DirecTV Profit up 31 Percent on Fewer Subs, Latin America Growth

By Tara Seals February 14, 2013

The number one US satellite TV provider, DirecTV, grew its profit 31 percent year-over-year for the fourth quarter of 2012, even as subscriber additions ebbed. The success came on the back of success in Latin America and a strategic shift towards “premium” subscribers who contribute more ARPU to the company coffers.

The company beat Wall Street estimates handily for the fourth quarter, posting earnings of $942 million, or $1.55 per share, for the quarter ended Dec. 31. That's up from $718 million, or $1.02 per share, one year ago.

Even when discounting one-time tax effects and the sale of a stake in the Game Show Network, DirecTV earned $1.31 per share for the quarter, well over analyst estimates of $1.13 cents per share. And revenue was $8.05 billion, up 8 percent from a year ago—beating an $8.03 billion estimate.

The El Segundo, Calif., company crossed the 20 million subscriber threshold for the first time, putting it in the number three position by subscriber totals, behind Netflix and Comcast. It added 103,000 U.S. subscribers in the quarter, which represents a slight fall-off from Q4 2011, when it added 125,000.

The real story, however, is the fact that U.S. subscriber growth is down a full 70 percent for the year. The company added just 199,000 customers in 2012, down from 662,000 the year earlier—and it even lost U.S. subscribers for the first time in the second quarter. No matter, however—the subscribers it did add will prove to be cash-positive for the company as DirecTV veers away from promotional discounts for customer acquisition, and improves loyalty with better service.

DirecTV plans to spend $2 billion dollars in capital expenditures in 2013 to upgrade facilities but also invest in “subscriber upgrade programs,” according CEO Mike White, including equipment upgrades for long-term and loyal customers. Overall, ARPU should go up in the next three years, and the company expects to see growth in the mid-single digits in the U.S.

DirecTV gets 78 percent of its revenue from U.S. operations, but Latin America performed well for the company— DirecTV's Sky Brasil and PanAmericana added 658,000 subscribers, up from 590,000 a year ago.

It now has 10.3 million subs in the region, plus additions from Sky Mexico (it owns a 41 percent stake), which has another 5.2 million. It may soon step up its focus in the region: White said on the earnings call that the company is in the final throes of deciding whether to buy Vivendi SA's GVT, a Brazilian telecom operator, and should have an answer by the end of the first quarter.

For the full year, DirecTV earned $2.95 billion, or $4.58 per share, on revenue of $29.7 billion.




Edited by Rich Steeves

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Remote Work: The Future of IT

By: Special Guest    6/28/2017

Remote work opportunities are on the rise thanks to innovative technology that makes telecommuting and virtual collaboration more effective than ever …

Read More

WannaCry? No, It's Worse in New Ransomware Attack

By: Steve Anderson    6/28/2017

A wave of ransomware attacks strikes computers across much of the planet, leading some to wonder if WannaCry has made a return.

Read More

Surface Pro, Surface Book, Surface Notebook: The Choice Is Surprisingly Easy

By: Rob Enderle    6/27/2017

I've been using Microsoft's latest versions-or, in some cases, the only versions-of its Surface PC line of products. Each is very different in terms o…

Read More

Two Technologies That Showcase Good VR Could Cost $20K

By: Rob Enderle    6/23/2017

This month, there were two interesting product announcements. The first was in regard to very high-resolution displays that should arrive in VR headse…

Read More

Popularity of Voice Recognition Gadgets Highlights Need for Speech Analytics

By: Kayla Matthews    6/21/2017

Voice-activated personal assistant platforms such as Amazon's Alexa continue to grow in popularity, making lives easier in all sorts of ways. As such …

Read More