By Saabira Chaudhuri
DirecTV Group Inc.'s (DTV) first-quarter earnings fell 5.6% as
the satellite television provider was weighed down by currency
devaluation charges, but core earnings and revenue both improved,
pushing results above expectations.
DirecTV's U.S. subscriber growth has slowed in recent quarters,
a decline the company has attributed primarily to a strategic shift
it undertook last year to focus on retaining existing customers and
acquiring only so-called "high-quality" subscribers who are willing
to take additional services and more likely to stick around.
DirecTV has also previously said it expects mid-single-digit
growth in revenue in the U.S. for the next three years, driven more
by higher revenue per user than by subscriber growth.
In the first quarter, net subscriber additions in DirecTV's
large U.S business totaled 21,000 versus the 81,000 subscribers
added a year earlier. The total subscriber base rose 0.7% to 20.1
million.
DirecTV has had to adjust its U.S. strategy as its cable rivals
have been able to offset softness in the mature video business with
growth in broadband and other services that satellite operators
can't provide as well. The company has increasingly looked to Latin
America as a source of growth.
For the quarter the company reported it added a net 583,000
subscribers in Latin America, versus the 593,000 subscribers tacked
on a year earlier. The company had a total of 10.9 million
subscribers in the region by the end of the quarter, a 29% jump
from the year earlier.
DirecTV reported a profit of $690 million, down from $731
million a year ago. On a per-share basis, earnings were $1.20 from
$1.07 a year earlier as the number of shares outstanding dropped
15%. The quarter's results include a $166 million pre-tax charge
associated with the revaluation of the net monetary assets of the
company's subsidiary in Venezuela at the time of the Bolivar's
devaluation in February. Excluding one-time items, adjusted
per-share earnings rose 34% to $1.43.
Revenue increased 7.6% to $7.58 billion. Analysts were looking
for earnings of $1.07 a share on $7.53 billion in revenue,
according to a poll conducted by Thomson Reuters.
The company attributed the revenue rise to subscriber growth at
DirecTV Latin America and DirecTV U.S., as well as higher average
revenue per user at the latter.
Operating margin narrowed to 16.4% from 18.6%. Operating costs
and expenses jumped 10%.
Shares closed Monday at $57.96 and were inactive in recent
premarket trading. The stock has risen 21% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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