EchoStar Bullish Despite Analyst Concerns

[Satellite News – 3-19-08] While Dish Network Corp. claims the uncertain status of the AMC-14 satellite will not delays plans to enhance its high-definition (HD) programming line-up, industry analysts are not as certain.
    A March 15 Proton launch failure left the SES Americom satellite, which is intended to provide Dish service, short of its planned orbit. SES has not yet made a decision on what to do with the spacecraft, which is stable and performing normally.
        Dish Network still plans to increase its local HD offerings by more than 60 percent throughout the next two months. "The expansion of our HD programming over the next few months will proceed as planned," Charlie Ergen, chairman, CEO and president of Dish, said in a March 18 statement. "We are fortunate to have two more satellites scheduled for launch later this year to continue our HD rollout."
    Jeff Wlodarczak, a media equity analyst at Wachovia Capital Markets, is among those who think the AMC-14 satellite will only modestly affect the pay-TV providers plans. “We think the satellite launch problem is a modest negative for Dish, however, there appears to be a good chance that Dish’s delay in the launch of additional HDTV programming could only be a few months and that there will be enough life left on the satellite for SES to build and launch a replacement,” he said in a research note.
    Ben Swinburne, a media equity analyst at Morgan Stanley, believed the AMC-14 problems will have a more serious impact. “While steps made to shift the satellite to its intended geostationary orbit will likely result in a reduced operational life, we view the necessity for AMC-14 to reach the intended orbit in order to utilize its complete capacity as the more important issue for Dish,” he said in a research note.
    For Dish, the problems could not have come at a worse time, as the company struggled to met analysts expectations of subscriber additions in its most recent quarter. “Gross adds of 790,000 fell by 16 percent year over year and led to paltry net additions of 85,000, less than half of our 253,000 forecast,” Spencer Wang, a media equity analyst at Bear Stearns said in a research note. “Housing weakness, the overall economy, competition, and Dish’s slow rollout of HD locals, were the culprits.”
    Todd Mitchell, a media equity analyst at Kaufman Brothers said uncertainty surrounding AMC-14 only add to Dish’s subscriber problems. “If you look at EchoStar’s subscriber base, they have historically skewed more rural than DirecTV and certainly more rural than cable,” he said. “They have a relatively large percentage of subscribers in smaller markets where Dish has yet to launch local HD channels, and while they may not have a cable competitor, DirecTV is there now, and as a result [DirecTV] is likely to be the prime beneficiary of any delay on the part of the Dish Network in launching local HD services due to a satellite failure, or any other reason. Dish put out a press release saying it would be able to launch local HD in these markets without the new satellite, but it remains to be seen if solution will in fact give it the same coverage as a single bird.”