EchoStar Returns to the Black After Seven Years

19 August 2002

America’s second largest satellite broadcaster EchoStar Communications finally emerged from the red after seven years in the profit wilderness, it was revealed Friday.

It did so in style, with a robust profit of $45.8 million (€46.39m; £29.77m) for the quarter to June 30. EchoStar also achieved a net subscriber gain of 295,000, way ahead of analysts' expectations and on track to celebrate the year end with 1.2m more subscribers than those it counted last New Year’s Day. This would lift total subscribers to its Dish Network service to around the eight million mark.

EBITDA (earnings before interest, tax depreciation and amortization), the most closely watched financial yardstick in satellite broadcasting, rose year-on-year from $134m to $237m, also bettering the prognostications of most forecasters.

The results, the first significant quarterly profit reported since the broadcaster went public in 1995, underline the progress it is making compared with its larger rival Hughes Electronics/DirecTV – currently in process of acquisition by EchoStar. Many industry observers believe, however, that the merger will be torpedoed by antitrust regulators.

EchoStar’s standing in competition circles has not been enhanced by a recent revelation that the attorneys general of ten states are conducting a comprehensive investigation into whether the company violated certain consumer protection laws. Under the microscope are refund practices, response times for customer requests and cancellation fees.

Chairman Charlie Ergen remained cool, conceding that the investigators have offered “some very constructive criticisms”, and that EchoStar is cooperating with the lawmen.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff