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Dish Network Has Tough Q2

Satellite-TV provider loses 25,000 subscribers, posts lower revenue growth. 8/04/2008 09:30:00 AM Eastern

Dish Network lost 25,000 subscribers in the second quarter of 2008, according to its earning release issued Monday -- a troubling sign for the satellite operator as it seeks to keep pace with rival DirecTV and its cable and telco competitors.

Dish Network

Dish -- which has been aggressively marketing its expansion of HD channels in recent weeks after falling behind DirecTV in the HD arms race over the past year -- posted net income of $336 million for the quarter ending June 30, a boost from $224 million during the same period in 2007. Revenues were also up 5.6% to $2.91 billion for Q2 2008 compared with $2.76 million for the same period in 2007.

However, the revenue growth of 5.6% was a big drop-off from 12.3% a year ago and is being driven mostly by increased ARPU (average revenue per unit), noted Sanford C. Bernstein analyst Craig Moffett in a report issued Monday morning.

Moreover, the subscriber loss was the first ever by a U.S. direct-to-home satellite operator, Moffett said, calling it a "shock" when compared with subscriber growth of 170,000 a year ago.

Moffett said the subscriber loss was particularly disappointing considering that Dish is now getting exclusive distribution from marketing partner AT&T for the first time. When that is considered along with high churn numbers and increased subscriber-acquisition costs, the subscriber loss painted a bleak picture for Dish, Moffett wrote in his report:

"Dish Network, like Sprint [Nextel], looks more than ever like a company poised on the brink of secular decline," he added.