DirecTV, the largest U.S. satellite-television provider, reported a 7.7 percent increase in third-quarter profit after a football promotion helped it gain U.S. subscribers. The shares advanced.
Net income climbed to $516 million, or 70 cents a share, from $479 million, or 55 cents, a year earlier, DirecTV said today in a statement. Sales increased 14 percent to $6.84 billion, compared with analysts’ $6.78 billion projection.
DirecTV, based in El Segundo, California, added 327,000 U.S. users, driven by demand for its NFL Sunday Ticket promotion. Analysts projected a gain of 158,000, the average of 10 estimates in a Bloomberg survey. DirecTV gave away the NFL football package for free to customers who signed two-year contracts, saving users about $323 this season.
“These are unbelievable numbers,” said Vijay Jayant, an analyst at International Strategy & Investment Group in New York. “The subscriber additions are fantastic. The message is the NFL Sunday Ticket promotion really resonated with consumers.”
DirecTV rose 4.2 percent to $46.73 at 10:42 a.m. New York time. Before today, the shares had gained 12 percent this year.
Earnings per share missed analysts’ average estimate of 72 cents. Profitability took a near-term hit because customer additions were so large, Jayant said. DirecTV expenses about half of its subscriber-acquisition costs in the quarter in which it signs up customers, he said.
“All it means is you’ll have more cash flow in the next few quarters,” Jayant said.
DirecTV added a record 574,000 Latin American customers, evidence there’s room for growth in countries including Brazil, Argentina and Colombia, Jayant said. The total customer additions of 1.14 million, including those in Mexico, is DirecTV’s highest net quarterly figure ever.
The U.S. gains suggest subscribers leaving cable-TV may be switching to satellite instead of Internet-based video. Time Warner Cable Inc., Comcast Corp., Charter Communications Corp. and Cablevision Systems Corp. lost a combined 375,000 video customers last quarter.
DirecTV bought back $1.45 billion in shares in the quarter, part of a $6 billion share repurchase program announced in February.
(DirecTV plans to hold a conference call at 1 p.m. New York time. To listen, visit http://investor.directv.com/events.cfm.)