When good news is scarce, it's best to rejoice in small glories. On that note, shares of conjoined satellite TV twins DISH Network (Nasdaq: DISH ) and EchoStar (Nasdaq: SATS ) are soaring today on mildly positive news.
After a year of losing subscribers, quarter by quarter, DISH finally managed to eke out a small sample of customer growth in the second quarter. And I do mean small: 26,000 net new subscribers is barely above redline. More than 730,000 gross subscriber lines were added, but 96% of that was canceled out by customers leaving the service, or trial-offer customers who never converted to long-term subscribers. DISH has 13.6 million paying customers now.
To put that performance into perspective, fellow entertainment-by-subscription maven Netflix (Nasdaq: NFLX ) added 289,000 net subscribers last quarter to land at 10.6 million customers. Satellite rival DirecTV (Nasdaq: DTV ) picked up 224,000 new accounts for a total north of 24 million.
In all fairness, we're comparing DISH going it alone versus last year's distribution partnership with AT&T (NYSE: T ) . And growth is growth, even if served in minuscule portions. In addition, the quarter treated both DISH and its umbilical infrastructure partner EchoStar pretty well in financial terms. DISH's sales held steady from last year at $2.9 billion, though EchoStar's revenue fell 21% to $383 million. Basic earnings per share stopped at $0.14 per share for DISH and $1.18 per share for EchoStar. Legal costs of the seemingly never-ending patent infringement campaign TiVo (Nasdaq: TIVO ) is waging on DISH took a bite out of the bottom line.
Still, if you wanted to invest in a broadcaster today, DISH wouldn't be it. In the immediate family, EchoStar's high-margin business model looks far more attractive. And DirecTV is beating DISH in the satellite arena with another fat-margin strategy that leaves mere table scraps for DISH. Don't forget Verizon (NYSE: VZ ) , either. The FiOS TV service is just learning to crawl and has a lot of growing up to do.
What do you think? Let me know in the comments box below.
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