March 21, 2008 in Business

Dish Network faces a plateful of woes

David Lieberman USA Today
 
File Associated Press photo

Dish markets itself as an economical alternative to its larger rival, DirecTV. Associated Press
(Full-size photo)

NEW YORK – When a just-launched satellite to transmit HDTV channels fell short of its orbit Friday, it looked like a metaphor for several things happening lately at Dish Network.

Shares in the No. 2 satellite company, formerly known as EchoStar, have plummeted 36 percent since early November, closing Wednesday at $28.05.

Investors wonder whether Dish Network can soar in a slowing economy as it grapples with delays in its rollout of HDTV channels and the loss of a patent-infringement case from TiVo.

Dish markets itself as an economical alternative to its larger rival, DirecTV. As a result, its 13.8 million subscribers tend to be more vulnerable to a recession.

“If you contrast EchoStar and DirecTV, you have John Edwards’ two Americas,” says Kaufman Bros. analyst Todd Mitchell.

The anemic economy contributed to lower-than-expected subscription growth at the end of 2007, CEO Charlie Ergen told analysts in late February.

Another factor, though, was a delay in offering additional HDTV channels – especially from local TV stations. Dish and DirecTV already beat most cable operators in transmitting HD versions of national services such as History Channel and HGTV.

Some of the satellites that Dish needs to handle the additional HD load were delayed last year. With launches planned for 2008, the company vowed to offer at least 100 channels in 100 markets by year’s end.

That’s why many analysts are eager to hear more about the launch in Kazakhstan that went awry late last week. It left a satellite that EchoStar planned to lease in an orbit that’s too low to be useful.

The satellite has enough fuel to boost itself into the proper orbit, but EchoStar said that might “substantially” reduce its useful life. Ergen said this week that two additional satellite launches this year mean the HD rollout “will proceed as planned.”


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