DirecTV Profit, Subscribers Rise in First Quarter

4:46 AM PST 05/05/2011 by Georg Szalai
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"We're pleased so far, and we'll see how it goes," CEO Mike White says about the recent launch of premium VOD movies and discusses a recent uptick in promotional activity by pay TV competitors.

NEW YORK - DirecTV on Thursday reported stronger than-expected first-quarter subscriber gains in the U.S. and Latin America and improved earnings, but mentioned a recent uptick in aggressive cable and telecom promotions. 

On a conference call, president and CEO Mike White said that could have a "modest" impact on the satellite TV giant's full-year subscriber growth, but emphasized that competition doesn't seem to be "dramatically different" and that demand for the company's services remains solid. 

White didn't share much insight on DirecTV's recent launch of a premium VOD service that allows some of the company's subscribers to watch select films for $29.99 just 60 days after their theatrical start, saying it is still in its early days.

"We're pleased so far, and we'll see how it goes," he said, adding that DirecTV is "very excited" as the premium VOD offer is "a great opportunity for our customers."

As the company has previously said, it didn't share any take rates for premium VOD, and White reiterated that the company doesn't plan to change pricing and windowing at this time.

The satellite TV provider added 184,000 net new U.S. subscribers in the latest period, up from a gain of 100,000 in the year-ago quarter, ending March with a total U.S. user base of 19.4 million. Wunderlich Securities analyst Matthew Harrigan had projected a gain of 113,000 subscribers, and Miller Tabak analyst David Joyce had expected 110,000 additions.

The company's Latin American unit continued to grow strongly, setting a record for quarterly subscriber additions.

Quarterly profit rose 21 percent to $674 million. The figure included a $25 million pre-tax gain from the sale of a 5 percent stake in the Game Show Network. DirecTV's first-quarter revenue increased 13 percent to $6.3 billion.

"Building on the momentum of one of our best years ever, DirecTV delivered another strong quarter of operating and financial results," said White. "Record-setting subscriber growth in Latin America and robust customer gains in the U.S. culminated in a nearly two-fold increase in consolidated net additions to 611,000."

Barclays Capital analyst James Ratcliffe said the results "reinforce our DirecTV thesis of continued strong execution in the U.S. business, rapid Latin America growth and aggressive capital returns."
 

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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