Cracks at Dish Network will take time to repair

By Georg Szalai

NEW YORK (Hollywood Reporter) - In an economic downturn, shoppers tend to flock to big discounters like Wal-Mart. And for a long time, Dish Network has positioned itself as the Wal-Mart of satellite TV operators, with product appealing to the cost-conscious consumer who still wants options.

So, shouldn't things be fine and dandy for Charlie Ergen's company?

Well, perhaps in theory. Yet Dish just reported back-to-back quarters of subscriber declines, the first such drops since the launch of the U.S. satellite TV industry.

It turns out that Dish's lower-end customer base feels economic pressure faster and churns off. It's also hard to win over users from other service providers. That and some bad news in a long-running legal showdown with DVR pioneer TiVo has decimated Dish shares over the past six months, and the company hit a new 52-week low of $10.21 intra-day on Tuesday.

Which begs the question: Is the worst behind Dish shareholders?

Those hoping for a happy ending might have to wait, and it's not the kind of Twizzlers-sweetened wait found at your local movie theater. "Waiting for a turnaround at Dish Network has the flavor of waiting for Godot," Sanford C. Bernstein analyst Craig Moffett says in what must be a sobering assessment for investors -- even those who are Samuel Beckett fans.

Ergen is tenacious, so shareholders know he's working hard to address the issues his firm faces. However, little points to a quick resolution of Dish's business challenges. Or, as Moffett puts it, "Hope springs eternal, but there are few tangible signs in Dish's third-quarter results that signal a turn is near." He rates the stock a "market perform," with his $19 price target pointing to aspirations for an eventual rebound.

One of the subscriber challenges adding to a weak economy is Dish's co-marketing agreement with AT&T coming to an end in January, with competitor DirecTV set to become the telecom giant's new partner.