Dish Loses 135,000 Subscribers, Shares Fall on Q2 Earnings

CEO Joe Clayton tells analysts “It will take some time to regain our momentum”

Last Updated: August 9, 2011 @ 10:31 AM

Dish Network lost 135,000 net subscribers during its second quarter, many of them siphoned off by rival DirecTV and to streaming services such as Netflix, during a period of increased revenue and profit that nonetheless failed to meet Wall Street expectations. 

"The best way I can describe this quarter’s results is murky," Joe Clayton, president and CEO of DISH Network, said in a conference call with analysts.

"This was a transitional quarter. It will take some time to regain our momentum," Clayton added.

The Dish head said that the disappointing second quarter was partly attributable to increased competition in the sector and what he labelled "destructive" discounting in the video industry.  

Revenues for the company jumped 13 percent to $3.59 billion, beating analysts' projections. A poll of analysts by Thomson Reuters had predicted revenues of $3.41 billion.

Shares fell, however, after the second largest satellite company's profits failed to hit Wall Street's mark. Net income increased 30.3 percent to $335 million or 75 cents a share for the quarter, up from $257 million, or 57 cents during the same period last year. Projections called for Dish to earn 79 sense a share.

Dish's stock dropped over 2.5 percent to $22.07 after earnings were announced.

Although some industry watchers remain skeptical about the wisdom of Dish's successful bid for the bankrupt video rental chain Blockbuster last spring, in the short term the acquisition is helping the company drive revenues. Without the money generated by Blockbuster, revenue would have lagged at $3.34 billion.

Clayton told analysts that Dish was working on content deals with studios to keep Blockbuster supplied and planned to invest in Blockbuster's digital arm. He emphasized that the brand still had appeal, but poured cold water on the idea that the company would invest on the order of $1 billion to reinvigorate the company.

To rebound, Dish said it would freeze prices through January 2013 and would reposition its advertising to focus less on savings and more on the products the satellite company offers customers. 

The company ended June with over 14 million subscribers.