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EchoStar Revenue Jumps

5/05/2005 09:27:00 AM Eastern

Englewood, Colo. — Dish Network provider EchoStar Communications increased first-quarter revenue 28 percent, hitting $2 billion for the three months, ended March 31, compared with a year-ago $1.6 billion.

Operating income for the satellite TV equipment sales and support provider came in at $290.2 million, up from $122.2 million in the same three months last year.

The company moved into the black for the quarter, reporting net income of $317.5 million, compared with a net loss of $42.9 million in the first quarter of 2004. Net income for the first three months of 2005 includes a $134 million gain on an insurance settlement, while the increase also was attributable to higher operating income and a decrease in interest expense.

Dish Network added 325,000 net new subscribers in the first quarter, down 9.7 percent from the 360,000 added in the first three months a year earlier. This decrease was primarily a result of subscriber churn on a continuously increasing subscriber base. The monthly churn percentage dropped to 1.44 percent in the first quarter, down from a year-over-year 1.48 percent, which is a 2.7 percent decrease.

Even though the percentage monthly subscriber churn was low for the three months year-on-year, as the size of the sub base continues to increase, even if percentage sub churn remains constant or declines, increasing numbers of gross new subs are required to sustain the sub growth.

At the end of the quarter, Dish Network had 11.2 million subscribers, a 14.8 percent increase over the 9.8 million on board at the end of the first three months of the prior year.

Average revenue per subscriber in the first quarter hit $57, a 10.1 percent increase over the $51.76 recorded year-on-year. This is due to a reduction in the number of Dish Network subs receiving subsidized programming through free and discounted programming promotions, price increases and higher equipment rental fees.

At the same time, average subscriber acquisition costs per subscriber dropped to $416 for the first three months, a 21.5 percent decrease from the $530 reported in the same period last year. This was due to a higher number of Dish subscribers participating in the company’s equipment lease program and increases in the number of co-branded subs acquired during 2005.

Subscriber-related revenue for the three months totaled $1.9 billion, a 26.8 percent rise over the $1.5 billion reported a year earlier. The increase was directly attributable to Dish Network sub growth and an increase in the average revenue per subscriber.

Subscriber-related expenses totaled $990.1 million in the first quarter, a 28.3 percent rise over a year-on-year $771.6 million in the first three months of 2004. The increase was due to the number of Dish subscribers which resulted in increased expenses to support the network

In the first quarter, EchoStar earnings before interest, taxes, depreciation and amortization (EBITDA) reached $596.2 million, a 167.4 percent increase over the $222.9 million that came in for the first three months of 2004.

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