EchoStar Compensates Customers After Spat With Viacom

29 March 2004

America's second largest satellite TV operator EchoStar (after NewsCorp's DirecTV) has offered each of its nine million-plus customers a credit of up to $2 (€1.65; £1.11) to atone for removing several channels -- among them CBS, Comedy Central and MTV -- from its transmissions for forty-eight hours during a dispute with media giant Viacom.

And although EchoStar chairman/ceo Charlie Ergen declined to quantify the value of the customer refunds, he warned investors and analysts they would "have the effect of reducing operating margins and free cashflow during the first quarter of 2004".

Ergen claimed the payback would not depress full-year results, although he declined to make any forecast or give guidance as to the likely results for 2004.

Ergen's statement accompanied the company's delayed Q4 and full year numbers for 2003. Q4 saw net earnings of $3 million compared with a net loss of $716m in the same period of 2002. Sales rose 12% to $1.51bn during the quarter.

For the full year, EchoStar reported sales of $5.7bn for the year as a whole ($4.8bn in 2002), generating net income of $225m. This compares with losses of $852m in 2002, when earnings were wiped-out by a $689.8m termination payment to General Motors after EchoStar's failed attempt to buy DirecTV, then owned by auto giant.

Data sourced from: Financial Times; additional content by WARC staff