Revenue Down, Expenses Up for Dish Network Q2

With Q2 revenue of $2.9 billion, Dish revenue was down from $2.91 billion last year and $2.95 billion in Q1. Also hurting the company’s bottom line was an increase in subscriber-related expenses, subscriber acquisition costs and satellite and transmission costs, according to DISH’s Securities and Exchange Commission 10Q filing. The company also spent about $196 million on litigation in its ongoing patent dispute with TiVo over DVR boxes.

The company netted 26,000 new subscribers in the quarter, for a total of about 13.61 million subscribers. During a conference call, Executive Vice President of Corporate Development Tom Cullen said the DTV transition helped the influx of subscribers, judging by the increase in calls to the company around June 12. A large marketing campaign also helped the increase, making it impossible to attribute subscribership growth to a single factor.

Recessionary “belt-tightening” continued to affect the company’s bottom line as the company lost some premium package subscribers, said Cullen, though Dish does not break out the numbers of subscribers to specific packages.

Dish is working on a mobile video product for the 700 MHz wireless spectrum, spectrum space the company acquired during an FCC auction last year (CD March 24/08 p1), though there won’t be “significant public activity” for a while, said Cullen.

EchoStar Takes $5 Million Charge for Legal Battle

EchoStar took a $5 million charge against Q2 earnings to cover possible liability in its legal battle against TiVo, the company said in a 10Q filed Monday with the SEC. TiVo said it’s seeking up to $975 million from EchoStar and Dish Network for contempt of court sanctions for sales made to Dish DVR subscribers April 2008 to June 2009. EchoStar officials said their company would be on the hook for more than $5 million if Dish couldn’t pay any court award, EchoStar officials said.

EchoStar’s Q2 net income improved to $101.8 million from $47.8 million a year earlier. The company posted a $110 million unrealized gain on its investment in Sirius. Revenue declined to $383.1 million from $483.3 million a year earlier as sales to Dish dropped to $204.2 million from $301 million. Sales to Bell ExpressVu declined to $70 million from $76.9 million. But services revenue improved to $99.4 million from $93 million.

The sharp drop in revenue was tied to a decline in digital STB sales to $338 million from $429.5 million. The downturn in Dish-related sales came amid lower subscriber growth, EchoStar said.

The decreases in revenue from Dish and Bell ExpressVu were partly offset by $5 million in EchoStar sales to its Dish Mexico joint venture. EchoStar committed to providing $112 million to the joint venture over 10 years, and about $46 million has been paid in cash, the company said. About $28 million of the rest also be paid in cash, EchoStar said. Dish Mexico is expected to use the QuetzSat-1 satellite, scheduled to launch in 2011. EchoStar will lease 24 of the satellite’s 32 transponders from SES on the Loral-built satellite that will be located at 77 degrees west. Dish Mexico will have eight transponders. EchoStar also invested in an AsiaSat joint venture in Taiwan, agreeing to supply $36 million over three years, the company said.

Meanwhile, EchoStar was sued July 2 by Northpoint Technology in a U.S. District Court in Texas, alleging that its products infringe a patent covering the use of multiple low-noise block convertor feedhorns, antennas used for satellite reception. The patent was granted in March 2001 to Carmen Tawil of Austin, Texas, and assigned Northpoint.

Echostar’s cable STB equipped with Sling Media’s place- shifting technology is in “numerous” beta tests with cable operators, with a goal of launching the service this year, EchoStar President Mark Jackson said. The Sling cable box will be a version of the EchoStar 922 satellite receiver that Dish is expected to ship later this year.