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Dish falls most in 23 years after earnings miss ahead of merger

A Dish Network satellite dish is shown on the roof of a home in Crockett, California, on July 31.  (David Paul Morris/Bloomberg)
By Todd Shields Bloomberg

Dish Network Corp. suffered its worst stock decline in 25 years after reporting disappointing third-quarter revenue and a drop in wireless customers that was much worse than analysts predicted.

Dish reported a 26-cent loss per share in the quarter, while analysts were projecting earnings of 6 cents for the provider of mobile service and satellite TV programming. The satellite TV provider has been transitioning to the wireless broadband business, but even on that front, the company disappointed: It lost nearly five times as many mobile customers as analysts had predicted.

The earnings report “is astonishingly bad,” MoffettNathanson LLC said in an earlier note. “The overwhelming probability here has always been that Dish would enter bankruptcy sometime in the next few years,” the firm said in its note, and “today’s results likely accelerate that.”

Shares fell 37% to $3.44 at closing in New York,

marking the lowest settlement price since 1998 and the stock’s worst single-day plunge ever. It was among the worst-performing stocks of the day.

Like other pay-TV providers, Dish has bled subscribers as viewers reject expensive channel packages and turn to streaming options. To stem its steady descent, the company has worked to shore up its wireless broadband, mobile and 5G business, acquiring spectrum from T-Mobile US Inc. and selling its Boost Mobile and Boost Infinite products through major retailers like Walmart Inc. and Inc.

In a bid to bolster Dish as a mobile network, co-founder and Chairman Charlie Ergen announced plans in August to merge Dish with EchoStar Corp., the satellite network operator it once owned, in an all-stock deal valued at about $4 billion.

Still, Monday’s results suggest difficulties ahead. In its statement, Dish said third-quarter revenue was $3.7 billion, below analysts’ estimates of $3.8 billion. Loss per share was 26 cents, compared with expected earnings of 6 cents for the provider of mobile service and satellite TV programming.

The company’s results “show challenges to making headway in the wireless market” against heavyweights including AT&T Inc., Verizon Communications Inc. and T-Mobile, Bloomberg Intelligence Senior Analyst John Butler wrote in a note Monday. The merger with EchoStar may provide enough capital to complete Dish’s network, but won’t solve the formidable competitive or technical hurdles it faces, Butler said.

Dish is further burdened by debt exceeding $20 billion and rising borrowing costs that have left it struggling to finance the wireless network.

Retail wireless subscribers decreased by 225,000, compared with an expected loss of 46,000. The drop left Dish with 7.5 million retail wireless subscribers, the company said. Dish’s pay-TV business, both from satellite and its Sling brand, lost 64,000 subscribers. That compared with an expected loss of 46,000.

As part of the merger, Chief Executive Officer Erik Carlson will depart Nov. 12, the company said in its statement Monday. Echostar head Hamid Akhavan will become president and CEO of the combined company the following day. The personnel changes were disclosed earlier by Ergen in an investors’ call.

The EchoStar transaction is expected to close by year’s end, according to Ergen.

Liberty Latin America Ltd. on Monday said it is to buy Dish airwaves rights in Puerto Rico and the US Virgin Islands – and about 120,000 prepaid mobile subscribers in those markets – in exchange for cash and international roaming credits.