DirecTV reported its strongest domestic net new subscriber additions in seven years in the third quarter, silencing the naysayers who criticized its free promotion for its NFL Sunday Ticket package.
Investors were more than pleased, sending DirecTV shares up as much as 6.6% ($2.95 each) to $47.81 per share in early trading. The stock has settled down a bit since, trading at $46.55, up 3.8% ($1.69) at 10:24 a.m.
DirecTV added 327,000 net new subscribers in the third quarter, soundly beating analysts' estimates of 203,000 net new additions.
In a research note, ISI Group media analyst Vijay Jayant called the subscriber performance, nearly double last year's additions of 174,000 net new customers, "almost disbelievingly good." And he tied most of that growth to the Sunday Ticket promo.
"With 1.28 million gross adds during the quarter (DTV U.S.), we believe that the Sunday Ticket promotion is translated directly into subscriber growth," Jayant wrote.
DirecTV, using NFL Hall of Famer Deion Sanders as a spokesman in a fairy costume, replete with wings, kicked off the Sunday Ticket promo in July, as the NFL lockout, which threatened the entire season, lingered. Although a labor agreement was reached in August, the promotion, which would allow customers to receive the package at no extra charge for the first year if they committed to purchase its Choice Extra package or higher level of service, is available until Nov. 23.
The analyst added that the satellite giant achieved that growth without sacrificing economics. Consolidated revenue during the quarter was up an impressive 13.5% to $6.8 billion.
Operating profit before depreciation and amortization (OPBDA) rose 6.7% to $1.6 billion, missing expectations by a nose. In the U.S., revenue increased 7.8% to $5.4 billion and cash flow declined 3% to $1.2 billion. Latin America continued to outperform, with revenue up 45.8% to $1.4 billion and OPBDA increasing 8.7% to $434 million. The unit added 574,000 net new subscribers, more than twice the 206,000 added last year.
DirecTV is scheduled to hold a conference call with analysts to discuss results at 1 p.m. today.