Dish Network Corp lost more subscribers than expected because of promotions from rivals such as DirecTV, but the satellite television provider paid its shareholders a surprise dividend on Monday.

Dish lost 111,000 subscribers in the third quarter, bringing its total base to about 13.9 million, down 2.4 percent from a year earlier.

Brean Murray analyst Todd Mitchell was expecting a loss of 25,000 subscribers.

Last week, DirecTV said it had gained more than 327,000 million customers in the United States, its highest in seven years. The company, which is Dish's biggest rival, attracted new subscribers by heavily promoting its NFL Sunday Ticket package of out-of-market football games as a free service for a year to new customers who switched from a rival.

Dish just didn't go to market against the Sunday Ticket promotion, Mitchell said. It wasn't a focus.

Instead, Dish put its marketing dollars into promoting a new online movie service from its Blockbuster brand, which it acquired last April, he added.

In September, the company made a move to better compete against rental giant Netflix Inc by announcing the video streaming service called Blockbuster Movie Pass.

Analysts will be listening on Dish's conference call on Monday for any details on whether that service is attracting paid subscribers.

In a statement, Dish Chief Executive Officer Joe Clayton blamed the quarter's losses on aggressive competitive promotion offers by rivals and a weak housing market.

Dish, along with cable competitors such as Cablevision Systems Corp, has been blaming the weak economy for stunting housing growth and hurting its businesses. If people are not moving into new homes, they will not sign up for new TV services.

The company also announced a one-time dividend of $2.00 per share. Mitchell said Dish occasionally rewards stockholders with a payout because its share structure, with a class of stock owned by billionaire Chairman Charlie Ergen, makes it harder to buy back shares like other companies.

(It's) likely to placate investors who were looking for more operational strength, ISI analyst Vijay Jayant said in a research note.

Dish posted net income of $319 million, or 71 cents per share, up from $244.9 million, or 55 cents per share, a year earlier.

The results missed Wall Street expectations of 73 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 12.3 percent to $3.60 billion, slightly below analysts' expectations of $3.64 billion.

Shares of Dish were down 0.6 percent at $23.35 in premarket trading.

(Reporting by Liana B. Baker and Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty and Lisa Von Ahn)

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