Dish Fourth-Quarter Earnings Rise, Sub Growth Slows

3:24 AM PST 02/21/2014 by Georg Szalai , Paul Bond
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Dish Network chairman Charlie Ergen

UPDATED: Chairman Charlie Ergen says if the Comcast-Time Warner Cable merger happens it would cause a "seismic shift across our industry in ways we can't predict today."

Dish Network on Friday reported improved fourth-quarter financials but lower subscriber additions than in the year-ago period, and executive vp Tom Cullen told analysts that a proposed merger between Comcast and Time Warner Cable is "extremely concerning" to Dish.

"Management is still assessing the proposed merger's potential impact and our options, and we'll be discussing the implications of that with our board in the near future," Cullen said during a conference call on Friday.

Later during the call, chairman Charlie Ergen said if the Comcast-TWC merger happens it would cause a "seismic shift across our industry in ways we can't predict today."

Ergen also hinted that the Comcast-TWC merger idea could encourage a Dish-DirecTV merger.

"It certainly doesn't hurt the case for consolidation within the satellite providers," he said. "I mean, obviously, when you take the No. 1 and 4 providers and put them together it would be hard to see why you couldn't put the No. 2 and 3 providers together. And, in fact, the No. 1 and 4 provider going together, I think, puts pressure on everybody in the video business and broadband business in a way that's a bit unprecedented. … There's nothing that I can see that's positive about it for anybody in the video, broadband or content business."

The satellite TV giant, led by Ergen and CEO Joe Clayton, posted earnings of $288 million, up from $209 million in the year-ago period. Subscriber revenue rose to $3.50 billion from $3.29 billion.

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Dish added 8,000 net new pay TV subscribers in the fourth quarter, down from 14,000 in the year-ago period. That was in line with expectations from Northland Securities analyst Tom Eagan.

Dish ended 2013 with a total of 14.057 million pay TV subscribers. At the end of 2012, the company's user base stood at 14.056 million.

With the closure of its remaining Blockbuster domestic retail stores and by-mail DVD service, Dish said it has "recast its financial statements and certain operational metrics to present Blockbuster as discontinued operations for all periods presented."

Dish also reported 2013 revenue of $13.9 billion, compared to $13.2 billion in 2012, an increase of 5.5 percent. Full-year earnings rose 26.8 percent to $807 million.

The company reported its results Friday before the opening bell on Wall Street, and its stock was up 5 percent in midday trading.

Dish also announced a deal with corporate sibling EchoStar. "To improve its position in the growing consumer satellite broadband market, among other reasons, Dish entered into agreements … to implement a transaction with EchoStar Corporation and its subsidiaries that calls for Dish to transfer to EchoStar on March 1, 2014, five of its satellites (including related in-orbit incentives) and approximately $11 million in cash in exchange for shares of two series of preferred tracking stock, and for Dish to lease back certain satellite capacity on those five satellites."

Email: Georg.Szalai@THR.com
Twitter: @georgszalai

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