DirecTV Rises Most in Two Years After Adding Record Customers
DirecTV (DTV), the largest U.S. satellite- television provider, rose the most in two years after adding a record number of net subscribers in the third quarter.
DirecTV added 327,000 U.S. users, driven by demand for the El Segundo, California-based company’s NFL Sunday Ticket promotion. Analysts projected a gain of 158,000, the average of 10 estimates in a Bloomberg survey. DirecTV added a record 574,000 Latin American customers and a total of 1.14 million when including those in Mexico, its highest for any quarter.
“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.”
The U.S. gains suggest subscribers leaving cable TV may have switched to satellite in the quarter instead of Internet- based video. Time Warner Cable Inc. (TWC), Comcast Corp. (CMCSA), Charter Communications Corp. and Cablevision Systems Corp. (CVC) lost a combined 375,000 video customers last quarter.
DirecTV rose 6.2 percent to $47.63 at 4 p.m. New York time, for the largest one-day increase since Nov. 5, 2009. The shares have gained 19 percent this year.
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.
Earnings per share missed analysts’ average estimate of 72 cents. Profitability took a near-term hit because of customer acquisition costs associated with the high gross subscriber additions, Chief Executive Officer Michael White said on a conference call.
For the first time since acquiring rights to broadcast NFL games in 1994, DirecTV gave away its Sunday Ticket package for free to customers who signed two-year video contracts, saving users about $323 this season.
“All it means is you’ll have more cash flow in the next few quarters,” Jayant said.
DirecTV Latin America CEO Bruce Churchill forecast full- year revenue in the region would rise 40 percent, up from a projection of 30 percent in August. Latin American markets should remain “robust in the near to midterm,” he said.
DirecTV bought back $1.45 billion in shares in the quarter, part of a $6 billion share repurchase program announced in February. The company will continue to buy back shares at around a pace of 100 million per week, Chief Financial Officer Patrick Doyle said on the conference call.
The company also announced it had agreed to a three-year extension with AT&T Inc. (T) to offer satellite TV with AT&T’s broadband and voice service. The deal has similar terms to DirecTV’s current agreement with AT&T, White said.
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