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

Compliance: Hope Is Not a Plan

By: Special Guest    8/1/2018

Internal misalignment between compliance and business teams can lead to major problems for organizations seeking to implement new digital communicatio…

Read More

Modern Moms Shaping Influence

By: Maurice Nagle    7/19/2018

Everyone knows Mom knows best. The internet is enabling a new era in sharing, and sparking a more enlightened, communal shopping experience. Mommy blo…

Read More

Why People Don't Update Their Computers

By: Special Guest    7/13/2018

When the WannaCry ransomware attacked companies all over the world in 2017, experts soon realized it was meant to be stopped by regular updating. Even…

Read More

More Intelligence About The New Intelligence

By: Rich Tehrani    7/9/2018

TMC recently announced the launch of three new artificial intelligence events under the banner of The New Intelligence. I recently spoke with TMC's Ex…

Read More

Technology, Innovation, and Compliance: How Businesses Approach the Digital Age

By: Special Guest    6/29/2018

Organizations must align internally to achieve effective innovation. Companies should consider creating cross-functional teams or, at a minimum, incre…

Read More