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

Rising Mobile Broadband Accessibility and Usage Impacting Global Social and Economic Growth

By: Laura Stotler    5/28/2015

Information and communication technologies (ICTs) are having a direct impact on social and economic development, according to interesting new research…

Read More

Avago Technologies Acquisition of Broadcom: Let The Chips Fall Where They May

By: Peter Bernstein    5/28/2015

With a combined valuation of roughly $77 Billion and revenues of $15 Billion once the transaction closes the new Avago will have the human and technic…

Read More

Digital Ad Viewability: The New Metric for Monetization

By: Tara Seals    5/28/2015

Verizon Communications raised a few eyebrows earlier this month when it announced plans to acquire AOL for $4.4 billion. It seemed a lot to pay just t…

Read More

Future Watch Apps May Surprise You

By: Mike Russo    5/27/2015

If there's one thing that's abundantly clear about the Apple Watch, it's that this isn't your grandpa's timepiece. Oh, it tells time, sure. The rest i…

Read More

Why Apple iOS is Dominating Google's Android

By: Rob Enderle    5/27/2015

Apple's iOS platform is kicking Google Android's butt all over the Smartphone playground. This battle has been fascinating to watch because it seemed …

Read More