Satellite

Unlike Cable, DirecTV Adds Subs in 2Q

8/05/2004 10:21 AM Eastern

DirecTV Group Inc. reported blowout net subscriber additions in the second quarter, trouncing analysts’ estimates and hinting that recent basic-subscriber losses at the major cable operators were due to more than just seasonality.

The direct-broadcast satellite provider added 455,000 net new subscribers in the second quarter, easily beating the analysts’ consensus estimate of 285,000.

It marked the second-best net customer addition in DirecTV history, just missing the top mark of 460,000 in the first quarter of this year. It was also the third straight quarter during which the company added more than 400,000 subscribers.

The additions also came during a traditionally weak quarter, as college students and snowbirds disconnect service when they return to summer residences. In contrast, the three largest cable operators reported basic-subscriber losses in the second quarter ranging from 21,000-96,000 customers.

On a conference call with analysts, DirecTV USA president Mitch Stern said subscriber growth was especially strong in markets where it offers local channels, and he managed to criticize the subscriber losses of cable competitors.

“As you saw last week, all of the major cable companies reported that they are losing basic-video subscribers. They all can’t be college students,” Stern said.

Still, DirecTV Group CEO Chase Carey said growth in the second half could slow due to increased competition.

Carey said he expected cable to ramp up promotional offerings, along the lines of Cablevision Systems Corp.’s $90 monthly package of voice, video and high-speed data.

“I think it would be naive to assume cable is going to sit here and lose subs and not respond,” he added. “I think we still have a much stronger offering, we have the goods to build off of. I think they’ll do what they can to counter it, but I think we continue to have the goods to offer.”

Revenue was up 21% in the period to $2.6 billion. Average monthly revenue per subscriber was $65 in the period, up from $60.90 in 2003. Subscriber-acquisition costs, at about $645, were essentially flat.

DirecTV shares were up 42 cents to $16.75 each in 4 p.m. trading Thursday.

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