DirecTV Earnings Rise on HD Subscribers

May 8, 2008  •  Post A Comment

At least one satellite is weathering the storm.
DirecTV said Wednesday that first-quarter earnings rose 10%, largely on more subscribers and less turnover from its high-definition and digital-video recorder services. That signals that
DirecTV’s HD channel inventory is helping stave off competition from cable and fiber-optic companies.
With its 95 HD channels in more than 70 U.S. markets, the largest U.S. satellite television operator boosted its U.S. subscribers 5.3% from a year earlier to more than 17 million, or more than two-thirds of cable leader Comcast’s total. DirecTV’s first-quarter revenue jumped 17% to $4.59 billion, beating the $4.47 billion average analyst estimate in a Thomson Financial survey.
“While we believe all operators are benefiting from cyclically low churn rates due to a lack of housing velocity, DirecTV’s results are nevertheless exceptionally strong,” wrote Sanford C. Bernstein analyst Craig Moffett in a note to clients Wednesday.
At the root of the revenue and earnings growth was DirecTV’s HD and DVR subscription base, which surged more than 40% to more than 7 million, the company said in a conference call Wednesday. Because of greater demand for HD services, DirecTV had a 1.36% subscriber turnover rate, a 10-year low.
Seasonally lower HDTV sales and more competition from telecommunications companies such as Verizon and AT&T, which are adding customers by bundling Internet, television and phone services, may challenge DirecTV’s attempts to continue its growth in the second quarter.
In the longer term, the multibillion-dollar wireless broadband Clearwire partnership that includes Sprint Nextel, Time Warner Cable and Comcast—announced Wednesday—is likely to move some customers toward Internet television services, Mr. Moffett wrote.
Still, DirecTV is counting on a recently launched satellite, which goes into service in the third quarter, to add more customers by boosting its high-definition lead, Chief Executive Officer Chase Carey said on the call Wednesday.
“We’re competing very effectively against the bundle and other market forces out there,” Mr. Carey said. “We still have a unique position of leadership and the momentum to drive it.”


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