EchoStar’s Earnings Make a Turnaround

Satellite television provider EchoStar Communications Corp., continuing to lure cable subscribers, surpassed Wall Street expectations Tuesday by posting a $58-million profit in the first quarter, a strong turnaround from the losses it suffered in the same period last year.

The Littleton, Colo.-based company -- which has made money in only three quarters in the last nine years -- earned 12 cents a share, contrasted with a net loss of $35 million, or 20 cents, in the period a year earlier. The year-ago loss included a charge related to an investment in EchoStar by Vivendi Universal.

First-quarter revenue rose 23% to $1.36 billion

Wall Street rewarded the company for its strong quarterly performance, driving up Echo- Star’s stock 5% on Tuesday. The shares closed at $32.17, up $1.54, on Nasdaq, just below their 52-week high.

The stock has jumped 45% this year after the company’s yearlong attempt to merge with DirecTV owner Hughes Electronics Corp. was nixed last fall by federal regulators because of antitrust concerns.

During the quarter, EchoStar continued to grow faster than DirecTV, adding 350,000 customers, bringing the total to 8.53 million subscribers, up 19% from a year ago. DirecTV serves 11.4 million customers, an increase of 8.3% compared with the same quarter last year. Both companies continue to take subscribers from the cable industry.

EchoStar’s success stems partly from prices that beat cable operators and DirecTV. Even so, EchoStar said subscribers spent a record amount per month for the company’s Dish Network services during the quarter, paying an average of $51.48, up from $48.36 in the year-ago period.

Analysts, however, questioned whether EchoStar can maintain its fast growth as competition intensifies from both cable and DirecTV. Last month, News Corp. agreed to take control of Hughes from General Motors Corp.

During a conference call with analysts Tuesday, EchoStar Chief Executive Charles Ergen said the company’s strategy of being the pay-TV industry’s low-cost provider would protect it from competitive pressures.

He said that approach helped keep customers from terminating service. He acknowledged, however, that customer turnover might rise if the company loses a long-running court battle with several TV broadcasters, including News Corp.’s Fox and Viacom Inc.’s CBS.

The lawsuit, which is expected to be resolved this year, alleges that EchoStar’s rebroadcasting of local TV channels violates copyright law. The broadcasters asked a federal judge in Miami last month to ban Echo- Star from offering local channels. Ergen said Tuesday that about 60% of EchoStar’s customers receive at least one local channel and that subscribers may be inclined to cancel their service if these channels no longer are available.

EchoStar said it also was discussing a legal settlement with 13 states’ attorneys general who last year accused the company of violating consumer protection laws.