Dish Network Corp reported better-than-expected profit for the second quarter on Thursday. However, the company posted its biggest-ever drop in pay-TV customers mainly due to intense competition from online video services.
Shares fell more than 1 percent in early trading following the results.
The U.S. satellite TV provider reported it lost 281,000 net pay-TV customers in the latest quarter, well above a loss of 91,000 subscribers estimated by analysts.
The company reported net income of $410 million, or 88 cents a share for the three months ended June 30, up from $324 million, or 70 cents a share in the same period last year. Analysts surveyed by Thomson Reuters I/B/E/S were looking for earnings of 72 cents a share on $3.85 billion in revenue.
To make up for the losses in its key satellite-TV segment as audience gravitate toward other online video services like Netflix, Dish last year rolled out a low-cost Sling TV online streaming service that provides a slim bundle of channels, which include live programming from networks like ESPN.
When the company reveals pay-TV subscriber figure, it includes Sling TV and satellite TV customers. It doesn’t separately reveals Sling TV numbers, though experts say it has over 700,000 subscribers. According to MoffettNathanson analyst Craig Moffett, Dish is estimated to have added 49,000 Sling TV subscribers and to have lost 330,000 television subscribers.
The company’s net revenue jumped to $3.84 billion in the quarter, slightly above $3.83 billion in the year-earlier quarter. Dish reported that its average revenue per user surged to $89.98 from $87.91.
Dish’s core business is struggling and investors are wondering what CEO Charlie Ergen will do with wireless airwaves or spectrum on which the company has invested billions of dollars over the past year. Analysts say that the company has spectrum worth $45 billion.