Dish Network Corp., the nation's second largest satellite TV operator, said Monday that net income fell 12 percent in the third quarter on the back of higher costs, including a reserve related to a lawsuit by TiVo Inc.

But the company also gained a surprisingly strong 241,000 net subscribers, the second consecutive increase in six quarters. Dish stepped up promotions to attract and retain subscribers, although such action hurt margins and ultimately, the bottom line.

Dish has been struggling to get its footing back after its strategy of being the low-cost provider didn't work as well as hoped when competitors began to aggressively discount as well. It is distracted by its patent infringement fight with TiVo and suffered signal theft and customer service problems.

In a surprise overture to investors Monday, Dish declared a one-time dividend of $2 per share, payable on Dec. 2 to shareholders of record on Nov. 20. Shares of Dish rose by $1, or 5.2 percent, to $20.15 in morning trading.

Sanford Bernstein analyst Craig Moffett said Dish turned in a mixed performance although the good outweighed the bad. The operator is getting its bearings back, but still isn't out of the woods.

"What finally tips the scales, however, is the one-time dividend. While a far cry from a recurring dividend that would clearly be better, the return of cash to shareholders is nevertheless a very welcome development," he said in a research note.

In the quarter, Dish earned $81 million, or 18 cents per share, compared with $92 million, or 20 cents, in the same quarter a year ago.

Revenue fell 1.5 percent to $2.89 billion. Dish missed the 44 cents per share in earnings and revenue of $2.93 billion that analysts were expecting, according to survey by Thomson Reuters.

Average monthly revenue received from subscribers fell to $69.51 from $69.82.

Operating costs rose by 7 percent in the quarter, including a $132 million increase to its reserve to handle possible damages from its latest round in the courts with TiVo.

The company also said it's testing a new alternative technology that won't infringe on TiVo's patented time-warp technology, a sign that it's not giving up its fight yet. Other pay-TV operators are paying TiVo royalties to use its technology, but Dish refuses to do so and has paid dearly for it in court judgments.

Free cash flow for the nine months ended Sept. 30 rose by 3.6 percent to $1.89 billion.