Dish Network posts lower-than-expected profit, loses subscribers

November 9, 2016 6:15 AM EST

A satellite dish from Dish Network is pictured in Los Angeles, U.S., April 20, 2016. REUTERS/Mario Anzuoni


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By Malathi Nayak and Rishika Sadam

(Reuters) - U.S. satellite TV operator Dish Network Corp (NASDAQ: DISH) reported a lower-than-expected quarterly profit on Wednesday as it lost more pay-TV subscribers due to stiff competition from online video services.

Shares in Dish were up about 1.5 percent at $57.56 in early-afternoon trading after paring earlier losses.

Dish said it posted a smaller-than-expected loss of 116,000 pay-TV subscribers on a net basis in the third quarter ended Sept. 30, compared to a loss of 23,000 subscribers a year earlier.

Analysts on average had expected a decline of 142,000, according to market research firm FactSet StreetEstimate. Dish's pay-TV subscriber numbers include satellite TV and its online streaming service, Sling TV.

The company's satellite TV service, its mainstay, has been under pressure as more customers shift to online streaming services such as Netflix (NASDAQ: NFLX) and ditch traditional cable, a trend known as "cord-cutting".

Sling TV is expected to face tough competition from AT&T's upcoming DirecTV Now streaming video service and Hulu's live online TV service that is expected to launch next year, analysts say.

Last year, Dish launched Sling TV, a cheaper online streaming service with a slim bundle of channels, including live programing from networks such as ESPN. A monthly Sling TV subscription costs $20 for 28 channels and $40 for over 50 channels.

AT&T Inc (NYSE: T), which announced plans to buy Time Warner Inc (NYSE: TWX) last month for $85.4 billion, plans to launch DirecTV Now in late November. It will cost $35 per month, including mobile streaming costs, and have over 100 channels.

Dish will have to invest more on marketing Sling TV and "do creative deals" with content owners to compete, Recon Analytics analyst Roger Entner said.

Dish has amassed a treasure trove of wireless spectrum in recent years that analysts have valued at nearly $45 billion. The company has been long considered an acquisition target for AT&T or Verizon Communications Inc (NYSE: VZ) to boost their wireless networks.

AT&T's Time Warner deal "presumably takes AT&T out of the running as a potential suitor," MoffettNathanson analyst Craig Moffett said in a note on Wednesday.

Net income attributable to Dish rose to $307 million, or 64 cents per share, in the third quarter, from $196 million, or 42 cents per share, a year earlier.

Total revenue rose slightly to $3.75 billion from $3.73 billion.

Analysts on average had expected a profit of 68 cents per share and revenue of $3.74 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Rishika Sadam in Bengaluru; Editing by Saumyadeb Chakrabarty and Tom Brown)



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