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DirecTV, Charter Climb to Record Highs on Subscriber Growth

DirecTV (DTV), the largest U.S. satellite-television provider, rose the most in four years to an all-time high after reporting first-quarter profit that topped estimates, bolstered by Latin American subscriber growth.

DirecTV shares surged 6.9 percent to $61.95 at the close in New York, the biggest one-day gain since March 23, 2009. Charter Communications Inc. (CHTR), another pay-TV provider, also jumped on better-than-predicted earnings. Its stock climbed 4.4 percent to $109.69, also a record closing price.

DirecTV is counting on its Latin America expansion to fuel growth -- a bet that paid off last quarter. The company added 583,000 customers in the region, beating the 505,000 predicted by analysts. It also added 21,000 U.S. subscribers, better than the 10,000 estimated. That may help reassure investors who have been concerned that growth is sputtering.

“DirecTV reported results that were better than expected, due to balanced growth and profitability in Latin America,” Vijay Jayant, an analyst at ISI Group in New York, said in a note to clients.

Excluding one-time costs, DirecTV’s profit was $1.43, topping the $1.09 average estimate of analysts compiled by Bloomberg. Sales rose 7.6 percent to $7.58 billion, the El Segundo, California-based company said today in a statement, beating the average analyst estimate of $7.52 billion.

The uptick in customers coincides with a U.S. rate increase of 4.5 percent on average, driving revenue per user to $96.05. Still, net income fell to $690 million, or $1.20 a share, from $731 million, or $1.07, a year earlier. Mounting programming costs and Venezuela’s currency devaluation led to the decline in profitability.

Stock Buybacks

DirecTV repurchased $1.38 billion in stock in the quarter, helping boost the per-share earnings figure. The company’s pace of buybacks has exceeded that of its cable-TV rivals, a sign of strength for the company, said Todd Mitchell, an analyst at Brean Capital LLC in New York. He has a buy rating on DirecTV shares.

DirecTV will probably lose subscribers in the second quarter, Chief Executive Officer Mike White said during a conference call. The company lost customers in last year’s second quarter, the first ever quarterly decline in DirecTV’s history.

Average revenue per user will be higher in the second half of this year as customers pay more for products such as the company’s Genie high-definition digital recording device, White said. DirecTV’s stock has gained 24 percent this year.

Charter Earnings

Billionaire John Malone is DirecTV’s fifth-largest investor, holding 27.7 million shares. This month, the media mogul bought 27 percent of Charter, the fourth-largest U.S. cable company.

Charter’s net loss of $42 million, or 42 cents a share, narrowed from $94 million, or 95 cents, a year earlier. Sales rose 4.9 percent to $1.92 billion, the Stamford, Connecticut-based company said in a statement, matching the average analyst estimate. Charter added 99,000 Internet and 59,000 telephone subscribers in the period, though it lost 24,000 TV customers.

Charter’s shares are up 44 percent this year. Analysts are predicting that Charter will become a profitable company next year for the first time since emerging from bankruptcy in 2009.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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