EchoStar Communications, the No. 2 television satcaster, Wednesday reported fourth-quarter profits soaring as high as its satellites.
Earnings rose to $70.1 million from $2.7 million a year earlier. Revenue was up 28% to $1.93 billion from $1.51 billion last year, the company said in a filing with the U.S. Securities and Exchange Commission.
The company also said its audit committee found problems with record-keeping in earlier years. EchoStar’s audit committee is examining the company’s accounting, and the SEC has opened an inquiry into chairman-CEO Charles Ergen’s role, people familiar with the matter said this month. EchoStar said Wednesday in the filing that it received a telephone call from the SEC’s enforcement division inquiring about these issues.
The audit committee reported “one instance in which one of our executive officers in charge of certain business functions directed the preparation, in prior years, of inaccurate documentation that was used to determine payments made to a vendor,” EchoStar said in the filing.
EchoStar may have improperly booked transactions with suppliers and made suspect consulting payments to a friend of Ergen, people familiar with an internal probe of the company’s accounting said this month.
Ergen, 52, who founded the company with his wife and a friend in 1980, controls 91% of EchoStar’s voting rights through a separate class of super-voting stock.
“We are … implementing several changes recommended by the Audit Committee to our governance, operating and control policies and procedures,” EchoStar said. “We have also taken disciplinary action and other steps to remediate the conduct underlying the deficiencies identified by the Audit Committee’s Review.”
EchoStar has one of the worst corporate governance ratings in the U.S., hurt by Ergen’s control of voting rights and the fact that five of eight board members are insiders. The company ranked lower than at least 2,925 of the 3,000 companies in the Russell 3000 index, according to Institutional Shareholder Services, which advises investors on proxy voting.
Shares of EchoStar rose 39% to $28.83 in Nasdaq Stock Market composite trading, before the company’s filing was disclosed. The shares have fallen 17% in the past year.