Dish Network Beats Analyst Expectations With A Strong Third Quarter
NEW YORK – On Tuesday, Dish Network (NASDAQ:DISH) reported that the company is back in the black after earnings beat expectations. Based on the news, shares rose 6 percent in extremely heavy trading to close at $ 50.35 – breaking $ 50 per the first time this year.
The company report that net income swelled to $ 315 million compared to a $ 158 million loss during the same period last year. The result was well ahead of consensus estimates of $ 203.3 million. Earnings per share also beat expectations, coming in at $ .68 compared to the forecasted $ .43 per share. Sales were also up 2.3 percent to $ 2.5 billion.
For the third quarter, the company added more than 35,000 pay-TV customers, for 14 million subscribers, and churn, the difference between new customers and cancellations, fell to 1.7 percent, compared to 1.88 percent last year. Average revenue per user was also up, 5.3 percent to $ 81.05, mostly on the back of broadband subscriptions, which rose 24.2 percent to 385,000 users.
According to Citi analyst Jason Bazinet, subscriber additions widely beat estimates, which in many cases called for net subscriber losses. Based on these results, he expects the stock to trade higher. However, not every analyst is upbeat. Nomura’s Adam Likowitz, points out that despite subscriber beats, growing subscriber-related expenses will continue to put pressure on margins.
The positive quarter follows legal battles between the Dish Network, ABC (NYSE:DIS), and AMC (NASDAQ:AMC) which has cost the Dish Network in legal fees. In September, a U.S. district court judge ruled that DISH could continue selling their Hopper with allows customers skip commercials on DVR recorded programs. The Dish Network announced earlier this month that they would close the remaining 300 Blockbuster locations in a move that Likowitz expects would add to the company’s profitability going forward.
On Tuesday, the Dish Network also announced that they are close to reaching a comprehensive programming agreement with Disney. An agreement would avoid a blackout of ABC and ESPN. Dish Network’s prior agreement with Disney expired at the end of September; however, ongoing talks have allowed the Dish Network to keep Disney’s networks on the air.
According to Dish Network Chairman Charlie Ergen, Disney is looking for a multi-year contract, and ‘both sides are trying to look at where the technology is going…and what the world might look like in several year.’
A long-term agreement with Disney would be an advantage for the Dish Network as it would give them access to some of the most popular content available, especially ESPN. Regardless of what television looks like in three to five years, looking up Disney today would help Dish Network’s stock price in the near-term.