DirecTV profit jumps 24% on gain, price increases
DirecTV, the No. 1 U.S. satellite broadcaster, said Tuesday that its third-quarter profit climbed 24% — breezing past most Wall Street forecasts — on a gain related to a settlement in Latin America, a 6% increase in revenue-per-user due to price increases and greater demand for pay-per-view events. The company said it earned $699 million, or $1.28 a share, compared with a profit of $565 million, or 90 cents a share, in the year-ago period. Revenue rose to $7.88 billion from $7.42 billion.
According to a survey of analysts taken by Thomson Reuters, DirecTV was expected to report net income of $1.01 a share on revenue of $7.84 billion.
The company picked up 139,000 net subscribers, up from 67,000 in the same quarter last year. Total U.S. subscribers rose to 20.16 million from 19.99 million.
Average revenue per subscriber at DirecTV U.S. rose to $102.37 from $96.41. In addition to a boost in pay-per-view sales, the ARPU improvement reflected higher fees for advanced receiver service, greater prices for programming packages and increased fees under a new enhanced warranty program.
The average monthly rate of cancellations fell to 1.61% from 1.74%; in the third quarter of 2012, DirecTV’s carriage-fee battle with Viacom caused a number of channels to go dark, driving away a number of subscribers.
DirecTV said it ramped up promotional spending in the quarter to reach both new and existing customers, partially offsetting the ARPU increase.
Investors may have some concerns about the satellite company’s expenses during the fourth quarter and beyond, as DirecTV shares were down marginally Tuesday afternoon at $64.14.
The company will have a conference call with analysts and investors at 2 p.m. Eastern time.