Sling TV gains help Dish ride out Maria losses

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(Reuters) – Dish Network Corp lost fewer-than-expected subscribers in the third quarter as its internet-based service Sling TV attracted more customers, offsetting a temporary hit from Hurricane Maria.

The U.S. satellite and internet TV provider said it wrote off monthly fees from around 145,000 subscribers in Puerto Rico and the U.S. Virgin Islands cut off by damage to infrastructure from the hurricane.

The lost subscriptions, which the company said should return as the islands get back on their feet, reduced third-quarter profit at the U.S. satellite TV service provider to 57 cents per share, below the average analyst estimates of 59 cents, according to Thomson Reuters I/B/E/S.

While the hurricane effects meant that overall pay-TV subscribers declined about 129,000 in the quarter, the company said it added about 16,000 net pay-TV subscribers in the mainland United States.

“This defies the trend seen thus far (at rival firms),” Barclays analysts said in a note on the results.

They said others in a sector that includes Charter Communications, Comcast and AT&T, had seen video losses accelerate in the third quarter due to competition from stripped down packages of services.

Analysts were expecting Dish to lose 155,000 subscribers, according to research firm FactSet StreetAccount.

Dish shares rose around 4 percent by midday in New York.

Dish, like other pay-TV providers, is battling a broader trend of cord-cutting, where consumers drop their TV packages for online streaming services such as Netflix Inc and Amazon.Com Inc’s Amazon Prime.

To counter the threat, the Colorado-based company in 2015 launched multi-channel internet offering Sling, for which it has said it is seeing demand beyond just younger consumers.

Evercore analysts estimated that Sling TV added between 224,000 and 264,000 video subscribers in the quarter, above Evercore’s forecast of 100,000.

Dish’s “churn” rate, or the percentage of subscribers who leave a service provider, fell to 1.57 percent, compared with 2.11 percent last year.

Gross new pay-TV subscribers still fell to 638,000 from 736,000 in the same period a year ago.

BROAD SPECTRUM

The company also faces intense competition in the traditional pay-TV market and has been buying up wireless airwaves, or spectrum, in recent years as its satellite business came under pressure.

After the collapse of merger talks between T-Mobile and Sprint, analysts said that Dish’s hoarding of spectrum assets makes it attractive to a telecom major.

J.P. Morgan analyst Philip Cusick said he believed the company would continue looking at M&A opportunities with traditional carriers and outside participants.

Moffett Nathanson analyst Craig Moffett was less impressed with the results.

“Yes its spectrum is still attractive. But only at a reasonable price,” he said. “And could Dish even consider selling its spectrum – say, to T-Mobile – for a reasonable price… to be left only with the satellite business?”

Net income attributable to Dish fell to $297 million, or 57 cents per share, in the three months ended Sept. 30 from $318 million, or 67 cents per share, a year earlier.

Revenue fell to $3.58 billion from $3.77 billion.