Dish earnings wiped out by surge in costs

AMERICAN satellite TV powerhouse Dish Network yesterday said its profits fell 40 per cent in the first quarter of the year, hurt by higher programming, subscriber-acquisition costs, and fewer new subscribers than expected.

The company added a net 36,000 subscribers in the quarter, down from 104,000 a year earlier. Analysts had expected 68,000, according to StreetAccount.

Dish, which made a $25.5bn (£16.3bn) offer for Sprint Nextel last month, has been waiting for a response from Sprint’s special committee, which is analysing its bid and a rival offer from Japan’s SoftBank.

Dish’s offer for Sprint is part of chairman Charlie Ergen’s strategy to diversify Dish beyond its core pay-TV business, which faces tough competition from cable, telecom and internet video providers.

Ergen said yesterday he could end up putting the entire satellite TV company up for sale if he lost his battle to buy Sprint.

But he added on a conference call with analysts that he could also take on a bidding partner or even sell some non-core Dish assets to pay down debt if a bidding war with SoftBank became too expensive.

The firm’s net profit in the quarter fell to $215.6m from $360.3m a year earlier.

Revenue dropped marginally to $3.56bn, mainly due to a weak performance of its Blockbuster video rental business, which Dish bought in a bankruptcy auction last year.

Blockbuster revenue fell 46 per cent to $180.3m, mainly because Dish sold the British unit of the video rental company to private equity firm Gordon Brothers Europe.

Meanwhile securities filings showed that SoftBank expects more than $3bn in annual cost savings by 2017 if it succeeds in buying Sprint.

Dish has said its offer is more compelling because it would achieve $11bn in cost savings and create a national provider of video, broadband and voice services.