By Saabira Chaudhuri
DirecTV Group Inc.'s (DTV) second-quarter earnings slipped 7.2%
as the satellite television provider lost more subscribers in its
U.S. arm, while growth slowed in Latin America.
Net subscriber losses in DirecTV's large U.S business totaled
84,000, up from net subscribers losses of 52,000 a year earlier.
The total subscriber base stood at 20 million at the quarter's end,
compared with 19.9 million a year ago.
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.
The company added a net 165,000 subscribers in Latin America,
versus the 645,000 subscribers added a year earlier. The company
had a total of 11.1 million subscribers in the region by the end of
the quarter, up from 9.1 million the year earlier.
Chief Executive Mike White said "macro-economic and operational
challenges in Latin America," particularly in Brazil, hurt the
quarter's results.
DirecTV reported a profit of $660 million, or $1.18 a share,
versus $711 million, or $1.09 a share, a year ago. The latest
period included a $59 million charge tied to the deconsolidation of
a sports network, while the year-ago quarter included a $64 million
charge for a loss on the early retirement of debt.
Revenue increased 6.6% to $7.7 billion.
Analysts were looking for earnings of $1.33 a share on $7.75
billion in revenue, according to a poll conducted by Thomson
Reuters.
The company attributed the revenue rise to higher average
revenue per user at its U.S. business, as well as subscriber growth
at both the U.S. and Latin America arms. It said the increase was
partly offset by lower average revenue per user in Latin America,
primarily due to unfavorable exchange rates.
Operating margin narrowed to 17.5% from 19.5%. Total operating
costs and expenses rose 9.2% to $6.35 billion.
Ahead of DirecTv's report, analysts at Wunderlich had said they
expect that "the competitive and regulatory playing field will
allow DirecTV to adhere to its go-it-alone strategy and use
competitors pipes or spectrum to deliver an 'as good or better'
video product."
Shares closed Wednesday at $63.28 and were inactive in recent
premarket trading. The stock has risen 12% in the past three
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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