Dish Network 2Q profit rises, subscribers fall

August 9, 2011 - 10:14 AM
Earns Dish Network

In this Feb. 23, 2011 photo, three Dish Network satellite dishes, attached near the roof line of an apartment complex is displayed in Palo Alto, Calif. Dish Network Corp.'s second-quarter net income climbed 30 percent Tuesday, Aug. 9, 2011, but its net subscribers declined partly because of rival's discounts. (AP Photo/Paul Sakuma)

NEW YORK (AP) — More subscribers cancelled satellite TV from Dish Network Corp. than it gained in the latest quarter, which combined with results from competitor DirecTV means the U.S. satellite TV industry lost subscribers for the first time.

Dish on Tuesday said lost 135,000 net subscribers, to end June with 14.1 million. It was the second-worst quarter for the Englewood, Colo., company after the loss of 156,000 subscribers in the fourth quarter.

DirecTV Group Inc. last week reported gaining 26,000 subscribers, its lowest result in at least four years.

Together, the two companies lost 109,000 subscribers. The satellite companies have been adding subscribers for years, poaching many of them from cable companies. Now, however, they're hamstrung by their inability to offer Internet services, which the cable companies can.

Dish blamed the subscriber flight on aggressive marketing and promotional offers and discounting from competitors, plus economic weakness.

To remain competitive, Dish said Tuesday that it will be freezing prices through January 2013.

Dish reported net income of $334.8 million, or 75 cents per share, for the three months that ended June 30. That's up from $257 million, or 57 cents per share, a year earlier.

Analysts expected earnings of 79 cents per share, according to a poll by FactSet.

Revenue rose 13 percent to $3.59 billion from $3.17 billion, driven by Dish's recent acquisition of the Blockbuster chain of video rental stores, which was in bankruptcy, and by price increases on TV service.

Excluding Blockbuster, revenue was $3.34 billion, below the average analyst estimate at $3.38 billion.

Dish shares fell 39 cents, or 1.7 percent, to $22.25 in morning trading.