DirecTV Loses Fewer U.S. Subs, Quarterly Earnings Rise
DirecTV on Thursday reported improved second-quarter earnings amid continued subscriber gains in Latin America, helped in part by the soccer World Cup, and lower U.S. subscriber losses.
The satellite TV giant, led by CEO Mike White, lost 34,000 U.S. TV customers in the period, compared with a loss of 84,000 in the year-ago quarter and a loss of 52,000 in the second quarter of 2012. It ended March with a total U.S. subscriber base of 20.23 million. Wunderlich Securities analyst Matthew Harrigan had forecast a subscriber drop of 72,000 in the seasonally weak second quarter.
Quarterly revenue grew 5 percent to $8.1 billion. Earnings of $806 million rose from $660 million in the year-ago period.
DirecTV recently agreed to be acquired by telecom giant AT&T for $48.5 billion. The deal was struck after cable giant Comcast earlier this year agreed to acquire Time Warner Cable for $45 billion. DirecTV CEO Mike White briefly addressed the merger during a conference call Thursday before asking analysts who were on the call that they stick to questions related to quarterly earnings.
"The more planning we do with our proposed merger with AT&T, the more excited I am about the opportunities for the combined company," he said. "We have filed all of the initial documents required by the FCC, DOJ and key countries in Latin America. In addition to that, the SEC provided comments on the S-4 that AT&T had filed on July 1. We're currently in the process of responding to them, and we fully expect to hold our shareholder vote in the September time frame."
White also said he has nothing new to report about negotiations with the NFL over its very popular Sunday Ticket product, but added: "I remain very confident that we will have an exclusive deal completed for the service by the end of this year."
The improved second-quarter financials were driven by higher profit and operating profit, as well as a $44 million improvement in foreign currency translation at Sky Brasil. Also, the year-ago period saw a $59 million drag from a non-cash pre-tax charge.
"Building on our first-quarter momentum, DirecTV delivered yet another excellent quarter of operating and financial results," said White. "DirecTV Latin America's second-quarter results highlight the tremendous success of our unparalleled FIFA World Cup coverage."
Sky Brasil and PanAmericana achieved record gross subscriber additions, resulting in strong DirecTV Latin America subscriber additions of 543,000, up from 165,000 in the year-ago period. The Latin American arm ended June with 12.47 million subscribers. Sky Brasil added 137,000 users after losing 80,000 in the year-ago period amid demand for the World Cup hosted by the country.
"Overall, DirecTV continues to deliver on our strategic imperatives as we prepare for the exciting opportunities that our merger with AT&T will bring to our customers, employees and key stakeholders," White said.