EchoStar Profit Rises, but Subscriber Growth Slows

EchoStar Communications, the second-largest U.S. satellite television operator, on Friday reported a rise in third-quarter profit but said subscriber growth slowed due to worsening economic conditions and increased competition.

EchoStar said it added 110,000 net new subscribers in the quarter -- down from 295,000 a year earlier. It now has 13.7 million subscribers, according to a regulatory filing.

The company said its customer churn, or rate of customer losses, rose to 1.94 percent from 1.76 percent a year ago partly due to increased competition and a rise in "non-pay disconnects primarily resulting from adverse economic conditions."

EchoStar had been seeing strong subscriber growth over the last year as its larger satellite TV rival DirecTV tightened up customer credit requirements in a bid to
reduce customer losses by winning higher quality subscribers.

EchoStar's management said in the filing that its gross number of new subscribers would likely continue to be hurt by attractive promotions from competitors, deteriorating housing market and increased mortgage defaults due to subprime lending practices.

EchoStar, which operates the Dish Network, said net income rose to $199.7 million, or 44 cents a share, from $139.6 million, or 31 cents a share. It said profit was boosted by selling customers higher priced services while reducing customer equipment costs.

Revenue rose to $2.794 billion up from $2.475 billion a year.

The results were slightly below Wall Street analysts' average expectations of profit of 45 cents a share and revenue of $2.811 billion, according to Reuters Estimates.

EchoStar said average revenue per subscriber rose 4.3 percent to $66.01 during the quarter up from $63.28 a year ago, mainly due to higher equipment rental and programming fees related to high-definition TV.

EchoStar and DirecTV face increasing competition from major cable companies like Comcast and Time Warner Cable , who offer customers attractively priced
packages of video, high-speed Internet and phone.

There is also increased competition from phone companies Verizon Communications and AT&T , who are both rolling out advanced digital video services alongside phone and Internet services.

EchoStar said in September it is considering spinning off its technology assets, leaving its satellite TV service as a separate publicly traded unit. This has raised speculation that AT&T may buy the satellite operator as a way to accelerate its roll-out of a video service to compete with cable.