EchoStar posts third quarter loss despite revenue gain

Satellite TV provider EchoStar Communications today posted a third-quarter loss of $168 million, or 35 cents a share, compared with a year-earlier profit of $3.1 million, or 1 cent a share. The company reported a 19.6% increase in revenue to $1.22 billion from $1.02 billion.

The loss, EchoStar said, was partially attributable to rights granted to Vivendi Universal which holds a 10% stake in the company that gives it a hedge against declines in EchoStar’s stock price. That price has dropped by about a third this year.

Increased revenues came on the backs of 320,000 additional subscribers who signed up for Dish Network service during the quarter. EchoStar now has 7.78 million total subs.

“It was a mixed quarter for us. We pretty much hit what we wanted to hit,” said Charlie Ergen, the company’s chairman and CEO.

While disappointed with higher churn, which resulted from the end of free trial periods, Ergen pointed out that average revenue per unit [ARPU] was up “a little bit.”

“That was a little surprise and shows we’re getting some good customers,” Ergen said. “We, as a company, are a material part of the new video growth in the United States and have been for a pretty long period of time. We continue to be a material factor in the marketplace.”

EchoStar also got bad news during the quarter as both the Federal Communications Commission and the Justice Department threw monkey wrenches into its proposed acquisition of rival DirecTV. The satellite provider is left with two recourses: litigate with the Justice Department or present a remedy that is acceptable to the federal bodies, Ergen said.

Litigation, he added, would probably go beyond the cut-off date that Hughes Network Systems, DirecTV’s parent company, has set for closing the deal.

“Obviously that leaves as the best option to come up with remedies that would be acceptable to regulatory authorities,” Ergen said. “That’s where our focus is. We’ve by no means given up on the merger.”