Dish Network, the nation's second largest provider of satellite TV service, said Thursday that its fourth-quarter net income rose 41 percent, beating Wall Street analysts' expectations even as it lost subscribers for the third straight quarter.
The Englewood, Colo., company ended the quarter with 156,000 fewer subscribers than it started, bringing the total customer base to 14.13 million — just 33,000 more than it had at the end of 2009.
Dish's stock fell 31 cents, or 1.4 percent, to close at $22.62. In intraday trading, it fell as low as $21.72.
Dish said its net income rose to $252 million, or 56 cents per share, for the three months ended Dec. 31, up from $179 million, or 40 cents per share, a year earlier.
Revenue rose 8 percent to $3.21 billion from $2.96 billion. However, revenue inched down 0.1 percent from the third quarter, as the company was unable to compensate fully for the loss of subscribers.
Analysts were expecting earnings of 53 cents per share on $3.21 billion in revenue, according to FactSet.
The results come a day after DirecTV Group Inc., Dish's larger rival, said it added 289,000 U.S. subscribers in the U.S., its best fourth-quarter performance since 2008. DirecTV ended the quarter with 19.2 million U.S. subscribers.
Dish said the loss of subscribers was mainly due to customers canceling service, rather than a change in the number of subscribers fresh to the company. In particular, Dish said subscribers were leaving because of intense competition from other providers, weak economic conditions and disputes with broadcasters that have temporarily left viewers without access to certain channels.
"Frankly, I would say we still have executional issues internally in sales, marketing, as well as retention," added CEO Charlie Ergen in a conference call.
A fee dispute with News Corp. left Dish viewers without Fox programming for most October. Cablevision Systems Corp. had a similar dust-up with News Corp. that month and lost viewers, too.
There might be fewer such disputes this year. Ergen said fewer contracts are up for re-negotiation this year than in 2009 or 2010.
Ergen said a recent across-the-board rate hike of $5 per month might prompt some cancellations by customers, but said rates remain competitive. In the quarter, Dish subscribers paid an average of about $76 per month, compared to $97 at DirecTV.
Ergen also signaled that maintaining profits is more important than cutting prices to gain subscribers.
Dish "can't go out and match every programming offer and give away the store just to get a customer to please Wall Street," Ergen said on the call.
For 2010, Dish reported net income of $984.7 million, or $2.20 per share, up from $635.5 million, or $1.42 per share, in 2009. Annual revenue rose to $12.64 billion from $11.66 billion.
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