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EchoStar Q1 profit down more than 50%

Dish Network parent takes $74 million hit from TiVo verdict

Joyzelle Davis, Rocky Mountain News

Published May 11, 2006 at midnight

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EchoStar, the operator of the Dish Network satellite-TV service, reported first quarter profit fell by more than half, hurt by a $74 million bill for TiVo litigation and tough comparisons with the year before.

The Douglas County- based company reported net income of $147.3 million, or 33 cents a share, compared with $317.5 million, or 69 cents, a year earlier. Revenue soared 13 percent to $2.29 billion, EchoStar said in a regulatory filing.

Dish, which has more than 12 million customers, reported slower subscriber growth as marketing partner AT&T focused efforts on its own planned video service and cable rivals stepped up competition with a bundle of phone, video and Internet services. EchoStar added a net 225,000 customers, 100,000 fewer than a year earlier.

Aryeh Bourkoff, an analyst with UBS, anticipated EchoStar would report lower subscriber numbers in a note previewing the company's earnings after Comcast, Charter and Insight Communications reported strong first-quarter operating results and subscriber growth.

The pay-TV market is getting "increasingly competitive," he wrote. Larger rival DirecTV, which has more than 15 million customers, last week reported its first-quarter subscriber additions similarly slowed to 255,000 net new customers, compared with an increase of 505,000 a year earlier.

EchoStar released its earnings with little comment through a Securities and Exchange Commission filing. EchoStar Chief Executive Officer Charlie Ergen will provide more color on the company's earnings during a conference call today.

In the year-earlier quarter, EchoStar's earnings got a boost from a $134 million one-time gain from the settlement of an insurance claim over a malfunctioning satellite.

This year, EchoStar expensed the $74 million verdict in TiVo's claims that EchoStar violated its patents used in digital video recorders.

The Texas verdict may still be thrown out or possibly tripled in post-trial motions next month or appeals possibly months or years away, but EchoStar recorded the $74 million verdict in the first quarter to comply with SEC rules.

EchoStar

DISH: Nasdaq

$32.25

+ 13 cents