Dish Network adds video subscribers in third quarter, tops estimates

Liana B. Baker

By Liana B. Baker

(Reuters) - Dish Network Corp added 35,000 pay-TV subscribers in the third quarter, far exceeding Wall Street expectations, sparking a 4.5 percent jump in its shares on Tuesday.

The gains underlined how satellite services were gaining customers by undercutting cable rivals on price. Larger rival DirecTV also added more customers than expected in the third quarter, while cable providers Time Warner Cable Inc, Comcast Corp and Charter Communications Inc all reported video subscriber losses. Dish also got a bit of a boost from Time Warner Cable's protracted fight with CBS Corp.

"Dish's Q3 operating results were surprisingly good, as were DirecTV's, boosted perhaps by the travails at Time Warner Cable, which got smoked in its programming dispute with CBS," said Craig Moffett, a research analyst at MoffettNathanson.

Wall Street analysts looked for Dish to lose 39,000 subscribers in the quarter, on average, according to market research firm StreetAccount.

Quarterly revenue also topped analysts' estimates.

Despite its well-received earnings report, results for Dish's core business were not the most thing on investors' minds. The bigger question is how billionaire chairman Charlie Ergen plans to use the roughly $3 billion worth of wireless spectrum he bought in the last few years, and transform Dish into more than just a pay-TV provider.

Dish, which earlier this year lost a battle with SoftBank Corp to take over Sprint Corp and smaller operator Clearwire Corp, has said it eventually wants to use the wireless airwaves it owns to offer mobile video services.

Ergen has also talked up network-sharing partnerships with an existing operator such as No. 3 U.S. mobile operator Sprint or T-Mobile US Inc.

Almost a year after receiving U.S. government approval to go ahead with a wireless service, Dish has yet to announce a plan.

The company made no mention of Ergen's plans in its earnings report but Ergen will appear on a conference call later Tuesday, when he is expected to discuss his wireless push.


The company added 75,000 broadband subscribers in the quarter, more than Wall Street's estimate of 62,000. Dish has a broadband service that incorporates satellite airwaves and appeals mostly to rural customers.

Revenue generated per subscriber rose to $81.05 from $76.99.

Dish reported net income of $315 million, or 68 cents per share, in the quarter, compared with a net loss of $158 million, or 35 cents per share, a year earlier.

In the year-earlier period, net income was reduced by $453 million due to a legal settlement with Voom, a now-defunct network owned by AMC Networks Inc and AMC's former parent Cablevision Systems Corp.

Revenue rose 2 percent to $3.60 billion, compared with expectations of $3.58 billion, according to Thomson Reuters I/B/E/S.

Dish shares rose $2.18 to $49.63, adding to its more than 30 percent gains since the start of the year.

(Additonal reporting by Jennifer Saba in New York and Chandni Doulatramani in Bangalore; Editing by Savio D'Souza and Jeffrey Benkoe)