Despite a 24% jump in fourth-quarter net income, Dish Network's subscriber base continued to dwindle, as it slipped further behind larger rivals in the pay-TV arena.
Dish is the USA's number-two satellite-to-home video broadcaster and posted net income of $217 million, or 48 cents a share, versus $175 million, or 39 cents a share, a year earlier.
But its customer base shrank for the third quarter in a row while marketing costs climbed. The gains in Dish's net income are primarily the result of raising prices and customers opting for more features. But even with average monthly prices up by 5% in the last quarter, the company hasn't been able to maintain the same revenue growth rate it had previously. Revenue grew 1% to $2.92 billion -- compared with a robust 11% a year ago -- highlighting Dish's increasing difficulty in sticking with its traditional focus on rural and lower-income customers.
Coupled with a wider fourth-quarter loss posted by sister firm EchoStar Corp. -- which also is controlled by Dish Chairman and founder Charles Ergen -- the results are bound to increase pressure on Ergen to find new partners or devise another survival strategy.
Even before the current economic turmoil, limited satellite capacity and other factors constrained Dish's high-definition program lineup compared with larger rival DirecTV. Dish lost more than 100,000 net subscribers during last year's fourth quarter, while DirecTV gained 301,000 net new customers in the same period. Dish also has been losing momentum due to aggressive video and Internet packages offered by cablecos and telcos.
For some time, analysts have viewed Ergen and his management team as treading water until they could find a way to differentiate their offerings from those of rivals. Now, many of the same analysts believe the company must urgently chart a new strategy. Dish's efforts to plot a new course suffered a major blow last month, when Ergen failed to gain control of Sirius XM Radio. The long-term goal, was seen to be combining broadcast spectrum and in-orbit assets to create a truly mobile video network.
Dish was hurt last month when AT&T officially ended its partnership and switched its joint marketing efforts to DirecTV. The AT&T tie-up accounted for nearly 20% of new subscribers in the latest quarter, and no new partners appear ready to make up the loss. (info from The Wall Street Journal)