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DirecTV Posts Q1 Profit

May 4, 2006  •  Post A Comment

DirecTV Group reported a first-quarter profit of $235 million, compared with a year-earlier loss, as the company benefited from a decline in the rate of subscriber disconnects even as the pace of subscriber additions slowed.

The satellite company said a reduction in the cost of signing up new customers and its efforts to attract customers with positive credit histories drove the company into the black in the first quarter. A year ago DirecTV posted a loss of $41 million. DirecTV’s profit was 17 cents per share, compared with a 3 cents-per-share loss a year ago.

Revenue advanced 8 percent to $3.4 billion, fueled by the addition of 255,000 new subscribers in the quarter as well as by subscribers’ paying higher bills for services such as digital video recorders and high-definition television.

DirecTV and its rival EchoStar Communications are facing increased competition from cable companies that are successfully packaging their television product with high-speed Internet and telephone services to drive subscription rates. DirecTV’s strategy is to focus on high-paying customers rather than on gaining market share.

The company’s subscriber growth of 255,000 in the quarter was down from the 505,000 customers added in the 2005 first quarter, but the company stressed the quality of the 2006 customer additions was higher. That helped to reduce the number of customer defections, known in the industry as churn, to 1.45 percent from a year-earlier rate of 1.49 percent.

DirecTV had 15.4 million subscribers at the end of the quarter, up 7 percent from a year earlier.