Dish Net Posts Strong Sub Gains

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Countering the recent rash of dismal financial earnings, EchoStar Communications Corp. saw a healthy rise in revenues and profits during the second quarter.

But all was not completely rosy for the Littleton, Colo.-based direct-broadcast satellite provider — it also acknowledged a consumer-complaint investigation of the company by 10 state attorneys general.

EchoStar posted revenue of approximately $1.169 billion for the quarter ending June 30, a 21 percent rise compared to the $966 million gathered in second-quarter 2001.

Net income came in at $45.8 million, a significant improvement from the $5.9 million loss posted in the same quarter of 2001.

Earnings before interest, taxes depreciation and amortization (EBITDA) also improved to $237 million, compared to $134 million posted in second-quarter 2001. Earnings per share came in at 8 cents apiece, compared to a 1 cent loss posted for the same quarter last year.

EchoStar's Dish Network added about 295,000 net new subscribers in the quarter, a sizeable drop compared to the 350,000 subscribers added in the same quarter of 2001. Nonetheless, the DBS provider now claims 7.46 million subscribers, a 23 percent increase compared to the 6.07 million recorded during same period last year.

Revenue per subscriber also dropped year over year, from $50 in second-quarter 2001 to $48.85. EchoStar blames the drop on its "I Like 9" promotion, which offers a 12-month service discount, and expects revenue per subscriber to hold steady through the rest of the year.

Despite generally strong results, EchoStar's 10-Q earnings filing also acknowledged an investigation by 10 state attorneys general into alleged failures to comply with consumer-protection laws. The investigations started with two state probes in April, and since then, eight more attorneys general have joined the investigation.

EchoStar spokesman Marc Lumpkin said the DBS provider is cooperating with the state officials. The DBS provider would not disclose which states are involved.

The probe centers on EchoStar's call-response times and policies, advertising and customer-agreement disclosures, as well as its policies for handling customer complaints.

"They have questions about general consumer complaints over the years, and we are responding to their questions," he said. "Once we do that, we think they will understand."

The probe is not related to EchoStar's proposed $26 billion merger with Hughes Electronics Corp.'s DirecTV Inc., which is scheduled to close by the end of the year, Lumpkin added.