Dish Network chairman and CEO Charlie Ergen laid the blame of a dismal fourth quarter squarely on the shoulders of management, but said in a conference call with analysts that things will only get better.
“In 2008, the goal was to stop getting worse,” Ergen said on a conference call with analysts on Monday. “In 2009, we are prepared to go forward by getting better. There were a couple of major things we did right.
"It was disappointing that operationally, we made the product too complex," he said. "But it is much easier to change that than your balance sheet.”
Ergen added that Dish’s balance sheet is solid – it has no major maturities until 2011 – so it won’t have to tap the credit markets any time soon. That, he said, is an accomplishment in this economic environment.
Dish reported a disappointing quarter earlier this morning, with net subscriber losses numbering 102,000 for the period, well below analysts’ estimates. Revenue was up 1% to $2.9 billion.
The results were a marked contrast to its satellite TV rival DirecTV, which reported a subscriber gain of about 301,000 customers in the fourth quarter.
Some analysts believe that the customer losses will only get worse in the first quarter – that’s when the company should begin to feel the impact of the cancellation of its resale agreement with AT&T. That deal expired in February.
In a research note this morning, Sanford Bernstein cable and satellite analyst Craig Moffett estimated that the loss of the AT&T deal could cost Dish another 100,000 subscribers each quarter.
“Unfortunately, 2009 looks poised to be worse,” Moffett wrote. “Without AT&T, gross additions will face continued downward pressure. And a worsening economy poses a stiff headwind to any hopes of churn improvement.”
Ergen tried to down play the loss of AT&T, adding that although the telco accounted for 19% of its gross customer additions in the past, they weren’t necessarily high quality customers.
“It is a negative in a sense but a positive in the sense that we are able to get subs by not dealing with both a competitor and a partner,” Ergen said. “We have to replace that business, but our operations are more solid. We’ll see how that balances out.”
Investors seemed spooked by the quarterly results – the stock plunged 10.8% ($1.22) in afternoon trading Monday.