Dish Q1 Profit and Revenue Miss Wall Street Expectations

By: Anton Aleksandrov
Anton Aleksandrov
Anton is a freshly graduated economist from the States with passion for the world of finance. He is one of the… read more.
on May 9, 2013

Dish’s share price (NASDAQ:DISH) fell by more than five percent in pre-market trading in New York on Thursday, May 9 after the satellite-television operator reported a 40 percent fall in first-quarter net profit and revenue below Wall Street expectations.

Net income in the three months to March 31 was $215.6 million (₤138.7 million), compared with $360 million (₤232 million) in the corresponding period a year earlier, the company said in a statement on Thursday. The fall was primarily due to higher subscriber-related expenses driven by increased programming and subscriber acquisition costs. Revenue decreased by 0.6 percent on the year to $3.56 billion (₤2.29 billion) driven by reductions in the Blockbuster video rental business, which Dish bought in a bankruptcy auction last year. A Thomson Reuters survey of analysts had expected net income of $245 million (₤157.7 million) on revenue of $3.61 billion (₤2.32 billion).

In the lasy quarter Dish added about 654,000 gross new pay-TV subscribers, slightly less than the 673,000 gross new subscribers in Q1 2012. Pay-TV average revenue per user (ARPU) totalled $78.54 (₤50.55) and subscriber churn rate, or the percentage of subscribers that discontinued their subscription, was 1.4 percent, compared to ARPU of $76.24 (₤49.07) and churn rate of 1.35 percent for the first quarter of 2012. The company also added about 66,000 new broadband subscribers in the last quarter, compared to 6,000 in the year-ealier period.

“Broadband sales are encouraging, especially given that almost all of our dishNET™ customers have bundled with our pay-TV service,” Josh Clayton, president and chief executive of Dish, said in the statement.
**Sprint Reluctant To Let Dish Look Into Its Books**
Last month, Dish made a $25.5 billion (₤16.4 billion) acquisition bid for Sprint Nextel (NYSE:S) but according to media reports released on May 8, the U.S. third largest mobile operator was holding off on granting its suitor access to its books because of doubts over funding and cost savings.

Sprint’s board is concerned about Dish’s ability to raise the finance needed for the deal as well as the debt that would burden the merged company. The mobile operator also doubts the accuracy of Dish’s estimate of $11 billion (₤7.08 billion) in cost savings.
Dish has responded to Sprint’s board inquiries by saying it was confident in its cost-saving projections. When Dish Chairman Charlie Ergen announced his bid for Sprint, he said that the deal might generate as much as $24 billion (₤15.4 billion) in “new opportunity synergies,” on top of the planned $11 billion (₤7.08 billion) in savings.

!m[Share Price Drops Five Percent in NYSE Pre-Market Trading](/uploads/story/2175/thumbs/pic1_inline.png)
Softbank (TYO:9984), Japan’s third-largest largest mobile Internet provider, is also trying to acquire Sprint. Earlier this week, the Japanese company said a report from research firm Franklin Court Partners had shown that it would be harder for Dish-Sprint to achieve cost savings because the two partners in the merger would be so dissimilar. According to the report, Dish also didn’t account for integration expenses, which could go as high as $3.5 billion (₤2.25 billion).
**DISH share price was $38.80 as of 09.05.2013, 13.20 GMT.**
**Sprint share price was $7.39 as of 09.05.2013, 13.20 GMT.**
**Softbank share price was ¥5,230 as of 09.05.2013, 13.20 GMT.**

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