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DISH Network: Trimming Its Sails, Banking On Broadband

Published on February 24, 2012

DISH Network defied analysts yesterday by reporting a profit for Q4 2011. In an investor call, the company reported total revenue of $3.63 billion for Q4, a 13% increase over the same period in 2010.

President and CEO Joe Clayton claimed that "By introducing new Blockbuster-branded services, we've begun to turn the tide in subscriber losses while continuing to face increased competitive pressures.” He also heralded introducing DISH’s Hopper product this quarter, “The most technically advanced whole-home HD DVR in the world.”

The Blockbuster statement is a bit of a puzzlement. As Deadline New York reports, DISH Network plans to close 500 of its 1,500 Blockbuster stores in this quarter. DISH acquired Blockbuster last April, for a consistent operating loss, owed to “increasing competition from video rental kiosk [like RedBox], streaming and mail order businesses [like Netflix].” But DISH will jettison only the underperforming stores--about 1,000 of them still turn a profit.

DISH Network gained approximately 22,000 net subscribers in Q4, for a total of just under 14 million subscribers at year-end. Still, that represents a loss for the year: net subscribers decreased by approximately 166,000 for the full year ended Dec. 31, 2011.

Meanwhile, DISH Network is “amassing airwave spectrum to offer wireless broadband services,” says Deadline, and is perceived as a candidate for merger or acquisition. Dish Chairman DISH is awaiting FCC approval for the network to buy wireless spectrum from TerreStar for $1.4 billion, which the network will use to offer new broadband services. “I think we’d be disruptive in the wireless business,” Ergen says. “It would transform not only our company but the way people use wireless in the United States,” said Ergen He acknowledged that the company must hedge its bets with wireless broadband (a field in which the Obama wants more competition), and less focus on satellite delivered video. Ergen acknowledged that cable, AT&T and Verizon are best poised to take advantage of wireless broadband, but DISH Network will compete strongly for a share.