Big Gains At DirecTV

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Satellite giant DirecTV put to rest concerns that it would not be able to maintain its customer growth momentum Thursday, reporting a 100,000 increase in U.S. subscribers and four times that amount in Latin America during the second quarter.
For the period, DirecTV increases its U.S. subscriber rolls to 18.8 million. The 100,000 domestic additions mirror results in the first quarter of this year. In Latin America, the growth was even more impressive, with 415,000 net new subscriber additions in the period.
"For years, questions have swirled about DirecTV's ability to sustain subscriber growth in the U.S.," wrote Sanford Bernstein cable and satellite analyst Craig Moffett in a research note. "Not to worry. Today's results suggest that subscriber growth is just fine, thank you (and better than fine in Latin America)."
But subscriber growth wasn't the whole story. Despite fierce competition from cable and telephone companies, and some aggressive discounting and promotions, DirecTV grew domestic revenue by 9% to $4.9 billion and operating profit before depreciation and amortization by 12% to $1.4 billion. Overall revenue grew 12% to $5.9 billion and OPBDA rose 18% to $1.64 billion.
DirecTV also managed to buy back about $1.7 billion of its stock in the second quarter, and authorized and additional $2 billion.
On a conference call with analysts, DirecTV chairman and CEO Mike White said that subscriber trends, especially in the U.S., are encouraging. White noted that in part because of its free HD promotion, 70% of new subscribers are taking advanced services. And subscriber churn, at about 1.5%, was flat with the prior year, breaking a five- quarter trend of increased churn.
White has been a major proponent of enhancing services to existing customers, driving advanced service and increasing average monthly revenue per customer. As a result DirecTV launched three new 3D channels, a whole-room DVR product and began beefing up its on-demand movie inventory in the second quarter with stellar results. Those products are expected to continue to drive growth into the second half of the year and beyond.
"We're building on strong operating momentum," White said.

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