DirecTV Reports Solid Q4 - Multichannel

DirecTV Reports Solid Q4

103,000 Net New Subscribers on Target With Estimates
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DirecTV reported solid fourth quarter results Thursday, adding 103,000 net new subscribers at its U.S. operations, slightly ahead of analysts’ consensus targets of 96,000 additions.

U.S. revenue increased 5% to $6.3 billion and operating income before depreciation and amortization rose 6% to $1.4 billion in the quarter. Average monthly subscriber churn was down from the previous year to 1.4% from 1.5% in 2011.

In a research note, Morgan Stanley media analyst Ben Swinburne said the results indicate early success in DirecTV’s focus on customer retention, adding that churn improvement could play a vital role in future growth for the satellite giant.

“Lower churn, in our view, will be increasingly critical to EBITDA growth given (1) the rising competitiveness of cable video and (2) the rising cost of new subscriber acquisitions (SAC per gross add approaching $900), and we believe DirecTV is leading the industry in managing churn,” Swinburne wrote.

DirecTV’s Latin American operations continued to shine, with net new subscriber additions reaching an all time quarterly high of 658,000 in the period. Those additions helped drive revenue at the Latin American unit up 22% to $1.6 billion and OIBDA up a strong 17% to $494 million.

In a statement, DirecTV chairman and CEO Mike White said the company exited 2012 with “good momentum” as it continues to execute its strategy to drive sustainable profitable growth across the Americas.

“We believe that these strategies along with our share repurchase plan - highlighted by the approval of a new $4 billion buyback authorization - will continue to create significant shareholder value for years to come," White said in a statement.

DirecTV is scheduled to hold a conference call with analysts to discuss quarterly results at 2 p.m. today.