DirecTV posts profit as subscriber numbers grow


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Sep 4, 2005
El Dorado Hills, CA Nr Sacramento

NEW YORK (Reuters) - Top satellite television operator DirecTV Group Inc. (NYSE:DTV - News) on Thursday said it turned a profit in the first quarter due to an increase in subscribers and higher revenue per user, beating Wall Street expectations.

The company, which is controlled by Rupert Murdoch's News Corp. (NYSE:NWS - News), posted a net profit of $235 million, or 17 cents a share, compared with a net loss of $41 million, or 3 cents per share, a year earlier.

Wall Street analysts expected profit of $155.8 million, or 10 cents a share, according to Reuters Estimates .

DirecTV, which is based in El Segundo, California, said it added 255,000 net new subscribers in the first quarter, compared with an increase of 505,000 a year earlier, but it generated more revenue per user and reduced subscriber losses, known as customer churn, for the first time in almost two years.

"These are very solid results," said Todd Mitchell, an analyst at Kaufman Bros. "The 255,000 net additions were in line with what I was looking for but with lower churn."

Shares were down 3 cents, or 0.2 percent, at $17.14 in afternoon trading on the New York Stock Exchange.
Revenue grew to $3.4 billion from $3.1 billion in 2005.
Customer churn dropped to 1.45 percent from 1.49 percent, and average revenue per user increased to $69.75 from $65.78.
Analysts said DirecTV and rival EchoStar Communications Corp. (NasdaqNM:DISH - News) are benefiting from increased efforts from phone companies to market satellite TV and compete with the cable television industry.

Phone companies and cable companies are locked in a battle to sell bundled video, phone and Internet services to homes.

"The telcos are responding by diving into their satellite partnerships, which is driving a very efficient satellite growth," Mitchell said.
DirecTV has a marketing partnership with BellSouth Corp (NYSE:BLS - News) that was recently extended by five years.

DirecTV has over 15 million subscribers. In April it said it would add 1 million new subscribers by the end of 2006 and have 18 million by 2008. EchoStar has around 12 million subscribers, according to Leitchmann Research.

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