http://www.hollywoodreporter.com/thr/business/article_display.jsp?vnu_content_id=1000903924 May 03, 2005 Subscriber growth lifts DirecTV By Georg Szalai NEW YORK -- News Corp.-controlled satellite TV giant DirecTV Group Inc. posted improved first-quarter financials Monday that exceeded Wall Street estimates across the board. The results were driven by record net subscriber additions that were higher than in any quarter of what was a record 2004 despite increasing cable competition. However, management warned that seasonal factors and tighter credit policies will slow future quarterly subscriber gains by about 10%. Shares of DirecTV closed up 5.3% at $14.87. The company reported a first-quarter loss of $41 million, compared with a year-ago loss of $639 million, which included various one-time charges. Revenue rose 26% to $3.2 billion as net U.S. subscriber additions came in at a first-quarter record of 505,000, bringing the firm's total user base to 14.4 million as of March 31. A rise in monthly average revenue per user from $63.57 to $65.78 -- in part because of increased prices -- also boosted revenue as did the consolidation of rural subscribers that DirecTV acquired in the third quarter. Analysts said DirecTV's latest financials also showed improvement in two areas that have been concerns for investors: average monthly user churn and subscriber acquisition costs/retention marketing. Investors have feared that it is becoming increasingly expensive for satellite TV providers to grow their user base profitably. DirecTV's monthly churn in the latest quarter rose from 1.4% last year to 1.5% but was lower than analysts had expected. Retention and upgrade costs rose from $176.6 million a year ago to $254.5 million in the first quarter, and average SAC rose from $644 to $656. However, the latest figures were better than the $334.2 million and $669, respectively, that DirecTV had posted for the fourth quarter. "While results were encouraging given first signs of more balanced growth ... it remains early to determine if trends are sustainable amid increased cable competition," UBS analyst Aryeh Bourkoff said. In a conference call, DirecTV president and CEO Chase Carey lauded his company's performance, saying "the strong demand for DirecTV U.S. service throughout the country continued in the first quarter." He particularly mentioned the success of DirecTV Para Todos, which targets Spanish-language homes and added more than 120,000 net new users in the latest quarter to reach more than 700,000 overall. Carey said the coming quarters will "really be critical" for DirecTV in terms of making its service even more cutting-edge with new interactive TV features, such as local weather information, an interactive digital video recorder coming in the summer and enhancements to the NFL Sunday Ticket package. Carey said the current second quarter tends to be more challenging for subscriber growth and churn, and a March price increase will add to that. Also, stricter new credit policies will reduce gross subscriber gains by about 10% going forward, he predicted. ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.