DISH Network’s (NASDAQ:DISH) high-def strategy suffered a setback on Friday night when a rocket launching a satellite the company had leased failed to reach the intended final orbit.
In a statement, International Launch Services, which handled the rocket launch from Kazakhstan, said that there was an “anomaly” during one stage of the launch.
In an 8-K filing with the SEC, DISH says SES Americom, which operates the satellite, and Lockheed Martin, which manufactured it, are looking at ways to bring the satellite into the correct orders. “If those efforts are successful, station keeping fuel would be required to correct the orbit, so the service life of the satellite would be substantially reduced,” the company said.
EchoStar notes that it had intended to lease the entire capacity of the satellite. “The launch anomaly will result in a delay in our roll out of some high definition channels, including some local network channels,” the company said in the filing.
Bernstein Research analyst Craig Moffett said it is possible that the satellite could be a “total loss.” He observed in a research note last night that the new satellite was to be “instrumental” in DISH Network’s plan to expand their HDTV capacity to 70-100 channels from the current 50. Moffett notes that the financial implications of the launch are unclear, since DISH itself did not own the satellite. “More significant than the loss of the asset itself, however, is the lost competitiveness of DISH’s HD offering, which has suffered a major blow,” he writes. “Having the most high definition has become a major source of competitive advantage for DirecTV (NYSE:DTV), which has used its HD superiority in an appeal to high end subscribers.”
DISH Monday morning is down 73 cents, or 2.6%, to $27.01.