DirecTV Sub Growth Soars to 4-Year High

5/09/2009 2:00 AM Eastern

Promotional offerings, its reseller agreement with AT&T and a boost from the digital transition helped propel DirecTV to its largest quarter of net new subscriber additions in four years, CEO Chase Carey told analysts Thursday.

DirecTV added 460,000 net new subscribers in the first quarter, its best quarter since 2004. Customer churn for the period, at 1.3%, was at its lowest level in 10 years.

While the level of subscriber growth was especially strong given the maturity of the business and the current economic climate, Carey couched it somewhat by adding that the satellite-TV giant may have overdone promotional pricing a bit during the quarter. But Carey said that promotions probably had more of an impact on monthly revenue per subscriber — which inched up slightly to $80.35 in the quarter versus $79.70 in the same period last year, as more existing customers than expected took advantage of upgrade promotions.

Chief financial officer Pat Doyle also credited DirecTV's relationship with telephone companies — it has resale agreements with Verizon Communications and AT&T — which he said accounted for about 20% of gross additions. Gross subscriber additions at 1.2 million, were the highest for the company since 2004.

And Carey said while he couldn't exactly quantify it, the digital transition also played a role in the additions, as it has for several cable operators.

“We believe it was a positive,” Carey said of the digital transition.

While the subscriber growth results were off the charts — analyst consensus estimates were for 267,000 additions — investors appeared a bit spooked by the less than robust ARPU increase. At 0.8%, it was meaningfully below consensus estimates of 2.6% growth.

That may have been a factor in DirecTV's stock declining in late trading Thursday. The stock closed at $24.08 per share, down 25 cents (1%) each.

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