Posted on September 5, 2007
Please Visit Sky Report For The Best In Satellite News Most analysts realize the crippling housing market is taking its toll on the pay-TV industry. The cable crowd seems to have survived the seasonal downturn, and DIRECTV took its lumps like most expected. But as for EchoStar's DISH Network, some say the country's second leading satellite provider got "squeezed." That's according to Bernstein Research's Craig Moffett, who said being the last of the multichannel video providers to report, expectations surrounding DISH's Q2 were lowered in recent weeks. DISH touted its 170,000 net new subscriber additions as pushing the satellite service past Time Warner Cable to become the nation's third largest pay-TV provider with 13.585 million subs. But even with seasonally weak cable sub growth during Q2 - usually a boon for DBS - and a 25 percent year-over-year decrease in new housing additions, Moffett said DISH's subscriber results are still "something of a disappointment." The analyst said the 170K net adds are EchoStar's lowest in 10 years, and are fully 30 percent below the 250K net adds Wall Street was expecting. Still, Moffett said financially speaking, DISH's results were stronger than many anticipated with EBITDA growing to $785 million - a 23 percent year-over-year growth rate. The analyst was also impressed by the company's steady state cash flow growth of 21.5 percent during the period to $674 million. (It should be noted, however, that Bernstein's SSCF numbers include other expenses not reported in EchoStar's 10Q filing.) Moffett also said DISH's $645 SAC was well below Street predictions. Wedbush Morgan's William Kidd said the firm was pleased with EchoStar's earnings per share of 50 cents. The analyst also said DISH's gross additions result is fairly impressive given the change in SAC and increasingly difficult consumer environment. Kidd said churn (1.68 percent) seemed to be the company's biggest problem during the period, but the increase is related more to the consumer market and recent rate hike as opposed to increased competition. And, not surprisingly, Oppenheimer's Thomas Eagan said it will become increasingly difficult for DISH to continue sustaining its historical subscriber growth rate given changes in the competitive landscape. Most pressing being the sale of Adelphia systems, continued rollout of cable VoIP, and the slowing growth of AT&T's DISH Network partnership subscriber base.