DENVER—Dish Network Corp., the nation’s No. 2 satellite television provider, reported a disappointing fourth-quarter profit on Tuesday as subscriber growth slowed amid tough competition and a sluggish economy.
The company posted a 14 percent increase in net income and a 12 percent rise in revenue for the quarter but Chief Executive Officer Charlie Ergen called the results disappointing from a sales perspective.
He blamed fewer housing starts, competition from rival DirecTV and cable companies and delays in satellite launches that would have boosted his company’s high-definition offerings.
“As long as we go out and execute the way we know we can, I think that satellite is going to do just fine, and we’re going to do just fine,” he told analysts during a conference call. He noted that Dish Network maintains a good solid base, particularly in rural America.
Net income totaled $175 million, or 39 cents per share, missing analysts’ expectations for the quarter ending Dec. 31. The latest results compared with $153 million, or 35 cents, a year earlier. Revenue rose 12 percent to $2.89 billion.
Wall Street, on average, had expected 45 cents per share, on revenue of $2.86 billion, according to analysts surveyed by Thomson Financial.
Shares of the Englewood, Colo.-based company fell nearly 5 percent.
Dish Network said it added 85,000 net new subscribers in the fourth quarter to put the total at 13.78 million for the year. The total rose by 675,000 subscribers, or 5.2 percent, from December 2006.
By comparison, No. 1 satellite TV provider DirecTV added 474,000 net subscribers during the fourth quarter to end 2006 with 16.8 million subscribers, up 6 percent.
Pacific Crest Securities analyst Steve Clement, who follows Dish Network, said the results were disappointing across the board. “Subscriber growth slowed down a little more than anyone was expecting,” he said.
Its average monthly churn rate, which reflects the number of subscribers who stop service, rose to 1.7 percent in 2007 from 1.64 percent in 2006, which Ergen attributed to the slowing economy, a need to continue improving customer service and piracy issues.
“Obviously if people can’t pay their housing mortgages or losing their houses and moving back into an apartment or something … there will be some churn driven by that beyond what we saw in 2006,” Ergen said.
The company said its average monthly revenue per subscriber rose to $65.83 from $62.78 in 2006 and average acquisition costs per subscriber dipped slightly to $656 in 2007 from $686 in 2006.
For the year, Dish reported net income of $756 million, or $1.69 a share, compared with net income of $608 million, or $1.37 a share, in 2006.
Dish Network was known as EchoStar Communications Corp. until Jan. 1 when it spun off its equipment business into EchoStar Corp. The Dish Network retained the pay television business.
Its stock fell $1.48, or 4.8 percent, to $29.18 Tuesday.
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