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Higher Revenue, Lower Net For EchoStar

Englewood, Colo. — EchoStar Communications reported total revenue of $2.47 billion for the quarter ended Sept. 30, a 16 percent increase compared with $2.13 billion for the corresponding period last year.

The company’s DISH Network also added about 295,000 net new subscribers during the third quarter, and ended the period with approximately 12.755 million total subscribers.

Meanwhile, net income totaled $140 million for the quarter, compared with $209 million during last year’s third quarter. Last year’s number included a non-recurring, non-cash benefit of about $73 million to recognize the tax benefits of previously reported tax losses.

In an investor conference call, EchoStar chairman Charlie Ergen said the company’s “gross and net subscriber adds was the most we’ve done in a quarter in some time.”

At the same time, the company’s churn ratio has remained “consistent the last four of five years,” Ergen said. He added that so-called triple play offers – combined TV, broadband and telephone services – from competitive cable and teleco services have not had as much of an impact on EchoStar’s business “as we read about everyday.”

The company continues to look at possible acquisitions and partnerships that make sense to bring a broadband offering to DISH subscribers, Ergen said, adding that offering the best quality video service remains EchoStar’s top priority. The company is also working on a satellite broadband offering with WildBlue and is piggybacking on DSL services with teleco partners.

EchoStar president Carl Vogel said the company also saw an increased take rate on PVR and HD TV products in the period.

As for the company’s pending litigation issues, Ergen said EchoStar is optimistic it will see a favorable outcome from its appeal of a TiVo patent infringement suit on PVR technology. He reminded that EchoStar also awaits the results of a PVR patent infringement claim it has filed against TiVo.

He noted that EchoStar has not been as fortunate in its battle to continue providing distant network signals to approximately 900,000 DISH network subscribers “who have done nothing wrong,” Ergen said.

He said that EchoStar will ask Congress to take up the case, and come to the aid of subscribers who are about to lose network TV signals when it reconvenes for a special session on Nov. 13th.

Ergen said many of the 900,000 distant network customers will be eligible to trade off for local-to-local network service, but he added that many of the most rural customers may not have access to some or all major networks through local broadcasts. If DISH loses its bid for Congressional assistance, it will try to install off-air antennas at some locations or seek to bring in lifeline cable service for network coverage.

He added that EchoStar will likely take a slight hit on average revenue per subscriber and higher churn, if an injunction remains in place and DISH Network is forced to shut off distant network channels on Dec. 1, as currently ordered.

Detailed financial data and other information are available in EchoStar’s Form 10-Q for the quarterly period ended Sept. 30, filed with the Securities and Exchange Commission.