DirecTV Quarterly Results Beat Expectations
NEW YORK – Satellite TV giant DirecTV on Wednesday said it swung to a better-than-expected fourth-quarter profit and added more net subscribers than projected.
U.S. subscriber momentum exceeded expectations, and the company also continued to grow its Latin American subscribers in the latest period, which propelled it to its best quarter of total subscriber growth in 10 years.
DirecTV shares rose in early trading and set a 52-week high of $46.90 before closing up 1.8 percent at $45.03.
DirecTV added 667,000 net subscribers in the final period of 2010, including 289,000 in the U.S. - well ahead of the Wall Street consensus expectation of 200,000 for the U.S. and of the year-ago addition of 119,000 users. That allowed DirecTV to end 2010 with more than 19.2 million total U.S. customers. For all of 2010, DirecTV added 663,000 U.S. subscribers, compared with 939,000 in 2009.
For 2011, management predicted slightly lower subscriber growth amid increased competition, but the company said the year is off to a good start.
"Our fourth quarter results capped off one of DirecTV's strongest years ever as we further extended our position as the world's largest provider of pay television services with over 28 million subscribers in the U.S. and Latin America," said DirecTV president and CEO Mike White. "Fueled by the best quarter in a decade with 667,000 consolidated net additions, DirecTV added 1.9 million new subscribers in 2010 representing the second best year in our history.”
DirecTV posted a quarterly profit of $618 million, compared with a year-ago loss of $32 million that was weighed down by a charge related to a merger with part of John Malone’s Liberty Media. Revenue rose 11 percent to $6.62 billion. Those financials also exceeded Wall Street estimates.
DirecTV on Wednesday also announced a $6 billion stock buyback program.
On a conference call, White said the company is talking to movie studios about premium VOD-type early film releases that could lead to tests around mid-year.
He also once again called programming costs "our industry's biggest challenge," citing the costs of the NFL, regional sports networks and retransmission consent fees that broadcasters have been charging TV distributors.
Asked about what the FCC may do on the retrans issue, White said that while he likes the idea of an arbitration role for the FCC, the best the agency can do is likely adding transparency to the retrans process and retrans payments.
White also said that DirecTV wants to connect set-top boxes to the Internet to allow subscribers to watch streaming video. The goal is to have 40 percent of customers connected in 2013, he said.
The company said its launch of DirecTV Cinema led to 30 percent higher movie buy rates, which helped boost average revenue per user in the latest quarter.
Wall Street lauded the latest results from DirecTV, with Gimme Credit analyst Dave Novosel saying: "DirecTV continues to dominate the U.S. video business." Evercore Partners analyst Bryan Kraft said: "DirecTV's fourth-quarter results exceeded our estimates on virtually every metric."