Chase Who? DirecTV Continues Gains


lDespite losing its charismatic CEO Chase Carey in July to his old employer Rupert Murdoch, DirecTV continued to outpace the competition and analysts' estimates in the second quarter, growing revenue by 9% and adding 224,000 net new subscribers, a 74% increase over the prior year.

Consolidated revenue for the period was $5.2 billion, up 8.6% from the same period last year and operating profit before depreciation and amortization rose 2% to $1.38 billion.

"DirecTV continued to execute at a very high level, quarter after quarter," Sanford Bernstein cable and satellite analyst Craig Moffett wrote in a research note.

Carey, who shepherded DirecTV through some of its highest periods of recent growth - and was in charge through the second quarter - decided to return to News Corp. in July. While some analysts feared that his decision to leave could have been in part because of doubts that it would be able to maintain its blistering growth pace, those fears appear unfounded.

Carey, for his part, said prior to leaving that DirecTV was on a strong growth trajectory. His interim replacement, executive vice president of legal, human resources and administration Larry Hunter, said on a conference call with analysts on Thursday that the search for a permanent replacement for Carey is ongoing and likely to take a few more months to complete.

On the conference call, chief financial officer Pat Doyle said that a big factor in the subscriber growth was the satellite giant's telco relationships. The second quarter was the first full period of DirecTV's resale relationship with AT&T. That deal began in February.

While Doyle said that DirecTV does not break out individual results from its telco sales channel, the entire channel accounted for about 25% of DirecTV's total gross subscriber additions. That is about double the telco contribution last year. 

Although its cable competition continued to lose basic customers in the period -- Time Warner Cable shed 57,000 customers in the quarter  and Comcast lost 214,000 basic subscribers  -- DirecTV managed its second straight quarter of growth. The satellite giant gained about 460,000 net new subscribers in the first quarter.
Whether that growth is coming from cable or from rival satellite TV service Dish Network is anyone's guess. On a conference call with analysts Thursday, Comcast COO Steve Burke said the biggest impact on its basic-customer losses in the period was from telephone companies, not satellite.
"On a day when Comcast reported a subscriber loss of 214,000, it's nice to see the strength of the DirecTV brand continues to drive market share gains," Doyle said on the conference call.
Hunter said on the call that despite Comcast's claims, the bulk of DirecTV's additions are coming from cable. He added that subscriber gains from Dish have not changed materially.