Dish Loses Subscribers, Revs Slip

Dish Network's silver-lining of its third-quarter results was that it didn't lose as many subscribers as expected. At the same time, revenue slipped and the satellite TV provider's net income turned into a net loss.

The second-largest U.S. satellite TV with around 14 million subscribers lost only 19,000 subscribers -- about half of what analysts thought. A year ago in the third quarter of 2011, Dish lost some 111,000 subscribers.

Dish reported a net loss of $158 million versus a net income of $319 million in the third quarter of 2011. Dish's third-quarter revenue slipped to $3.5 billion from $3.6 billion in the third quarter of 2011.

The poor results were largely due to recording the cost of the Voom HD litigation, which negatively impacted net income by $453 million. (On the losing end of its lawsuit with Voom, Dish was reported to pay $700 million in cash). Dish also had higher programming costs and increased advertising costs to promote its Hopper set-top box.

Taking out the financial consequences of the 4-year-old lawsuit with Voom HD, Dish says net income would have declined by 8% to $295 million versus the third quarter of 2011 to $319 million.

Craig Moffett, media analyst for Bernstein Research, wrote: "Third-quarter results continue to point to a company whose core business is still struggling... badly."

Moffett believes Dish -- as well as as DirecTV -- will continue to suffer as long as they offer a broader range of media/communications products, like broadband. Analysts have said this continues to put satellite TV operators at a disadvantage to cable system competitors, which have been selling a so-called "triple-play" package of products: video, data (broadband) and voice.

But near-term, there could be more bad news should the TV networks prevail over the issue of Dish's highly controversial commercial-skipping Hopper unit. According to its Securities and Exchange Commission filing, Dish says: "In the event a court ultimately determines that we infringe the asserted copyrights, we may be subject to, among other things, an injunction that could require us to materially modify or cease to offer these features."

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