Dish Net stock rating lowered

Cut tied to loss of subscribers

By James Callan, Bloomberg News

Published August 20, 2008 at 12:53 p.m.
Updated August 20, 2008 at 11:54 p.m.

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Dish Network Corp., which lost 25,000 satellite-TV subscribers last quarter, had its stock rating cut by Sanford C. Bernstein & Co. on concern that defections will continue and the company will lose AT&T Inc. as a distributor.

Subscriber losses have increased and customer satisfaction has dropped, Craig Moffett, an analyst in New York, said Wednesday in a note to investors.

On Aug. 4, Dish cited weak economic conditions and promotions by competitors for the defections.

"Dish Network simply doesn't look competitive anymore," Moffett said. Moffett cut his recommendation to "underperform" from "market perform" and said the stock will be worth $25 in 12 months, lowering his estimate from $30.

Douglas County-based Dish fell $1.17, or 3.9 percent, to $28.84 in Nasdaq Stock Market trading. The stock has dropped 15 percent this year.

AT&T, a "crucial" distribution partner that accounts for 15 percent of new Dish subscribers, may not renew a contract that is expiring this year, Moffett said.

AT&T said last month it would terminate the contract, putting Dish in competition with DirecTV Group Inc. for a partnership with the largest U.S. phone company. AT&T will make a decision as early as the end of this year, spokesman Michael Coe said.

A ruling in a legal fight with TiVo Inc. could force Dish to shut down or replace as many as 4 million digital-video recorders as early as next month. The companies have sued each other over patents for the devices, and a judge is expected to rule on the case Sept. 4, Moffett said.

A merger with DirecTV doesn't look possible because of regulatory concerns, Moffett said.

Dish Network

DISH: Nasdaq

$28.84

DOWN $1.17

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