[Satellite News 05-12-09] Dish Network reported a 21 percent increase in its first quarter earnings to $312.7 million, the satellite pay-TV operator announced May 11. Dish reported revenues of $258.6 million in the 2008 first quarter.
    The gains came despite a 21 percent drop in subscribers — a loss of about 94,000 net subscribers — during the quarter. Dish Network, which has lost subscribers for four straight quarters, currently has 13.6 million subscribers.
    The results were the opposite for Dish Network’s main competitor, DirecTV, which added 460,000 net new U.S. subscriptions during the first quarter, bringing its total to 18.1 million U.S. customers. But DirecTV saw earnings decline 46 percent during the period to $201 million.
    The contrast in results exhibits the outcome of two drastically different business models dealing with a hampered U.S. economy. In August, Dish Network spokeswoman Francie Bauer told Satellite News that her company was launching a campaign to acquire customers affected by the Digital TV switchover with programming packages. The company also put up its entry-level converter box, the TR-40 CRA, for free when customers apply a $40 U.S. government coupon to the price.
    “We wanted to take this step to give over-the-air customers the chance to experience the technology of digital TV practically for free,” said Bauer. “And then, eventually, if they ever do decide to switch over to pay TV, they will think of us.”
    CFI Group analyst Philip Doriot, was skeptical of the program. “Most people who still work with broadcast television do so by choice,” he said. “It is not as if entry prices for either Dish Network or DirecTV have created a barrier for people to afford the services. A drop in price of $10 is not going to create the wave of customers Dish Network has not been seeing.”
    In its latest financial report, Dish Network CEO Charles Ergen said the transition to digital television did help Dish Network but not in a significant way. “We probably got some customers on the margin. It’s certainly a one-time shot, but it’s difficult to gauge which customers switched to Dish because of the digital transition because they rarely give a reason when signing up,” Ergen said during the first quarter report conference call.
    Ergen said the Dish Network service is a difficult to obtain in areas most affected by the digital switchover and that any subscriber benefit from the change would cease by the third quarter.
    According to Ergen, the company was surprised by subscriber additions from DirecTV, who sacrificed revenue for subscriber add-ons in the valuable Latin American TV market.