Dish Network Q3 2010 Earnings Call Transcript

Dish Network (DISH)

Q3 2010 Earnings Call

November 05, 2010 12:00 pm ET

Executives

Jason Kiser - Treasurer

Bernard Han - Chief Operating Officer and Executive Vice President

Robert Olson - Chief Financial Officer, Principal Financial Accounting Officer and Executive Vice President

Charles Ergen - Co-Founder, Chairman of the Board, Chief Executive Officer and President

Stanton Dodge - EVP, General Counsel and Secretary

Tom Cullen - Executive Vice President of Programming, Sales and Marketing

Analysts

John Hodulik - UBS Investment Bank

Bryan Kraft - Evercore Partners Inc.

Jason Bazinet - Citigroup Inc

Stefan Anninger - Crédit Suisse AG

James Ratcliffe - Barclays Capital

Marci Ryvicker - Wells Fargo Securities, LLC

Douglas Mitchelson - Deutsche Bank AG

Todd Mitchell - Kaufman Bros., L.P.

Tuna Amobi - S&P Equity Research

Craig Moffett - Bernstein Research

Presentation

Operator

Compare to:
Previous Statements by DISH
» DISH Network Corporation Q2 2010 Earnings Call Transcript
» Dish Network Q1 2010 Earnings Call Transcript
» Dish Network Corp. Q4 2009 Earnings Call Transcript

Good afternoon. My name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the DISH Network Corporation Third Quarter 2010 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Treasurer, Jason Kiser, you may begin your conference.

Jason Kiser

Thanks, Tracy. And thanks for joining us. This is Jason Kiser, Treasurer here at DISH Network. I'm joined today by Charlie Ergen, Chairman and CEO; Tom Cullen, Executive Vice President; Bernie Han, COO; Robert Olson, our CFO; Paul Orban, our Controller; and Stanton Dodge, our General Counsel.

Before we open up to Q&A, we do need to do our Safe Harbor disclosure. So for that, we will turn it over.

Stanton Dodge

Good morning, everyone, and thanks, Jason. We invite media to participate in listen-only mode on the call and ask that you not identify participants or their firms in your reports. We also do not allow audio taping and ask that you respect that. All statements we make during this call that are not statements of historical fact constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that could cause our actual results to be marginally different from historical results and from any future results expressed or implied by such forward-looking statements. For a list of those factors, please refer to the front of our 10-Q.

All cautionary statements we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. And with that out of the way, I'll turn it back over to Jason.

Jason Kiser

Thanks. And so, Tracy, we're just going to go straight into the Q&A. So if you would to open up the line, we're ready to go.

Question-and-Answer Session

Operator

[Operator Instructions] You're first question comes the line of James Ratcliffe, Barclays Capital.

James Ratcliffe - Barclays Capital

First of all, pretty strong ARPU growth in the quarter. I'm wondering, can you talk a little bit more color about how much of that was driven by more advanced services subs versus the flow-through from price increases? And it sounds like a little less willingness to concede to customers if they were threatening to churn? And secondly, Charlie, can you give us an overview on what you're thinking about capital allocation at this point? Because several other companies in this space have made a lot of efforts lately to clarify their capital allocation strategy and increase the return to capital to shareholders? I mean, last year, you did a big onetime dividend. And are you seeing anything similar this year? Your leverage is well below the rest of the space. And you're at the point you could probably take it private and be 1 to 3x levered. So I'm just wondering what's driving the choice to have that kind of a leveraged profile? And is it looking for security or is there some other use for the cash that you're preparing for?

Charles Ergen

I'll take the part of the question directed at me and maybe, Robert, you want to -- maybe you talk about ARPU after I finish. Well, capital allocation, A, is one thing we do think about a fair amount. So even though we haven't really articulated a lot of what we're thinking in terms of actual action, I think we've articulated on these calls our thought process. And a couple of factors that we would say. One is that when you look at the overall economy and kind of where we think that's going to go and kind of factor that in our plans, and obviously, the economic outlook is still not real optimistic at this point. Second, we need to know what tax policy is going to be. Tax policy, if the tax rates are going to go up, a dividend gets more attractive. If tax rates are going to up, leverage could make some sense. If tax rates aren't going to go up, then it's probably a better economic climate from a strategic investment point of view. We have our own -- and also, in an economic environment that doesn't look that optimistic to us, at the same time, I would say that there appears to be an awful lot of opportunity out there as well. And then our overall business is changing a little bit from just putting in video products to whatever the next thing that the trends are. And certainly, you may have questions ultimately on things like over-the-top video and things like that. So we look at all those factors. Then what's the price of our stock, right? So do we think that price is fairly valued, overvalued, undervalued? So we look at all those factors and we try to make some decisions. And we also have a TiVo case, which has a material impact on our business one way or the other, which isn't resolved yet. So all those factors are things that make us, I guess, fairly conservative in terms of what we're doing. We don't think we're missing a particular decision or a particular investment. And when we do think that last year, we were concerned that tax rates might go up even before they were supposed to, and so we did that onetime return to shareholders. So those are the factors we look at. And if you can tell me what the tax policy is going to be, if you can tell me what interest rates are going to do, if you can tell me what the resolution on TiVo case is going to be, if you could tell me what the -- then I think we can make rational decisions. But the only thing that might run away from us would be tax -- at this point, the thing we're probably keeping our biggest eye on is tax policy. Because that could drive us one way or the other. That could be resolved as early as three weeks from now or it could be three months from now, but we're probably going to get some indication from the government as to what that's going to be. And Robert, you want to take the...

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