Rocket failure will delay launch of Dish Network's EchoStar XVI satellite

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The failure Monday of a Russian rocket carrying two communications satellites will force EchoStar (Nasdaq: SATS) to delay the launch of a satellite that Dish Network (Nasdaq: DISH) hoped to use to expand its HD channel capacity, EchoStar executives said Wednesday.

EchoStar had planned to launch the EchoStar XVI bird from the Baikonur cosmodrome in Kazakhstan next month, using a Proton rocket like the one that left two communications satellites stranded in low orbit. But EchoStar EVP and general counsel Dean Manson said EchoStar will keep the EchoStar XVI satellite in a Palo Alto, Calif., storage facility until an investigation into Monday's failed launch is completed.

"A malfunction in the upper stage appears to have left the satellites short of their intended orbits. While the investigation into what caused the malfunction of the upper stage has already commenced, it appears certain this will cause a delay of some sort in the scheduled September launch of EchoStar XVI," Manson told analysts on EchoStar's second quarter earnings call on Wednesday.

Last May, EchoStar announced that Dish Network would use EchoStar XVI, which contains 32 Ku-band transponders, to offer "expanded services, including HD programming."

In addition to operating satellites, EchoStar manufactures set-tops and other equipment for Dish Network and international cable and satellite providers. The company saw its second-quarter revenue increase 38 percent to $806 million. It posted $36 million (41 cents per share) in net income, up from $18 million (21 cents per share) during the same period last year.

EchoStar also manufacturers the Slingbox place-shifting set-top which is marketed to Dish subscribers. The company faces increased competition from Belkin and other technology providers developing similar products that allow viewers to remotely access programming from cable or satellite set-tops installed in their homes. But EchoStar CEO Michael Dugan suggested EchoStar will look to protect patents it owns for place-shifting technology.

"I would just say that Sling has a lot of IP [intellectual property] around their technology. Anybody is out there that we feel is violating it, we have to look carefully at that," Dugan said on the earnings call.

For more:
- see the earnings release

Special Report: Cable in the second quarter of 2012

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