Dish Profit Beats Analysts’ Estimates on Price Increases

  • Satellite subscription losses partly offset by Sling TV gains
  • Broadband customers increase from year-earlier period

Dish Network Corp. posted profit that topped analysts’ estimates after a January price increase and Sling TV subscriber gains helped cushion a drop in satellite-TV users, the strongest sign yet that Chairman Charlie Ergen’s “skinny bundle” strategy may be paying off.

First-quarter earnings rose to 84 cents a share, the Englewood, Colorado-based pay-TV company said Wednesday in a statement. Analysts projected 62 cents, the average of estimates compiled by Bloomberg. A January subscription price increase helped push sales up to $3.79 billion, compared with analysts’ $3.8 billion estimate.

To counter losses in its traditional satellite-TV service, Dish started a cheaper alternative last year, known as a skinny bundle. Sling TV is a $20-a-month online streaming offering with live broadcasts from channels including ESPN and TNT. Last week, Dish added a second $20 package that features Fox channels though excludes programming from Walt Disney Co.

“Sling TV remains a small fraction of total pay-TV subscribers, and may remain a niche service for the foreseeable future,” Bloomberg Intelligence analyst Joshua Yatskowitz wrote in a note Wednesday. He estimates the Sling TV bundle may have added 169,000 subscribers in the first quarter.

Philip Cusick, an analyst at JPMorgan Chase & Co., puts that number at 125,000, pointing out in a note that Sling TV bolstered otherwise weaker satellite-TV subscriber totals.

  • Dish reported 13.9 million video subscribers, including satellite and Sling, little changed from the end of last year.
  • The average monthly subscriber defection rate, or churn, was 1.63 percent for the first quarter, down from 1.71 percent at the end of 2015.
  • Dish had about 628,000 broadband subscribers, compared with 591,000 a year earlier.

The shares rose 2.5 percent to $48.50 in early trading. The stock rose 1.8 percent Tuesday on news that Viacom Inc. has been warning Dish subscribers that they may lose channels including Comedy Central and Nickelodeon because of a fee dispute between the companies.

Dish is participating in this year’s federal broadcast airwave auction. Ergen has said he hopes to establish a wireless network that can deliver advanced services like video and Internet to rival the larger U.S. carriers. He has acquired radio wave spectrum valued at an estimated $50 billion to help facilitate that goal. Investors and analysts will look to Ergen to provide an update on the plan during a conference call Wednesday at 12 p.m. New York time.

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