Dish Adds 340K Subs in 2Q

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DirecTV Inc. wasn’t the only satellite-TV provider with a healthy influx of new customers in the second quarter.

EchoStar Communications Corp.’s Dish Network said Tuesday that it added about 340,000 net new subscribers in the period, which it ended with 10.125 million customers.

In the three months ending June 30, EchoStar had total revenue of $1.78 billion, up 26% from $1.41 billion in the same period a year ago. Net income declined to $85 million from $129 million in the year-earlier quarter, and basic earnings per share dipped to 18 cents from 27 cents in the prior-year period.

EchoStar also said its board authorized buying back up to an additional $1 billion of class-A shares, supplementing a buyback plan the company disclosed in November 2003.

Chairman and CEO Charlie Ergen dodged questions from analysts that the buyback program could be an indication that he wants to take the company private, like Cox Enterprises Inc. plans to do with MSO Cox Communications Inc. Ergen controls about 50.3% of EchoStar class-A shares and more than 90% of its voting power.

“We bought back $1 billion of our stock at prices we thought undervalued our company long-term,” Ergen said. “Our board has said that at least we are in a position to continue to do that. Cox is a different situation -- they have a bunch of other divisions. It will be interesting to see how that plays out.”

The moves to privatize Cox are thought to be mainly a reaction to its undervalued stock price.

EchoStar’s basic-subscriber growth appears to have come primarily from cable -- No. 1 direct-broadcast satellite service provider DirecTV Inc. added 455,000 new customers during the period.

Ergen added that taking customers away from cable remains the priority. “The real focus is cable companies,” he said. “They have 67 million customers. If we’re going to grow our business, we’ve got to get customers for the most part from those guys.”

Ergen also said that it appears that cable’s retention efforts -- mainly dish-buyback programs -- aren’t working.

“Their bounty programs are now at $500 or $600, and they’re still losing subs,” he added. “Maybe they ought to pay $1,000 bounties. The consumer is voting with their pocketbook and saying they prefer satellite.”

Still, like DirecTV, Ergen believes cable operators will push hard to win customers back.

“I don’t think you’re going to see the satellite industry get 800,000 subscribers per quarter without cable reacting to that,” Ergen said, adding that MSOs will likely focus their efforts on video-on-demand, phone services and broadband data.

“It will be interesting to see what strategy they deploy,” he said. “They are clearly on the defensive.”

EchoStar finshed trading Tuesday at $29.55 per share, up $2.29 each (8.4%).

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