EchoStar Launches Price Hike

But Moffett, who assigns a headline range of 6% to 8% to EchoStar's price increases, argues they are significantly larger than recent percentage price increases announced by major cable operators. EchoStar's increases apply to its entire video bundles -- including channels that would be on digital tiers for cable operators -- while headline price increases for cable operators tend to cover basic video tiers, Moffett says.

Thus, says Moffett, his 6% to 8% number for EchoStar compares with what he calls a 4.5% recent increase at Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks), the nation's largest operator of cable systems. Cablevision (CVC Quote - Cramer on CVC - Stock Picks), he points out, recently announced a 2.9% increase for basic programming, and increased prices for digital less than that.

Comcast reported monthly average video revenue per customer of $50 in the third quarter. Cablevision, by TheStreet.com's calculation, had over $64 in average monthly video revenue per customer in the same quarter.

Pot and Tea Kettle

Moffett says he sees irony in EchoStar's price increases, given that the company often rails publicly against cable programming rate increases. For example, in November, EchoStar issed a press release advising journalists to call the company for help in reporting stories about local cable rate increases. "Every year, cable companies raise their rates as they approach the holidays, delivering a lump of coal to their customers," read the release. "DISH Network can help you balance your story."

The chief factor behind this year's increases, says EchoStar, is a 7% increase in programming costs. Also contributing, says the company, is passage of legislation in 2004 requiring EchoStar to rejigger its lineup of local programming in certain markets.

The price increase "is not an example of rampant corporate greed," says Moffett. Operating expenses, particularly programming expenses, are still rising, he says, and customer acquisition costs for satellite operators have grown dramatically in the last 12 months. "These operators are rational businessmen who expect to make an acceptable return," says Moffett.

Moffett has a market-perform rating on EchoStar, and a price target of $35. EchoStar's stock fell 2 cents Wednesday to trade at $32.28.

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