Dish Network on Tuesday posted a sharply lower profit for the second quarter as its subscriber losses continued, though results still topped Wall Street expectations, and also announced that it will recombine with satellite and broadband company EchoStar Corp. in an all-stock deal.
The announcements sent shares of the satellite television provider higher in morning trading. Dish shares added 37 cents, or 4.8%, to $8.01.
Dish reported revenue of $3.91 billion, a 7% decline from the $4.21 billion in the second quarter of 2022, but above the $3.82 billion forecast by analysts polled by Zacks Investment Service.
Net income came in at $200.3 million, or 31 cents per share, less than half the $522.8 million, or 82 cents per share reported last year. Analysts were expecting a profit of 29 cents per share.
Net pay-TV subscribers fell by 294,000 in the second quarter, compared with a drop of 257,000 in the year-ago quarter.
The company closed the quarter with 8.9 million pay-TV subscribers, including 6.9 million Dish TV subscribers and 2.00 million Sling TV subscribers. That was down from 9.2 million at the end of the first quarter.
Dish also said it is recombining with EchoStar, the satellite and broadband services company it spun off in 2008.
The all-stock deal will see EchoStar shareholders get 2.85 shares of Dish for each share they own, which represents a premium of 12.9% to EchoStar stockholders based on the closing stock prices of the two companies on July 5. Media speculation about the deal has tweaked the stocks in the past month.
When the deal is complete, existing Dish Network shareholders will own roughly 69% and existing EchoStar shareholders approximately 31% of the combined company.
With the recombination, Dish, which owns also Boost Mobile and several other cell phone services, is aiming to expand further into the mobile market as its satellite television service wanes. In the announcement, Dish said its 5G network now covers more than 70% of the U.S.
In its earnings report, Dish said it had 7.73 million retail wireless subscribers at the end of the second quarter, down from 7.91 million in the first quarter.
“This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business,” Charles Ergen, the billionaire chairman of both Dish and EchoStar, said in a statement.
EchoStar CEO Hamid Akhavan will serve as CEO of the combined company. Erik Carlson, the current CEO of Dish, will leave the company after the deal closes, the announcement said.
The new board of directors of the combined company will include 11 members, seven Dish directors, three EchoStar independent directors and Akhavan.
