DirecTV Reports Lower Fourth-Quarter Profit, Improved U.S. Subscriber Growth
AT&T is planning to acquire the Mike White-led satellite TV giant whose financials exceeded expectations and sub momentum accelerated partly due to "competitor programming disputes."
DirecTV on Thursday reported lower fourth-quarter earnings, but exceeded Wall Street expectations, and said it added more U.S. subscribers in the final quarter of 2014 than in the year-ago period.
The satellite TV giant posted earnings of $778 million, compared with $810 million in the year-ago period.
DirecTV, led by CEO Mike White, added 149,000 U.S. subscribers in the fourth quarter. In the year-ago period, it had added 93,000. For the full year 2014, DirecTV added 99,000 subscribers in the U.S., compared with a gain of 169,000 in 2013 and 199,000 in 2012.
The company said its stronger fourth-quarter momentum was partly due to "competitor programming disputes." Rival Dish Network had carriage disputes with CBS Corp. and Time Warner's Turner in the fourth quarter. DirecTV also cited "a successful new ad campaign, enhanced promotions [and] wider distribution in the consumer electronics channel" as helping subscriber growth in the fourth quarter.
Regulators are reviewing telecom giant AT&T's plan to acquire DirecTV.
"Our fourth-quarter results, although marked by challenging macroeconomic conditions in Latin America and a conscious decision to reinvest in our U.S. business, capped off another strong year of operations for DirecTV," said White. "In Latin America, despite the macroeconomic headwinds, our DirecTV and Sky brands attracted over 1.4 million net new customers — surpassing the 19 million cumulative subscriber mark by year-end."
He added that in the U.S. "despite operating in a mature, hyper-competitive market with significant cost pressures, we were able to improve our [operating profit] margins for the third consecutive year and surpass all of our 2014 plans for subscriber, revenue, [operating profit] and cash flow growth, while also making significant headway on improving both the customer service and entertainment experience."
Looking ahead, White said: "2015 will bring additional challenges to our businesses, but given our solid continued operating momentum and the pending merger with AT&T, I am confident that we will continue to drive value for our shareholders for the foreseeable future."
White said on a conference call with analysts that he has confidence the AT&T merger will close by the end of the first half of this year. All international and state applications have been approved, but the merger still needs approval from the FCC and Department of Justice, and he cautioned that it is "difficult" to say when those approvals will happen.