DirecTV Sub Adds Hit an All-Time Low

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Stiffer competition from telcos, price increases
on some products and a faltering economy helped
drive subscriber additions to an all-time low at DirecTV in
the second quarter, but the nation’s largest satellite-TV provider
said it has made
changes that are reversing
that trend.

DirecTV added a
mere 26,000 new customers
in the second
quarter, the lowest
growth rate in its history
and down from
100,000 net new additions
in the same period last year. The sluggish growth,
coupled with a skittish market, helped drive shares down as
much as 12.6% ($6.23 per share) in early trading Thursday.

On a conference call with analysts to discuss results,
CEO Mike White said DirecTV stepped up efforts to manage
churn in a more targeted way, including refining its segmentation
analysis to better identify customers more likely
to cancel service as they near the expiration of their two-year
contracts; increasing upgrade and retention spending; and
raising credit-score requirements for new customers.

“I think we’ve made excellent progress in addressing our
churn issues, but I am cautiously optimistic that the worst is
behind us,” White said. “In fact, based on the favorable subscriber
trends we’ve seen so far in the third quarter, I think
we’ve also regained some of our lost momentum.”

That seemed to appease some investors — DirecTV
stock started to claw back later in the day, rising to $47.23
per share in later afternoon trading (down 4.5% or $2.24 per
share). It closed Aug. 4 at $46.63, down $2.84 or 5.7% in what
was a dismal day for the stock market.