Subscriber Surge Sharply Cuts EchoStar’s Loss

EchoStar Communications Corp.’s first-quarter loss narrowed more than expected as the second-largest U.S. satellite broadcaster added 460,000 customers for television dishes and service.

The loss shrank to $167 million, or 35 cents a share, from $185.1 million, or 40 cents, in the year-earlier quarter. Sales rose 52% to $861.9 million, spokesman Marc Lumpkin said. The stock rose as much as 13% in early trading.

EchoStar’s Dish Network satellite-TV service added 35% more subscribers in its first quarter than bigger rival DirecTV, a unit of Hughes Electronics Corp. DirecTV added 340,000 customers in the quarter for a total of 9.8 million. EchoStar had 5.72 million at the quarter’s end, 48% more than a year earlier.

“The quarter was incredible,” said Rob Kaimowitz, an analyst at SG Cowen with a “strong buy” rating on EchoStar stock. “They blew away subscriber” estimates, said Kaimowitz, who expected EchoStar to add 350,000 to 400,000 customers.

EchoStar shares rose $4.63 to close at $36.93 on Nasdaq. They have fallen 42% in the last year.

The company had earnings before interest, taxes, depreciation and amortization of $51.1 million in its first quarter, more than Kaimowitz’s estimate of $31 million. A year earlier, it had a loss before those items of $87.6 million.

Total Dish Network’s operating expenses rose 44% to $390.2 million from $270.1 million as EchoStar spent more to win new customers.

Excluding a $92-million charge to reduce the value of some investments, EchoStar said it would have had a loss of $75 million, or 16 cents, based on the number of common shares outstanding.

On that basis, the company was expected to have a per-share loss of 24 cents, the average estimate of analysts surveyed by First Call/Thomson Financial.