News

DirecTV Hits Growth Record

1/21/2001 7:00 PM Eastern

DirecTV Inc. signed a record 527,000 net new subscribers in the fourth quarter, parent Hughes Electronics Corp. said last week.

For 2000, the company added 1.834 million net new customers, ending the year with 9.5 million direct-broadcast satellite subscribers.

Wall Street rewarded that news on Tuesday, boosting share prices for Hughes stock by more than 11 percent. In a report, UBS Warburg LLC research analyst director Thomas Eagan wrote that while the fourth-quarter acquisitions fell short of expectations, the market was reassured by DirecTV's mention of a large, year-end installation backlog.

Bad winter weather kept DirecTV installers from adding another 110,000 new customers to its roster. Those subscribers already purchased the hardware in the fourth quarter-mostly through Blockbuster Video stores, Hughes executives said in an analyst call.

Those acquisitions are expected to be added to the first-quarter 2001 numbers.

"We simply can't do an install when we can't get to a customer's home or up on their roof," Hughes chief financial officer Roxanne Austin said during the call. Severe winter weather hit many parts of the country in the weeks just before and after Christmas, traditionally one of the hottest selling seasons for DBS.

Installations were also slowed by a growing demand for multi-receiver satellite systems, which limit the number of hook-ups an installer can handle each day. Installation waits vary from market to market, but typically don't exceed three or four weeks even in a backlog situation, said DirecTV president Odie Donald.

DirecTV global chairman Eddy Hartenstein estimated the company would net 325,000 to 400,000 new subscribers in the first quarter. He noted that churn historically spikes in the first quarter, after consumers start receiving holiday credit-card bills.

Before churn, DirecTV said its gross new subscribers for the fourth quarter hit one million. Customer churn for the quarter averaged about 1.5 percent per month. Average revenues per subscriber increased about $1 during the quarter, to $59.

"Our best customers come from the urban areas," DirecTV global chairman Eddy Hartenstein said. That's where DirecTV gains its highest revenues per customer, he added.

Despite the greater likelihood of a digital-cable competitor, Hartenstein said, urban DMAs show no uptick in customer churn for the DBS company.

This fall, DirecTV plans to launch its first satellite with spot-beam technology that could allow it to deliver local broadcast signals to more markets. Today DirecTV serves 41 DMAs with local channels.

In 2001, DirecTV plans to do more of its local-channel promotions on a market-by-market basis, Hartenstein said.

Austin declined to comment on published reports that News Corp. was close to making a deal to buy DirecTV, except to say that Hughes continues to have discussions with "multiple parties."

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