EchoStar to Work on Improving Churn Rate

EchoStar Communications tumbled 16% Monday after the satellite television provider reported what it called an "unacceptable" customer churn rate even as third-quarter profits surged 45%. The company blamed excessive free programming and weak economic conditions. Company managers "just haven't done a very good job" of controlling subscriber turnover in recent months," CEO Charles Ergen told analysts, noting that the company historically has done a better job at installation, responding to customer requests and marketing. The housing and credit crises, he said, are also taking a toll. "If you go down some subdivisions in America today, every other house has a for sale sign, and that particular house may have a dish on the roof or may have cable running into the house, and there is nobody living there," he added. Late Friday the company said net income rose to $199.7M ($0.44/share) from $139.6M ($0.31/share) a year earlier. It added 110,000 net new subscribers during the quarter, down from 295,000 a year earlier, putting its churn rate at 1.94% vs 1.76% in the third quarter of 2006. Ergen also said the company was considering a possible minority investment in foreign satellite TV operations.

Sources: Wall Street Journal, AP
Commentary: EchoStar Churn Driven by Subprime Woes • Details of a Probable Dish Network Spin-off • AT&T Hires Goldman to Advise on EchoStar Buyout - TheStreet
Stocks to watch: DISH. Competitors: CMCSA, DTV
Earnings call transcript: EchoStar Q2 2007

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Comments

[User 239889]

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