No Charlie Chat on Dish Call

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EchoStar Communications chairman and CEO Charlie Ergen was conspicuously absent from the company’s second-quarter conference call Thursday, just as speculation that the No. 2 direct-broadcast satellite service provider was an acquisition target of DirecTV Group was starting to wane.

Ergen -- whose folksy self-deprecating humor and extreme candor is usually the highlight of EchoStar’s earnings calls -- had a prior family commitment that prevented him from participating, vice chairman Carl Vogel said.

“Charlie had a long-standing [commitment to] a family vacation,” Vogel said on the call. “Like all of us, he’s getting older, so his kids have to return to school a little earlier than they might otherwise have had to when they were younger. I wouldn’t read much into it.”

Vogel added that Ergen has said in the past that he would probably pull back on his participation in the quarterly earnings calls. However, that shouldn’t be interpreted as a lack of interest in the business.

“I’ve seen engaged and I’ve seen disengaged,” Vogel said. “This guy is totally engaged.”

Ergen’s absence comes merely days after News Corp. chairman Rupert Murdoch said he has had no discussions regarding a potential merger between EchoStar and News Corp.’s DirecTV. That, and a downgrade by Sanford C. Bernstein cable and satellite analyst Craig Moffett, sent EchoStar stock into a tailspin Wednesday, when its shares dipped more than 10% ($3.60 each) to $31.48 per share.

But while net new subscriber additions were weak, EchoStar reported strong second-quarter financial results, which boosted its stock to $32.77 per share, up $1.29 each, in Thursday-afternoon trading.

Gross subscriber additions were 824,000 in the period versus 799,000 in the same period last year. But net new subscriber additions were down -- 195,000 in the quarter, compared with 225,000 last year. Revenue rose 17% to $2.5 billion and cash flow increased 10% to $613 million.

EchoStar said on the call that it was in negotiations with some broadcasters regarding its ability to offer out-of market broadcast signals to some subscribers. In May, the DBS provider was ordered by a district court to stop offering out-of-market signals.

EchoStar said in a filing with the Securities and Exchange Commission that fewer than 1 million of its customers receive out-of-market broadcast stations, but if it were prohibited from offering the signals, some customers may defect.

On the conference call, general counsel David Moskowitz said negotiations with broadcasters are ongoing and, hopefully, a settlement can be reached soon.

He added that EchoStar has reached settlement agreements with hundreds of broadcasters in the past eight years -- when the litigation began.

“We’re anxious to try to reach a settlement with the remaining broadcasters, and we’re very focused on trying to do that. Of course, a big piece of that is outside of our control,” Moskowitz said. “There’s been a lot of history that has developed over the years, and whether the broadcasters can get over that history remains to be seen. We hope so.”

Moskowitz added that EchoStar already offers local-into-local broadcast stations in several of the markets in question, and that the process of transitioning some of those customers over to the local-into-local service would likely begin in the third quarter.

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