Post by dkennedy on May 5, 2005 8:09:29 GMT -5
EchoStar Posts 1st-Qtr Profit on Subscriber Gains
By Anthony Massucci
Bloomberg News
May 5 (Bloomberg) -- EchoStar Communications Corp., the second- largest U.S. satellite-television broadcaster, posted first-quarter profit of $317.5 million as it signed up more new customers and recorded a gain from settling an insurance lawsuit.
Net income was 69 cents a share, compared with a net loss of $43 million, or 9 cents, a year earlier, the Englewood, Colorado- based company said today in a statement. Excluding the $134 million gain from the settlement, EchoStar's profit was about 42 cents a share. Revenue rose 28 percent to $2.02 billion.
EchoStar gained 325,000 customers for its Dish Network satellite-TV service, beating analysts' estimates for new subscribers, and ended the quarter with 11.2 million. DirecTV Group Inc., the biggest U.S. satellite service, also added users in the first quarter while the two largest cable-television companies, Comcast Corp. and Time Warner Cable, lost customers to their basic packages of channels.
"The cable guys have lost subscribers to the satellite companies,'' said William Jacobs, an analyst at Harris Associates LP in Chicago, EchoStar's sixth-largest shareholder.
EchoStar had been expected to post profit of 39 cents a share, the average estimate of 21 analysts polled by Thomson Financial.
The company's subscriber growth topped the 302,000 average forecast by five analysts surveyed by Bloomberg News.
EchoStar shares yesterday rose 63 cents to $29.86 in Nasdaq Stock Market composite trading. They've fallen 12 percent in the past year. DirecTV shares, which have fallen 17 percent in the last 12 months, yesterday rose 2 cents to $14.94.
Partner Problems
EchoStar said it expects subscriber additions from Chief Executive Officer Charles Ergen's partnership with SBC Communications Inc. to decline. SBC, the second-largest U.S. local phone company, recently de-emphasized efforts to market EchoStar subscriptions along with telephone service, the satellite-TV company said.
SBC and other telecommunications companies may introduce fiber-optic networks that will let them compete with the satellite-TV companies.
Subscriber-related expenses, which include programming and customer-support costs, rose 28 percent to $990.1 million in the first quarter. The cost of equipment sales and more complicated installations of satellite dishes boosted expenses, the company said. Total costs rose 19 percent to $1.72 billion.
Operating income, or profit before interest and taxes, more than doubled to $290.2 million, EchoStar said.
Revenue Per Subscriber
EchoStar's average revenue per subscriber rose 10 percent to $57 in the first quarters it raised some prices and reduced the amount of free programming given to customers. That was lower than the $58.79 estimated by Bear Stearns & Co. analyst Robert Peck.
Discounts and programming promotions introduced in the second quarter is expected to reduce average revenue per subscriber this year, Peck wrote today in a note.
The company's so-called churn rate, the number of customers who terminate service each month divided by total subscribers, fell to 1.44 percent from 1.48.
Ergen, 52, who founded the company with his wife and a friend in 1980, controls 91 percent of the company's voting rights through a separate class of super-voting stock. Ergen is ranked 55th on Forbes magazine's list of the world's richest people, with a fortune of $7.2 billion, most of which is invested in EchoStar stock.
Both DirecTV, controlled by Rupert Murdoch's News Corp., and EchoStar are battling cable companies for customers by introducing new programming and discounting the cost of equipment and installation.
Cable companies such as Comcast Corp. and Time Warner Inc. are packaging TV programming, high-speed Internet access and telephone service at a discount in their battle against the satellite broadcasters.
EchoStar said last week that it will carry the 21 high- definition channels developed by Cablevision Systems Corp.'s Voom satellite service, which was shut down. EchoStar's Dish Network began carrying 10 of the channels earlier this week and will add the remaining 11 channels by 2006.
Discount
EchoStar is also offering its service at a discount in the New York area to attract some of Time Warner Cable's 2.4 million customers who can't get New York Mets baseball games because of a pricing dispute with Cablevision.
New customers may subscribe to the Dish service for $19.99 a month, $12 cheaper than the standard rate, with an added $5 a month to get Fox Sports New York and Madison Square Garden Network, the two Cablevision-owned sports channels currently not shown on Time Warner Cable.
www.echostar.com .)
To contact the reporter on this story:
Anthony Massucci in New York amassucc@bloomberg.net.
By Anthony Massucci
Bloomberg News
May 5 (Bloomberg) -- EchoStar Communications Corp., the second- largest U.S. satellite-television broadcaster, posted first-quarter profit of $317.5 million as it signed up more new customers and recorded a gain from settling an insurance lawsuit.
Net income was 69 cents a share, compared with a net loss of $43 million, or 9 cents, a year earlier, the Englewood, Colorado- based company said today in a statement. Excluding the $134 million gain from the settlement, EchoStar's profit was about 42 cents a share. Revenue rose 28 percent to $2.02 billion.
EchoStar gained 325,000 customers for its Dish Network satellite-TV service, beating analysts' estimates for new subscribers, and ended the quarter with 11.2 million. DirecTV Group Inc., the biggest U.S. satellite service, also added users in the first quarter while the two largest cable-television companies, Comcast Corp. and Time Warner Cable, lost customers to their basic packages of channels.
"The cable guys have lost subscribers to the satellite companies,'' said William Jacobs, an analyst at Harris Associates LP in Chicago, EchoStar's sixth-largest shareholder.
EchoStar had been expected to post profit of 39 cents a share, the average estimate of 21 analysts polled by Thomson Financial.
The company's subscriber growth topped the 302,000 average forecast by five analysts surveyed by Bloomberg News.
EchoStar shares yesterday rose 63 cents to $29.86 in Nasdaq Stock Market composite trading. They've fallen 12 percent in the past year. DirecTV shares, which have fallen 17 percent in the last 12 months, yesterday rose 2 cents to $14.94.
Partner Problems
EchoStar said it expects subscriber additions from Chief Executive Officer Charles Ergen's partnership with SBC Communications Inc. to decline. SBC, the second-largest U.S. local phone company, recently de-emphasized efforts to market EchoStar subscriptions along with telephone service, the satellite-TV company said.
SBC and other telecommunications companies may introduce fiber-optic networks that will let them compete with the satellite-TV companies.
Subscriber-related expenses, which include programming and customer-support costs, rose 28 percent to $990.1 million in the first quarter. The cost of equipment sales and more complicated installations of satellite dishes boosted expenses, the company said. Total costs rose 19 percent to $1.72 billion.
Operating income, or profit before interest and taxes, more than doubled to $290.2 million, EchoStar said.
Revenue Per Subscriber
EchoStar's average revenue per subscriber rose 10 percent to $57 in the first quarters it raised some prices and reduced the amount of free programming given to customers. That was lower than the $58.79 estimated by Bear Stearns & Co. analyst Robert Peck.
Discounts and programming promotions introduced in the second quarter is expected to reduce average revenue per subscriber this year, Peck wrote today in a note.
The company's so-called churn rate, the number of customers who terminate service each month divided by total subscribers, fell to 1.44 percent from 1.48.
Ergen, 52, who founded the company with his wife and a friend in 1980, controls 91 percent of the company's voting rights through a separate class of super-voting stock. Ergen is ranked 55th on Forbes magazine's list of the world's richest people, with a fortune of $7.2 billion, most of which is invested in EchoStar stock.
Both DirecTV, controlled by Rupert Murdoch's News Corp., and EchoStar are battling cable companies for customers by introducing new programming and discounting the cost of equipment and installation.
Cable companies such as Comcast Corp. and Time Warner Inc. are packaging TV programming, high-speed Internet access and telephone service at a discount in their battle against the satellite broadcasters.
EchoStar said last week that it will carry the 21 high- definition channels developed by Cablevision Systems Corp.'s Voom satellite service, which was shut down. EchoStar's Dish Network began carrying 10 of the channels earlier this week and will add the remaining 11 channels by 2006.
Discount
EchoStar is also offering its service at a discount in the New York area to attract some of Time Warner Cable's 2.4 million customers who can't get New York Mets baseball games because of a pricing dispute with Cablevision.
New customers may subscribe to the Dish service for $19.99 a month, $12 cheaper than the standard rate, with an added $5 a month to get Fox Sports New York and Madison Square Garden Network, the two Cablevision-owned sports channels currently not shown on Time Warner Cable.
www.echostar.com .)
To contact the reporter on this story:
Anthony Massucci in New York amassucc@bloomberg.net.