Echostar's cost of acquiring new subscribers jumped in the fourth quarter as the DBS service contined to battle with DirecTV.
EchoStar Chairman Charlie Ergen said that the marketing and equipment cost of snagging new customers hit $548 per addition. That's up 16% from $471 in the third quarter. Sub acquisition costs is a huge issue with the DBS providers because investors like to see top-line growth but are beginning to demand positive cash flow. Echostar's acquisition costs are slightly higher than those of rival DirecTV, but Ergen said that's because Echostar manufacturers its own equipment. "Our `sac' was lower than our compettion when you compare apples and oranges," he said.
EchoStar added 495,000 customers for its Dish Network satellite TV service in the quarter, bringing its total to 5.3 million. That's better than the 455,000 net new subscribers generated during the third quarter, but a less than analysts had expected, which in one case had been 535,000 subscribers. DirecTV added 527,000 suscribers in the fourth quarter. EchoStar expects to add 1.5 million to 2 million new customers this year.
EchoStar's cash flow loss narrowed to $42.2 million from $71.5 million and he asserted that the company would turn cash flow positive this year. Revenue surged 56% to $805.3 million.
Ergen said that he is not afraid of the downturn in the economy. "We will have improved operating results whatever the economy," he said. - John Higgins