[opendtv] News: DirecTV Posts Much Bigger Loss But a Higher SubscriberGrowth
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 5 May 2004 07:43:47 -0400
DirecTV Posts Much Bigger Loss But a Higher Subscriber Growth
By MARTIN PEERS
Staff Reporter of THE WALL STREET JOURNAL
May 5, 2004; Page B4
In its first full quarter under the control of Rupert Murdoch,
DirecTV Group Inc. reported sharply higher subscriber growth and a
much wider loss.
The first-quarter result is a worrisome sign for the cable-television
industry, which has been bracing for DirecTV to become a more
formidable competitor since News Corp. bought control of the company,
formerly Hughes Electronics, in December. The subscriber growth was
driven largely by marketing offers launched before News Corp. took
control.
The impact of News Corp. will be felt more heavily in coming months,
as DirecTV rolls out an array of new services and extra channels.
DirecTV's net loss widened to $638.8 million, or 46 cents a share,
from the year-earlier loss of $50.9 million, or four cents a share.
Revenue rose 22% to $2.51 billion.
Higher marketing costs contributed to the wider loss, but the red ink
largely reflected DirecTV's adoption of faster write-off of the cost
of acquiring new subscribers and a $479 million loss on its pending
sale of an about 80% stake in PanAmSat. DirecTV last month agreed to
sell PanAmSat to New York buyout firm Kohlberg Kravis Roberts & Co.
for $3.5 billion plus assumption of debt, a deal that will bring in
$2.8 billion in cash for DirecTV. The latest loss also included a
$387 million pretax gain on the sale of DirecTV's stake in XM
Satellite Radio.
DirecTV said it added 460,000 new customers in the quarter after
accounting for cancellations, finishing the quarter with 12.6 million
subscribers, a growth rate 67% higher than a year ago.
Yesterday DirecTV launched a new satellite that will allow it to
increase the number of markets where local TV channels are available
on the DirecTV service. Offering local broadcast-TV signals is seen
as vital in competing with cable.
Other services to be launched this year include set-top boxes with a
new electronic program guide and upgraded digital video recorders.
The digital video recorder is "very much at the center of our
strategy," DirecTV Chief Executive Chase Carey, installed by News
Corp., told analysts. Earlier this year, he outlined plans to boost
DirecTV's subscribers 25% to 15 million by the end of 2006.
In 4 p.m. composite trading on the New York Stock Exchange, DirecTV
shares were down five cents to $18.05.
Write to Martin Peers at martin.peers@xxxxxxx
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