DirecTV Subs Down, Cash Flow Up

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Hughes Electronics Corp. raised its third-quarter cash-flow guidance based on
better-than-expected results at its DirecTV Inc. subsidiary, but it lowered its
subscriber estimates for the period.

Hughes reiterated its revenue guidance of $2.2 billion to $2.25 billion
companywide for the third quarter, revising its cash flow guidance to under $225
million, compared with its previous estimate of between $175 million and $225
million.

At its DirecTV unit, revenue estimates remained relatively the same -- $1.61
billion, compared with $1.6 billion -- but cash flow is expected to grow to $195
million in the period, up $45 million from previous guidance.

However, the company added that it expects DirecTV's subscriber additions in
the quarter to be between 200,000 and 210,000 -- versus the 250,000 to 300,000
previously expected -- based on higher churn rates and larger-than-expected
disconnects due to customer theft of service.

In the statement, Hughes said churn in the period is about 1.7 percent. In
addition, it said it disconnected about 50,000 active subscribers who were
paying for basic service but who the company believes were receiving other
services via illegally modified access cards.

The company also said gross subscriber activations were below expectations,
'mostly due to a decline in consumer confidence resulting in softer sales at
national consumer-electronics retail outlets.'

Hughes will release its official third-quarter results Oct. 14. The company's
stock was up 61 cents to $9.09 per share in 4 p.m. trading Wednesday.

The guidance comes on speculation that the U.S. Department of Justice will
reject the $11 billion merger between DirecTV and EchoStar Communications Corp.,
possibly paving the way for News Corp. -- which lost out in the bidding for
Hughes to EchoStar last year -- to acquire the direct-broadcast satellite
provider.

A News Corp. bid for DirecTV could include Liberty Media Corp., which was a
partner in News Corp.'s earlier failed bid for DirecTV.

At the Banc of America Securities 32nd Annual Investment
conference in San Francisco Tuesday, Liberty executive vice president and chief
operating officer Gary Howard said his company would likely join News Corp.
chairman Rupert Murdoch in another DirecTV bid.

'If Murdoch were to go back into the equation, my guess is that we would be
talking to them,' Howard said. 'Whether Murdoch is involved or not, we might be
interested on our own for footprint distribution. A lot of that is all
speculative until we see what really comes out of Washington.'

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