Dish Loses Subs Again

Dish Network Corp. saw a 5.1 percent rise in revenue in the third quarter compared to last year’s Q3 (to $2.94 billion) as it failed for the second straight quarter to increase its subscriber numbers.

The company lost 10,000 net subs in the quarter—not much for a company with more than 13 million subs. But before the second quarter of this year, the company had never reduced net subscribers in a quarter.

Net income was $92 million (20 cents per share) in the quarter, down from $200 million (45 cents per share) during Q3 2007, primarily due to impairments on marketable and non-marketable securities.

Looking ahead, Dish, along with the rest of the economy, could face slow going.

For starters, the loss of Dish’s distribution relationship with AT&T on Jan. 31, 2009, “may impair our ability to generate gross and net subscriber additions, increase churn and impair our ability to generate revenue growth,” Dish told the SEC in a filing.

The credit crisis is also a problem.

“We are highly leveraged and subject to numerous constraints on our ability to raise additional debt,” Dish told the SEC. “We may be required to raise and/or refinance indebtedness during unfavorable market conditions. Recent developments in the financial markets have made it more difficult for issuers of high yield indebtedness such as us to access capital markets at reasonable rates. We cannot predict with any certainty whether or not we will be impacted in the future by the current conditions, which may adversely affect our ability to refinance our indebtedness, or to secure additional financing to support our growth initiatives.”

What’s more, a portion of Dish’s portfolio is invested in some of those financial instruments at the core of the current crisis. Dish said it holds asset-backed securities, auction rate securities, mortgage-backed securities and special investment vehicles.

“The markets associated with these investments have experienced greatly reduced liquidity in recent months and therefore have adversely affected our liquidity,” the company said. “In addition, certain of these securities have defaulted or been materially downgraded causing us to record impairment charges. Should the credit ratings of these securities deteriorate further, we may be required to record additional impairment charges.”