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EchoStar pays out over TV suspension

/ Source: Financial Times

EchoStar, the second-largest satellite-TV company in the United States, has paid compensation to more than 9 million subscribers after its dispute with Viacom, the country's largest media group, led to channels such as CBS, MTV and Comedy Central being taken off the air.

The pay-TV group, which temporarily suspended broadcasting Viacom channels after a dispute over carriage fees, has offered credits of $1-$2 per subscriber.

Charlie Ergen, chairman and chief executive, said in its annual report: "These credits will have the effect of reducing operating margins and free cashflow during the first quarter of 2004."

The dispute was resolved after CBS channels were kept off the EchoStar platform for 48 hours. The impact is not expected to weigh on full-year results.

Ergen said the group would not be making any forecast or earnings guidance for 2004.

He was speaking after EchoStar reported its delayed fourth-quarter and full-year results for 2003, which were postponed from earlier in the month after the Securities and Exchange Commission asked the company to restate the previous year's figures.

For the fourth quarter of last year, the company reported net income of $3 million, reversing a net loss of $716 million in the same period of 2002. Full-year net income was $225 million, compared with losses of $852 million in the previous year, when earnings were undermined by a $689.8 million termination payment to General Motors following EchoStar's failed attempt to buy Hughes Electronics, GM's satellite and communications arm.

Sales rose 12 percent to $1.51 billion for the last quarter and from $4.8 billion to $5.7 billion for the year as a whole.