DirecTV Reports Robust 4Q

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DirecTV Group stock soared Wednesday -- reaching a new 52-week high of $26.09 each (up 9%, or $2.12 per share) in early trading -- after the nation’s largest direct-broadcast satellite service provider reported strong fourth-quarter results.

The stock fell back slightly to $25.56 each (up $1.59 per share) in early afternoon trading Wednesday.

DirecTV beat analysts’ expectations on almost every metric, with revenue up 16% to $4.18 billion and operating income before depreciation and amortization (OIBDA, a measure of cash flow) more than doubling to $915 million.

DirecTV also added 275,000 net new subscribers during the quarter, a 38% increase over the same period in 2005 and 110,000 better than the 165,000 subscribers added during the third quarter. Monthly subscriber churn at 1.57% was below fourth-quarter-2005 churn of 1.7% and the lowest level for the company in three years.

DirecTV attributed the strong performance on continued success in its plan to focus more on high-quality subscribers and advanced services.

On a conference call with analysts, chief financial officer Mike Palkovic said the company upgraded about 200,000 customers to HDTV service in the quarter, a 70% increase over the previous year.

The net new-subscriber additions came as somewhat of a surprise given that some analysts expected that strong basic-subscriber growth from cable operators Comcast and Time Warner Cable was coming at the expense of the DBS companies.

Comcast added 111,000 basic customers during the fourth quarter. Time Warner, although losing 23,000 overall basic subscribers during the period, saw a gain of 29,000 basic customers at its historic systems, with the losses mainly coming from newly acquired Adelphia Communications properties.

On the conference call, DirecTV CEO Chase Carey said the subscriber gains should not be a surprise. He added that cable’s recent basic-subscriber growth comes off a long period of declines.

“People always forget that there is still a little growth in the marketplace,” he added.

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