Noting that the pay TV business is now at a saturation point, DISH Founder
and Chairman Charlie Ergen said that both his company and DirecTV will someday
probably consider merging with each other.
The executive suggested that possibility Nov. 6 while discussing DISH's
third-quarter 2012 financial and operating results with analysts. DISH lost
19,000 subscribers on a net basis during the quarter, although that was less
than the 111,000 drop in the same quarter last year.
“You've got basically mature video business that's very competitive, with the
power structure being more in the programming side than in the distribution
side,” Ergen said in response to a question about a possible merger. “And then
there's tremendous distribution coming, almost unlimited distribution power
coming, from broadband and the Internet, where neither one of use have a lot of
assets. So I think it's something that probably both companies will look
DirecTV Chief Executive Officer Michael White has already voiced enthusiasm
for a possible combination with DISH.
Ergen's prediction isn't stopping DISH from pursuing a variety of ways to
redefine itself. That includes the Oct. 1 introduction of dishNet satellite
broadband services, in partnership with ViaSat and HughesNet. dishNet which will
be capable of serving nearly 15 million rural residents and businesses with
little or no previous access to broadband connectivity, the company says.
“It is not only our intent to provide an Internet solution to this
underserved market, but to give customers faster speeds, greater capacity and
the convenience of bundling with video, which is an obvious win for customers
but also a win for DISH as the bundled customers have a longer churn rate,”
Chief Executive Officer Joseph Clayton said during the earnings call.
And DISH is still waiting for the Federal Communications Commission to clear
the way for it to provide mobile broadband services using satellite spectrum it
acquired when it purchased bankrupt TerreStar Networks and DBSD North America.
DISH can't use that spectrum until the FCC writes rules that will allow radio
waves in that frequency for terrestrial voice and data transmission. The company
is counting on the rules to be completed by yearend.
For now, DISH executives say they're encouraged by declining net loss in
customers, especially since its customers weathered a four-month blackout of AMC
channels due to a fee dispute. Plus, gross activations climbed 13 percent year
over year to 739,000. The company ended the quarter with slightly more than 14
million total subscribers.
Revenue fell 2.2 percent on an annual basis to $3.52 billion. And
per-subscriber acquisition cost was $805, flat sequentially but up $16 year over
year. The increase stemmed largely from higher brand advertising associated with
the marketing of the company's Hopper set-top box.
Average monthly revenue per customer was $77.57, less than $1 over 3Q11
DISH suffered a net loss of $158 million for the quarter, compared to net
income of $319 million in 3Q11. Had it not paid a settlement to AMC and its
former parent Cablevision, it would have earned $295 million.
DISH's pay out to settle the legal dispute totaled $700 million. The dispute
ended with a settlement in late October. Dish paid $700 million to AMC Networks
and Cablevision Systems Corp., a New York-area cable company that is AMC's
former parent. The dispute involved not just transmission rights for AMC
channels, but a defunct Cablevision programming service called Voom.
Dish, the No. 2 U.S. satellite broadcaster after DirecTV, said it lost $158
million, or 35 cents per share, for the three months ended Sept. 30. In the same
quarter last year, it reported net income of $319 million, or 71 cents per
Excluding the settlement, Dish would have earned $295 million, or about 65
cents per share, down 8 percent from last year.
Cablevision filed the suit in 2007 after DISH dropped a group of early HD
channels called Voom only two years into a 15-year carriage deal. As part of the
settlement, announced Oct. 21, DISH will receive 500 MHz of wireless
multichannel video distribution and data service spectrum licenses covering 150
points of presence in New York City, Los Angeles, Chicago, San Francisco,
Philadelphia and other cities.
By Scott Sleek
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