Dish Network added 249,000 net subscribers in its last quarter to produce a year of 422,000 net additions, when it reported its full year figures this week, surprising most, us among them. There appears to be a process of DirecTV ceding Dish the low end subscriber base and focusing more and more on top end customers, which are more profitable.
Given that so far in 2009, prior to the last quarter, only 173,000 customers were added to the Dish network in three quarters, a clear indication that it was suffering for having lost the support of AT&T in marketing it DTH TV service in parts of the US. That support is now at DirecTV, but it paradoxically only added 119,000 net new subscribers when it reported last week and the consensus of analysts watching these stocks is that DirecTV is focusing on profits, not additions and is weeding out poor credit risk families.
DISH had quarterly revenues of $2.96 billion hardly up at all against last year, and net income was $179 million down on the $217 million it did a year ago, despite what is close to record subscriber growth. One issue that Dish management highlighted in its 10K form was that subscriber costs as a percentage of subscriber related revenue went up from 52.2% to 55.1% over the course of the year, with much of this related to increased content costs. These costs are programming expenses, in-home service and call center operations, billing, refurbishment and repair, subscriber and retention incentives. The remaining 44.9% has to pay for satellite and transmission expenses, equipment and subscriber acquisition costs and overheads. If it goes up by a similar amount next year, the bulk of Dish profits will go with it.
For the year DISH reported revenue of $11.66 billion compared with $11.62 billion and net income of $636 million, compared with $903 million. It may still be suffering, but this was all good enough news to drive the stock up 10% over the past few days.