Dish Network Corp lost more subscribers than expected because of promotions from rivals such as DirecTV, but the satellite television provider paid shareholders a rare dividend, which sent its stock up as much as 7 percent.

The company said on Monday it would pay a one-time dividend of $2.00 per share, which analysts said placated investors who may have been worried about the cash strategy of Dish's billionaire chairman, Charlie Ergen.

(It) signals Chairman Charlie Ergen isn't going to hoard cash to build his wireless field of dreams, said Bernstein analyst Craig Moffett.

Ergen has been buying up a diverse array of assets over the past year, from bankrupt movie store chain Blockbuster to companies with wireless spectrum including DBSD and TerreStar.

Analysts have speculated that Ergen may want to build a national wireless network that could be used to deliver video to customers.

Moffett said that the dividend may have been welcomed, but Ergen's master plan and its possible cost are still perceived as murky by investors.

Ergen's grand strategy, whatever it is, isn't going to be cheap, and it's not clear who is going to fund it, Moffett said.

Brean Murray analyst Todd Mitchell said Dish occasionally rewards stockholders with a payout because its share structure would not favor ordinary shareholders if the company bought back stock since most shares are owned by Ergen.

Dish last announced a one-time dividend of $2 a share in November 2009.

The No.2 U.S. satellite TV provider 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.

Analyst Mitchell was expecting a loss of 25,000 subscribers.

ONLINE MOVIE SERVICE

Last week, DirecTV said it had gained more than 327,000 customers in the United States, its highest in seven years. The company, 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.

A key question to analysts is whether that service is attracting paid subscribers.

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

Dish, along with cable competitors including 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.

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 $3.65 billion.

Dish shares were up 5 percent at $24.66 on Monday morning, off an earlier high at $25.15.

(Reporting by Liana B. Baker in New York, additional reporting by Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty, Lisa Von Ahn and Matthew Lewis)

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