UPDATE: DirecTV Swings To 4Q Loss On Merger-Related Cost
19 2월 2010 - 12:27AM
Dow Jones News
DirecTV Group Inc. (DTV), beginning to feel the effects of more
aggressive competition, swung to a fourth-quarter loss thanks to a
charge related to its merger with Liberty Entertainment.
The El Segundo, Calif., satellite TV provider has in recent
quarters been more willing to let go of lower-end customers staying
on for promotions in an effort to reduce its service costs and
boost its profitability. But the company's subscriber growth in the
period was alarmingly low, illustrating the strides rival Dish
Network Corp. (DISH) has made in recent months. DirecTV a week ago
sued Dish over alleged misleading advertisements.
DirecTV reported a fourth-quarter loss of $32 million, or 3
cents a share, compared with a year-earlier profit of $332 million,
or 32 cents a share. Excluding the one-time merger-related charge,
per-share earnings would have been 48 cents.
Revenue rose 12.6% to $5.98 billion.
Analysts, on average, had projected earnings of 40 cents a share
and revenue of $5.82 billion.
DirecTV shares rose 1.1% to $31.99.
The satellite provider added 119,000 net subscribers in the
quarter, a 60% drop from a year ago. The company ended the year
with 18.6 million customers.
In a statement, new Chief Executive Michael White blamed the
lower number on tighter credit policies, increased competition and
"a generally cautious consumer seeking value in what continues to
be a sluggish economy."
The rate of customer cancellation rose to 1.52% from 1.42% a
year ago. The average monthly bill, however, rose to $92.36 from
$90.46.
DirecTV isn't expected to repeat the performance of the last few
years, when it added subscribers at a rapid clip despite the
struggles of the cable companies and Dish. The company was quicker
to push high-definition content and digital video recorder
technology in the past few years, giving it a momentary edge that
has since faded. The company, like the other pay-TV providers, also
received a one-time benefit from the migration to digital
television, prompting many consumers to switch to a pay service
last year.
But the company will be judged less on its ability to grow its
customer base, and more on its ability to drive cash flow and
profitability, analysts say.
The subscriber shift had already begun in the last two quarters,
with DirecTV more willing to let go of customers that signed up for
promotions and less likely to pay for premium services. Dish,
meanwhile, has gotten aggressive with its own promotions, offering
its service for $10 a month for the first year. DirecTV's cheapest
package is $29.99. Dish's biting ads irked DirecTV enough to prompt
legal action.
DirecTV's Latin American business, meanwhile, continued to
perform strongly on higher demand for advanced services, as revenue
rose 47% to $839 million, as the average monthly bill rose 25% to
$62.67.
The company added 254,000 net subscribers as the turnover rate
inched lower from a year ago.
DirecTV also approved a new $3.5 billion stock repurchase
plan.
In November, DirecTV completed its merger with Liberty
Entertainment, which was owned by media mogul John Malone and
Liberty Media Corp. (LINTA, LMDIA, LCAPA). Malone remains a large
minority shareholder of DirecTV.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
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