Dish Disappoints, Subscriber Growth Weak

Dish Network (DISH) shares are lower Tuesday morning as the company reported disappointing fourth quarter results, with unusually weak subscribe growth.

For the quarter, DISH reported revenue of $2.89 billion, and EPS of 39 cents; the Street was looking for $2.86 billion and 45 cents.

The company said it added 85,000 net new subscribers during the quarter, increasing the total to 13.78 million. As is typical for DISH, the earnings release was pretty minimalistic; you had to hunt through the 10-K they filed today to get the details.

“During 2007, our subscriber base continued to grow, but at a slower pace than in previous periods,” the company said in the 10-K. “We believe that our slower subscriber growth was driven in part by competitive factors including the effectiveness of certain competitors’ promotional offers, the number of markets in which competitors offer local HD channels, and their aggressive marketing of such advantages. Satellite launch delays at DISH Network have slowed its growth of local HD markets which in turn has delayed its own aggressive retention marketing efforts. Subscriber growth was also affected by worsening economic conditions which included a slowdown in new housing starts. Additional impacts to subscriber growth included operational inefficiencies at DISH Network and piracy and other forms of fraud. Most of the factors described above have affected both the growth of new subscribers and the churn of existing customers.”

As for the fourth quarter, the company noted that “growth was substantially lower than we have historically experienced on a quarterly basis for the reasons mentioned above, and was particularly slow given that we typically record relatively higher net subscriber growth rates in the fourth fiscal quarter of each year.”

The company also said churn is rising. “Our average monthly subscriber churn for the year ended December 31, 2007 was approximately 1.70%, a rate greater than we’ve experienced in recent years due mostly to high churn in the second half of 2007,” Dish said.

In a note this morning, Bernstein Research analyst Craig Moffett, who had expected the company to add 148,000 subs in the quarter, which was less than the Street consensus of 175,000, theorizes that the company is being hurt by slowing housing sales. “Dish’s exposure to the low end market, and to housing weakness, is likely to continue to weight on results in the near term,” he writes. “And longer term, the lack of a broadband option remains a glaring strategic hole.”

DISH Tuesday morning is down $1.19, or 3.9%, at $29.47.

Comments

[jcrash]

No theory needed. As a DISH customer, I am very frustrated along with many others on their lack of the main cable networks in HD - USA, FX and Sci-Fi being rather key to the whole HD need.

We don't need the FISH channel in HD.

[ballsschweaty]

I can't believe Dish has any customers. Directv and Comcast blow away Dish with their HD options and pricing.

Dish is like the old wireline telephone business. It will soon be continual secular decline.