EchoStar Launches Price Hike

EchoStar (DISH) is playing catch-up on prices.

Starting Feb. 1, the operator of the Dish Network satellite service will raise prices on major programming packages by as much as 8%. The changes appear to outpace recent annual increases rolled out by major cable operators.

EchoStar, which has long labored to position itself as the cheaper alternative to cable TV, says the new prices reflect rising programming costs. The boost illustrates how EchoStar and fellow satellite operator DirecTV (DTV) continue to fight with cable operators for subscribers -- without using price cuts as a weapon.

"Investors have been fretting over the prospect of a price war in the multichannel industry for the last 12 to 18 months," says Sanford Bernstein analyst Craig Moffett. "And they keep being surprised by the fact that it isn't materializing."

All Over the Map

The Dish Network price increases fall unevenly across EchoStar's customers and programming packages, making the exact impact of the increase somewhat hard to pin down.

The monthly fee for what Moffett calls EchoStar's most heavily promoted introductory tier -- America's Top 60 package, accompanied by a side order of local channels where available -- is rising $2, or 6.7%, to $31.99. Other "America's Top" package monthly fees are rising, too; for example, the price of the America's Top 180 package with local channels is rising $3, or 6%, to $52.99. Packages without local channels, says Moffett, will rise as much as 8%.

But other programming packages have no price increases, notes EchoStar spokesman Steve Caulk, including EchoStar's Latino packages and virtually all international programming packages.

EchoStar calculates the average price increase at 4.3%, based in part on the $56.11 in average monthly revenue per subscriber that the company reported for the third quarter of 2004. The company also says the number is weighted to reflect customers' payment for services that aren't being affected by rate increases.