Satcaster in the black as sub count rises

EchoStar said Thursday that it swung to profit of $37 million in the second quarter from a $6 million loss the year before as the satcaster added 295,000 subscribers to the Dish network.

Revenue rose 21% to $1.7 billion.

Company also revealed in an SEC filing that it’s under investigation by attorney generals from 10 states who claim the company didn’t comply with consumer protection laws in advertising, handling customer complaints and other issues.

Littleton, Colo.-based EchoStar, which is seeking regulatory approval for a merger with larger rival DirecTV, said it is cooperating with the inquiry.

The subscriber growth beat most estimates, although it was slower than in the first quarter. Company is sticking by its forecast of reaching the 8 million sub mark by year’s end.

EchoStar’s gain may be DirecTV’s loss. The two companies, the nation’s only satellite providers, are still heated competitors. DirecTV lost subs in the quarter as it shifted the way it sells its service through retailers, including Radio Shack, where it used to have an exclusive contract. EchoStar started to sell its services through Radio Shack last spring.

EchoStar said it expects to increase revenue by 20% for the year — at the bottom end of previous estimates — as it cuts prices to compete with rival cable companies.

“Based on the competition from cable, which continues to be very strong, we decided that we needed a strong cash-and-carry offer that would compete,” chairman-CEO Charlie Ergen told analysts in a conference call. “We have extended some discounted programming that we offered last year.”

Ergen noted that Vivendi Universal was restricted from selling its 10% stake in EchoStar until the FCC and Justice Dept. rule on the DirecTV merger. But he indicated that he’s open to negotiating a way for Viv U to sell earlier.

The French media conglom said Wednesday that its stake in EchoStar, for which it paid $1.5 billion in January, was one of several assets it would consider selling to raise cash and pay down debt.

EchoStar shares jumped 10.68% Thursday to close at $17.

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