DISH Network Corp. (DISH) declared dismal third-quarter 2014 financial numbers, wherein both the bottom and the top line missed the Zacks Consensus Estimate.
At the end of the third quarter, DISH Network had approximately 14.041 million pay-TV subscribers, down 0.1% year over year. Meanwhile, the company lost 12,000 pay-TV subscribers but gained 28,000 broadband subscribers in the same quarter. At the end of the quarter under review, DISH Network had 553,000 broadband subscribers.
Quarterly net income came in at $145.5 million or 31 cents per share compared with net income of $314.9 million or 68 cent in the year-ago quarter. Earnings also missed the Zacks Consensus Estimate of 41 cents. Quarterly total revenue stood at approximately $3,679.3 million, up 5% year over year but below the Zacks Consensus Estimate of $3,701 million.
Segment wise, quarterly Subscriber-related revenues grossed $3,647.9 million, up 5.3% year over year. Equipment and merchandise sales & other revenues totaled $16.3 million, down 35.4% from the year-ago quarter. Equipment sales, services and other revenues from EchoStar added up to $15.2 million, down 5.2% year over year.
Average monthly subscriber churn pay-TV rate in the third quarter stood at 1.67% compared with 1.66% in the prior-year quarter. Average revenue per user was $84.39 against $80.98 in the year-ago quarter. Average subscriber acquisition cost in the third quarter was $861 versus $842 in the year-ago quarter.
In the reported quarter, Subscriber-related expenses crept up 7.9% year over year to $2,132.6 million. Total Subscriber acquisition costs declined 2.0% year over year to $486.5 million. Depreciation and amortization expenses were $269.9 million, highlighting an increase of 6.7% from the prior-year quarter. General and administrative expenses were up 2.8% year over year to $196.4 million.
Third-quarter 2014 operating profit was $388.5 million compared with $420.4 million in the prior-year quarter. Accordingly, the quarterly adjusted EBITDA stood at $604.8 million versus $787.8 million in the year-ago quarter.
For the nine month-period ended Sep 30, 2014, DISH Network generated $1,786.7 million in cash from continuing operations compared with $1669.3 million in the first nine months of 2013.
At the end of the third quarter, DISH Network had $9,272.1 million of cash and marketable securities and $11,789.6 million of outstanding debt on its balance sheet compared with $9,739.4 million and $12,596.8 million, respectively, at the end of 2013.
Our Take
DISH Network is steadily transforming itself from a low-priced leader in the U.S. pay-TV industry to a premium service provider in order to check subscriber churn. Moreover, the company’s plan to deploy triple-play services coupled with the increased rollout of its popular hopper devices will help it to drive subscriber growth and counter stiff competition from Netflix, Inc. (NFLX), AT&T Inc.’s (T) U-Verse and Verizon Communication Inc’.s (VZ) FiOS pay-TV services.
Currently, DISH Network carries a Zacks Rank #2 (Buy).
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