Marketing Costs Drive Up Dish Loss

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EchoStar Communications Corp. last Monday reported
greater-than-expected losses in the fourth quarter, largely due to the cost of acquiring
new subscribers.

In addition, the company posted several noncash charges
that helped to push its operating loss for the quarter to $161 million. Its net loss for
the quarter was $220 million.

Despite the losses, Wall Street analysts who follow the
company were generally pleased with EchoStar's fourth-quarter results, which also
included increases in revenues and subscriber acquisitions.

Total revenue for the quarter was $515 million, up 79
percent compared with the last three months of 1998. The company added 438,000 net new
subscribers in the fourth quarter of 1999, at an average acquisition cost of about $425
apiece.

SG Cowen Securities Corp. analyst Gary Farber reiterated
his "buy" rating, with a target price of $142, on EchoStar's stock
following an analyst call with EchoStar chairman Charlie Ergen last Monday.

"I thought this was a very good quarter," Lehman
Bros. Inc. senior vice president of high-yield research Bob Berzins said. "My own
expectation [for the share price] is $200 for year-end," he said, adding that as a
high-yield analyst, his expectations may differ from others.

The stock fell from a record high of more than $140 per
share the previous Friday to less than $120 last Wednesday, although it began to pick up
again slightly last Thursday. EchoStar shares are scheduled for their third stock split in
less than one year later this week.

EchoStar plans to release its first-quarter earnings and
subscriber count on or around May 1, Ergen told analysts last week.

"My expectation is that they'll do over 350,000
net new additions for the quarter," Bear Stearns & Co. analyst Vijay Jayant said.

"I'm bullish on EchoStar," Jayant said,
adding that management for all of the direct-broadcast satellite companies -- including
DirecTV Inc. and Pegasus Communications Corp. -- appears more upbeat than ever.

Ergen's comments about consumer demand for
local-to-local broadcast packages mirrored earlier reports by DirecTV president Eddy
Hartenstein and Pegasus chairman Mark Pagon.

"DBS players saw almost overnight demand for
local-to-local," Ergen said. "As passionate as we were about the service, we
weren't prepared for the initial demand."

EchoStar served 26 markets with local-to-local signals last
week, and it expects to add seven more by May, Ergen said. He added that there's a
chance that the company may have to take one or two markets down later this spring if it
can't negotiate retransmission-consent agreements in time.

Average revenue per subscriber continues to increase by
about 25 cents per month, Ergen told analysts. He predicted that subscriber-acquisition
costs would continue to fall below industry average this year, although the company plans
to spend money to support a national ad campaign, as well as promotions like its current
free-hardware and installation offer.

"As a company, we're pretty much hitting all
cylinders," Ergen said. "We have the kinds of problems a company likes to
have."

Managing subscriber growth continues to be a challenge for
EchoStar, which is looking to beef up its customer service and installation networks, as
well as to make sure it has enough inventory on hand to meet demand.

In the fourth quarter of last year, EchoStar took a $16.6
million write-down on parts, including hard drives the company decided not to use for its
"DISHPlayer" receivers, deciding instead to go with larger storage drives.

The company also wrote down millions of dollars for an
employee stock-option plan, plus $13 million related to an impairment on its EchoStar IV
satellite.

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