Dish Network Corp., the low-cost leader in a subscription-TV industry where growth comes from taking customers away from competitors, lifted fourth-quarter revenue by attracting budget-conscious customers with aggressive promotions.
As a result, the nation's second-largest satellite TV operator added 249,000 net subscribers during the quarter while several of its cable TV rivals lost ground. The increase in customers overshadowed a 17.5 percent drop in net income to drive shares higher by 80 cents, or 4 percent, to $20.77 in morning trading on Monday.
Dish said Monday that it earned $179 million, or 40 cents per share, in the quarter compared with $217 million, or 48 cents per share, in the prior year's quarter. The results exceeded the 32 cents per share in earnings that analysts had been expecting on average, according to Thomson Reuters.
Revenue rose by 1.4 percent to $2.96 billion, just slightly ahead of the $2.94 billion expected by analysts.
Investors focused on subscriber growth because it marks a continued turnaround at Dish. The fourth quarter is the third consecutive quarter of customer growth, following four quarters of declines - the first for the satellite TV operator.
Last year, Dish mounted an aggressive advertising campaign that targeted fellow satellite TV operator DirecTV Inc., claiming that its TV plans are cheaper. DirecTV said Dish compared plans that were not similar and sued for false advertising. The case is pending. The fight between the two is unusual; typically they've targeted their chief nemesis, cable TV.
Dish's strategy seems to be working, especially among recession-weary consumers.
Collins Stewart analyst Thomas Eagan was impressed by Dish's subscriber growth, which was 50,000 higher than Wall Street's estimate of 199,000.
"While most pay TV providers ... reported disappointing basic video subscriber additions, Dish reported numbers that exceeded estimates" without significantly hurting adjusted earnings and overspending to acquire customers, he said in a research note.
Comcast Corp., Time Warner Cable Inc. and Cablevision Systems Corp. had all lost video customers in the fourth quarter.
In the quarter, Dish said customer paid an average monthly bill of $70.04, up from $69.27, mainly due to price increases and more orders for the pricier high-definition TV packages.
For the year, Dish's earnings fell 30 percent to $636 million, or $1.42 per share, compared with $903 million, or $1.98 per share, in the prior-year period.
Annual revenue edged up slightly to $11.66 billion from $11.62 billion.
Dish, based in Englewood, Colo., had approximately 14.1 million subscribers at year's end after gaining about 422,000 subscribers during 2009.
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