Dish Network Corp., the second-largest U.S. satellite-television provider, reported third-quarter profit that exceeded estimates after luring more customers away from cable companies.
Net income was $315 million, or 68 cents a share, compared with a loss of $158 million, or 35 cents, a year earlier, the Englewood, Colorado-based company said today in a statement. Analysts had projected earnings of about 43 cents, according to data compiled by Bloomberg. Sales rose 2.3 percent to $3.6 billion, compared with the average estimate of $3.59 billion. Dish added 35,000 pay-TV customers in the quarter, compared with a loss of about 19,000 a year earlier.
Dish and its satellite rival DirecTV are benefiting from an influx of TV viewers from cable providers. DirecTV added 139,000 subscribers in the third quarter, while cable companies Comcast Corp., Time Warner Cable Inc. and Cablevision Systems Corp. lost a combined 460,000 customers. The total U.S. pay-TV market has become saturated, meaning competitors have to grow by taking customers away from one another.
“It was actually a decent quarter operationally,” said Paul Sweeney, an analyst at Bloomberg Industries in New York. The most notable achievement was the lowered customer defection rate, Sweeney said. This so-called churn decreased to almost 1.7 percent from 1.8 percent a year ago.
Dish gained 6 percent to $50.35 at the close in New York. It was the biggest one-day gain since December 2011. The stock has climbed 38 percent this year.
Dish also got a boost from a price increase. Average revenue per pay-TV subscriber was $81.05, compared with $76.99 a year earlier.
Last week, Dish said it was closing the remaining 300 Blockbuster LLC stores it owned in the U.S. and ending the business’s DVD-by-mail service. With the shutdown, about 2,800 jobs will be cut.
Acquiring Blockbuster was a poor decision because Dish couldn’t make the video-rental business fit in its wireless strategy, Dish Chairman Charlie Ergen said on a earnings conference call with analysts. In contrast, the decision to acquire more airwaves gives the company many more options, Ergen said.
Among the possibilities is an acquisition of T-Mobile US Inc., one of the last wireless carriers available that would help Dish deliver video over a national network. A T-Mobile deal, which had been a subject of speculation earlier this year, is still “on the table,” Ergen said on the call.
Still, with all the top carriers building faster, long-term evolution, or LTE networks, Dish may be missing a crucial upgrade cycle.
“His options are quickly running out,” Sweeney said.