EchoStar eyes broadcast assets

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NEW YORK -- Satellite TV provider EchoStar Communications finds broadcast assets attractive as potential acquisition targets and could well start doing day-and-date film release trials with movie studios -- as cable operators have done -- as part of its expansion of VOD offerings, management said Thursday.

Asked during the firm's quarterly earnings call about recent reports that EchoStar bid for broadcast assets, namely Ion Media Networks, president and vice chairman Carl Vogel declined comment on specific companies.

But, he told analysts, "We keep looking for things that are complementary," where EchoStar can leverage its expertise in providing content and the like. "Broadcast assets are similar to what we do today. We find that category attractive," he added.

Management also said it expects to keep increasing the number of movie titles it offers on-demand via its hard drives, whose capacity it keeps expanding. Asked about cable firms' day-and-date trials, they said nothing precludes EchoStar from getting such trials as well. They didn't say, though, if they have any plans for such trials.

EchoStar on Thursday reported a first-quarter profit increase of 6.7% to $157.1 million as revenue rose 15% to $2.64 billion. The profit fell below Wall Street expectations on increased spending on high-definition TV.

The firm added 310,000 net new subscribers in the latest period, up 38% from the 225,000 added in the year-ago quarter. The additions compared with the 235,000 net new subscribers that competitor DirecTV Group reported Wednesday, which was down from 255,000 in the year-ago period. EchoStar ended the first quarter with about 13.415 million users.

Churn, or subscriber turnover, declined from 1.57% in the year-ago quarter to 1.47%, EchoStar said. Average revenue per user rose 5.3% to $64.17 per month.

Asked whether he thinks it is a better strategy for EchoStar to spend more money and add more subscribers or boost its profitability and free cash flow by growing users less aggressively, chairman and CEO Charles Ergen said subscriber growth "continues to be a valid strategy." He added that management will have to remain flexible as things could change and returns on user growth could decline.

Ergen also predicted that the popularity of HD and availability of more HD channels should grow next year with a possible "explosion" in 2009.
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