Dish Network in Possible Financial Crisis

Dish Network in Possible Financial Crisis:

by Hillary LaClair, Senior Editor
March 26, 2009

          CEO’s of major companies are always on the top of the payroll and often times the paycheck doesn’t come from a base salary but from different forms of incentives. Research analysts usually turn to the annual income of a company’s CEO to determine how well a company is really doing and to gauge how much longer he or she will be around. If professionals determine a company’s strength in this fashion then they would find overwhelming evidence that Dish Network is in serious trouble financially as compared to its closest competitors.

            Dish Network CEO and Chairman, Charles Ergen, has seen a gradual increase in pay for 2008. His compensation rose 4% last year to $2.66 million. This is a rise from the prior year’s $2.56 million. The money comes from something called option awards. To the average American this would seem like a large amount of money, but after taxes, the number decreases significantly. Taking into account that he is the CEO of the second largest satellite television provider in the entire United States and then comparing his end year salary to that of DirecTV’s Chase Carey – which was $13.9 million in 2007 – the number does not bode well for the satellite television provider that has already reported substantial losses in customer subscriptions.

            Dish Network was struck with its worst fiscal year in the company’s history. In 2008 the company reported a subscriber loss of 102,000, which is a company record. Dish also reported its lowest stock prices to date showing a drop of 66.5% for 2008, with another 5% drop just in the last few months resulting in a stock price to 11.11 dollars.

            Other top executives at Dish Network have posted salaries that really allow financial analysts to determine just how bad of a condition the company is in. Vice chairman Carl Vogel who has announced his resignation saw his total compensation reduced by 2.2% to $3.21 million from $3.28 million in 2007. Chief financial officer Bernard Han also saw is total compensation decrease as well by 0.3%, to $1.22 million from $1.23 million. Han received the same base salary as in 2007 ($400,000) but he did not receive a bonus in 2008, compared to 2007, when he received $20,000.

            Dish Network is currently in negotiations with Univision where it will decide whether or not to renew the Spanish speaking network’s contract, the 4^th most widely watched in the United States on average. In addition to recent disputes over carriage fees with Viacom, Dish Network has left financial experts wondering if the company may not be able to afford some of its bigger networks.

            Finally, Dish Network has been involved in many lawsuits this year and last that have cost the company dearly, including the most recent litigation with the FCC. The FCC claims that Dish Network representatives have been calling individuals on the do-not-call list in order to try to pick up more subscribers. Should this lawsuit follow that of a similar suit with DirecTV, Dish Network could face more than $5 million in settlement fees.