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Cable Technology Feature Article

August 06, 2013

Q2 Proves a Loss for Dish Network

By Steve Anderson, Contributing TMCnet Writer

It's bad news for Dish Network, as the company brought out its numbers for the second quarter. The company put up a loss of fully $11.1 million in the second quarter; however, the losses were only partially related to customer totals. The whole affair only somewhat suggests larger problems ahead, but is likely going to require some closer examination.

As for the numbers, the clear centerpiece was that $11.1 million loss which came about as the result of two primary factors: one, subscribers were down over the second quarter to the tune of around 78,000 total, and two, the company took a charge related to two of its satellites, around $438 million total. Those two satellites were part of a three-satellite deal gained in the acquisitions of TerreStar Networks (News - Alert) and DBSD North America Inc.

The rest of the numbers told an interesting story: the $11.1 million loss compares against a net income of $225.7 million in a year-to-year comparison, and revenue was up about 1 percent, from $3.57 billion to $3.61 billion in the most recent quarter. This is somewhat short of analyst estimates, who, when polled by FactSet (News - Alert), were expecting $3.65 billion.

Despite the slight subscriber losses, though, the average revenue per subscriber did increase slightly, and the number of new subscribers fell at an amount slightly less than expected. Citibank's Jason Bazinet expected Dish Network's churn rate—the rate at which the company loses subscribers—to be 1.63 percent, while the actual rate was 1.67 percent.

On the surface, the numbers don't exactly sound like bad news. A churn rate that's .04 percent higher than expected? A loss that probably would have been profit if it hadn't been for those two satellites? Increasing revenue per subscriber while subscriber numbers are down slightly overall? All of these two points together don't have too much impact, at least not this quarter.

The question, of course, is whether or not this is a momentary downturn as part of summer, or part of a wider trend to come. Let's face it, with the coming of summer, there might be more than a few customers looking at things and thinking now is a good time to shut down the cable at least temporarily. The coming of colder and darker weather—now starting to make an appearance, at least the darker part—may well change a few minds and put some punch in Dish Network's bottom line. While the third quarter numbers are likely to tell a much better part of the story than the second quarter numbers—the fourth quarter numbers especially so—the second quarter's numbers are still worth taking note of just to see whether this is a momentary aberration or the start of a much worse trend for Dish Network.

There is, after all, the ever-present threat of cable cutting, and as streaming video gains ground, more than a few of those departed Dish Network customers may well be wondering what the point of paying for cable was when there are plenty of options in Netflix and Hulu (News - Alert) Plus and the like for much, much less than Dish Network is asking per month. This could be a localized problem, mostly related to a couple pieces of infrastructure. It could be the sign of worse to come. Either way, it will take much closer watching to see just what's coming up, and what that means for not only Dish Network, but for entertainment as a whole.

Edited by Alisen Downey

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