DirecTV Adds 125K New Subs in Q4
Revenue Rises 9%
Mike Farrell -- Multichannel News, 2/16/2012 9:49:35 AM
Subscriber growth continued its upward trajectory at DirecTV during the fourth quarter, as the No.1 satellite TV service provider added 125,000 net new customers in the period.
The sub growth was a little below analysts' consensus estimates of 176,000 additions, but that was expected as the satellite giant scaled back on promotions for its NFL Sunday Ticket offering in the quarter. For the full year, DirecTV added 662,000 net new customers, about even with the pirior year's performance.
DirecTV shares, up as much as $1.39 each (3%) in early trading, finished Feb. 16 at $45.38 per share, down 92 cents each or 2%.
The lighter than expected net new customer growth had no effect on financial metrics - revenue rose 9% in the period to $6.03 billion and operating profit before depreciation and amortization was flat at $1.3 billion. In a research note, ISI Research media analyst Vijay Jayant wrote that DirecTV appears to be focusing on higher margin customers - which could explain the lower customer additions and a slight uptick in average monthly churn to 1.52% from 1.44% in the prior year.
"It seems that in 4Q, DirecTV wasn't the one to blink first, and sacrificed slightly higher near-term churn for a higher quality subscriber base over the long term," Jayant wrote.
Sanford Bernstein cable and satellite analyst Craig Moffett showed a little more concern for the slower customer additions. Moffett wrote that if the slowdown was merely a function of DirecTV putting the brakes on its NFL Sunday Ticket promotions, then the market should give the satellite giant a pass.
"But if it turns out that Cable is at long last flexing the muscle of its broadband superiority, as we have so long feared, then there is genuine cause for alarm," Moffett wrote.
The analyst pointed to Comcast's strong basic video customer improvement - it lost just 17,000 basic customers in the fourth quarter - as an indication that at least some bells may be ringing.
DirecTV is scheduled to hold a conference call with analysts to discuss results at 1 p.m.
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