Dish CEO: Q2 Results 'Murky'

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In his first conference call with analysts since being named CEO, Dish Network's Joseph Clayton vowed to turnaround net subscriber losses in the coming quarters, but remained sketchy on details for the satellite giant's intentions regarding its Blockbuster retail operations and its burgeoning wireless assets.

Clayton, who joined Dish is June, called the satellite giant's second quarter results "murky," marred by heavy discounting from competitors, a monthly price increase it implemented during the quarter and a reduction in marketing spend. As a result, Dish lost 135,000 net subscribers in the period, well above analysts' consensus estimates of a loss of 31,000 net customers.

"There is no question that pay television growth has slowed dramatically," Clayton said. "The market is becoming increasingly saturated. Industry double-digit growth rates have passed."

Dish consciously made an effort to dial back advertising and marketing efforts in the period, Clayton said, adding that the company did not want to chase low-margin, high-churn customers.

"Did we overcorrect? Possibly," Clayton said. "That will not be the case as we move into the second half of the year. Yes we have lost some sales momentum. One of my primary objectives will be to provide more focus on all of our commercial efforts. We will build back our sales results with both short term tactics and long term strategy over the next few quarters."

Dish will do that by re-energizing its distribution channels, enhancing its branding and striking new partnerships - he pointed to Dish's recent deal with Frontier Communications to extend its reseller agreement with the phone company. The Frontier deal involves about 4 million customers in 27 states.

But Clayton was less forthcoming regarding Dish's plans for its Blockbuster video rental chain or its growing wireless spectrum.

"What's next? In that regard, we will be somewhat nebulous," Clayton said. "We will keep our options open, we will not tip our hands and we will continue to pursue the necessary assets to shape our long term strategy. This could include additional acquisitions, partnerships, alliances and even parting with assets that might not prove to be strategic going forward."

Executive vice president sales, marketing and programming Tom Cullen offered a little more detail on Dish's recent trial with Charter Communications to allow the cable company to market its voice and data services to select Dish customers.

Cullen said the trial was basically a co-marketing agreement involving separately billed services and that it was not offered in an area where the satellite giant had a resale agreement with a telco.

"So far it has worked well for both parties," Cullen said of the trial. "Will we do it with others? We're open to that discussion."

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