• by Wayne Friedman , November 13, 2007

A massive drop in its net subscribers for the third quarter sent EchoStar's Communications' stock plummeting some 15% in mid-day trading.

Citing increasing competitive pressure, EchoStar's Dish Network was hit with a whopping 62% drop in the third quarter--only adding 110,000 subscribers. That's down 295,000 in the same quarter compared to a year ago. EchoStar was down at one point to near $40 a share in mid-day trading.

Financial analysts look at net subscribers, which counts as one of the key metrics in measuring the health of cable and satellite distributors businesses.

More bad news: Gross subscriber gains at Dish were lower, dropping 5.6% a year ago to 904,000 in the quarter. All this contributed to a higher monthly churn rate of Dish, up to 1.95% from 1.76% a year ago.

While some cable operators have had their share of growth problems--due to new IPTV and IPTV-like series from AT&T and Verizon--satellite distributors also have been having a hard time.

EchoStar has been linked to a possible merger deal with AT&T for some time. Analysts believe the pair would make a single strong competitor that competes with cable operators and other satellite distributors.

Investors weren't thinking much about the company's other mostly positive financial results: Net profit was up 43% to $199.7 million, and revenue was some 13% higher to $2.7 billion from $2.39 billion a year ago.

Recent financial results from cable operators showed the industry was hit by problems. Comcast Corp. Cablevision Systems Corp. and Time Warner Cable all reported weaker-than-expected subscriber growth in the third quarter.

Those companies and EchoStar have blamed poor economic conditions: a deteriorating housing market and increased mortgage defaults, as well as increased promotions from other video distributors.