Viacom Dispute Impacts DirecTV Q3

Higher Churn, Slower Net Sub Growth Tied to Blackout
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A blackout of about 26 Viacom networks, including MTV, Nickelodeon and Comedy Central, in July helped push up churn and temper net new subscriber growth in the third quarter at satellite giant DirecTV.

DirecTV added just 67,000 net new subscribers in the period, well below the 327,000 net new customers the satellite giant added in the same period last year, and missing analysts’ consensus estimates of a gain of 105,000. Churn for the period was 1.74%, 12 basis points higher than last year and above analysts expectations of 1.68%.

DirecTV did not name Viacom as the culprit for its subscriber performance, but it did mention in a press release that the higher-than-expected churn “was principally driven by a contract dispute with a large programmer that resulted in the removal of several channels for nine days in the third quarter.”

Viacom pulled its networks from DirecTV on July 10, returning the channels to the satellite giant after the two reached a comprehensive carriage deal on July 19.

Aside from the slight downturn in subscriber growth DirecTV reported a strong quarter, with U.S. revenue up 6% to $5.8 billion and operating profit before depreciation and amortization increasing 8% to $1.25 billion. On a conference call with analysts, CEO Mike White said that the company showed solid topline and OPBDA growth in what has been a challenging U.S. environment.

At its Latin American segmen, revenue increased 16% to $1.6 billion and OPBDA was up 5% as the unit added 543,000 net new customers in the period.