Satellite titans wage seesaw battle in Q2
EmptyNEW YORK -- Satellite TV giants DirecTV Group and EchoStar Communications reported somewhat diverging second-quarter results Thursday, with the former's subscriber growth better than a year ago, but profit declining, while the latter saw the opposite trends.
DirecTV launched a stock-buyback program and extended by three years an employment agreement with president and CEO Chase Carey. News Corp. is expected to transfer control over DirecTV to Liberty Media this year, and the contract will keep Carey in his post through the end of 2010.
The company said that it has completed a previous share repurchase of $1 billion and has authorized a new $1 billion program.
"We recognize this buyback does not answer the larger issues around our balance sheet and growing cash flow," Carey told analysts in a conference call to address remaining questions about future cash use. He emphasized it would be smarter to make long-term decisions about allocation of resources after control of the company changes hands and added he expects DirecTV to have more flexibility under Liberty as it had to keep the greater good of all News Corp. in mind at times in the past.
DirecTV said second-quarter earnings fell 2% to $448 million on a big jump in operating and other costs amid higher demand for its high-definition TV and DVR offerings, which also tends to make customers stay with the service longer.
Operating expenses jumped 22% to $3.4 billion because of higher depreciation and amortization costs, programming expenses and the increased customer acquisition and upgrade costs.
Revenue rose 17% to $4.14 billion, exceeding Wall Street expectations.
The company added 128,000 net subscribers, up from 125,000 last year, as average monthly churn declined to 1.58%. However, brass said it still was higher than hoped in the period, with Carey promising improvements in the coming quarters from a fine-tuning of credit policies. As of June 30, DirecTV had 16.32 million subscribers.
Average revenue per user rose 7% to $76.43 thanks to increased high-definition and DVR sales.
Meanwhile, EchoStar in a late regulatory filing said its second-quarter profit rose as it signed up more customers. Its profit increased from $168.8 million a year ago to $224.2 million.
Revenue rose from $2.5 billion to $2.8 billion as EchoStar added 170,000 net subscribers, compared with 195,000 last year. This meant it ended the first half with 13.6 million users.
Average revenue EchoStar per user came in at $66.06, up from $62.91 last year, while average subscriber acquisition costs fell from $683 to $645.
John Malone, chairman of future DirecTV owner Liberty Media, lauded Carey's "strong leadership" on Thursday. "Chase has overseen the growth of the company in an increasingly challenging environment and enabled it to build on its leadership position in the business," he said.