We've stumbled onto a dichotomy in the addition of subscribers in the world of satellite television and its cable competitors. Unfortunately for Dish Network (Nasdaq: DISH), it's having difficulty keeping up with its competition.
Oh, sure, its earnings for the most recent quarter were fine. In fact, they were better than fine, coming in at $259 million, or $0.58 per share. That was up 65% on the net income line from the $157 million, or $0.35 a share for the March quarter of 2007. The company's revenues were up 7.6% to $2.84 billion. The analysts who follow the company had only been expecting earnings of $0.52 per share on revenues of $2.83 billion.
Looked good, didn't it? Unquestionably. But perhaps more important was that the company's net subscriber additions dwindled to 35,000, an 89% tumble from the 310,000 adds a year earlier. And as if that weren't enough, its satellite video competitor, DirecTV (NYSE: DTV), added 275,000 U.S. customers, along with another 200,000 in Latin America.
And if it weren't enough to be skunked by your most direct competitor, Dish also watched as the cable group, including Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), Cablevision (NYSE: CVC), and Mediacom (Nasdaq: MCCC), all recorded solid subscriber additions for the quarter. It's therefore difficult to accept the notion of a year or so ago that a slowing economy had begun to cause a pullback in consumers' discretionary spending for television and other related services.
But it's probably also premature to pull the plug completely on Dish for its quarterly subscriber shortfall. The company is in the process of becoming the sole satellite provider for AT&T, a role it's previously shared with DirecTV.
For my money, the best current approach to Dish shares would be a hiatus to permit us to get at least one more quarter under our belts to better determine subscriber addition trends. In the vernacular of the dart throwers, let's call the company a "hold" for now.
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