DirecTV gains subscribers, but posts $1B loss
Copyright 2004 Newsday, Inc.
Newsday (New York)
November 3, 2004 Wednesday
DirecTV gained new satellite TV subscribers in the third quarter at a rate 49 percent higher than a year ago, thanks to an expensive marketing campaign, although it also lost customers at a higher rate.
Overall, the nation's biggest satellite TV provider added a record 484,000 directly controlled subscribers in the quarter, for a total of 12.08 million in the United States, up 18 percent from a year earlier, even as cable companies stepped up efforts to fight back.
DirecTV posted a loss of $1 billion, in large part because it lowered the estimated value of three new satellites by $1.5 billion, resulting in a $903 million charge after taxes, but also because of sharply higher costs to attract and hang on to subscribers. The estimate was slashed because DirecTV decided to use the satellites to vastly expand its ability to add high-definition TV channels rather than to offer a high-speed Internet service, the original intent.
The rate of loss of subscribers increased to 1.67 percent per month, up from 1.6 percent per month a year earlier, reflecting increased competitive efforts by cable companies and higher customer credit risks.
"It was a quarter of mixed results," DirecTV chief executive Chase Carey told analysts.
Since Rupert Murdoch's News Corp. gained control of DirecTV last year, it has focused on luring subscribers with equipment and service special offers.
The swelling subscriber base gives News Corp. more clout to start and expand cable TV networks. The U.S.-traded version of News Corp. stock jumped $1.50 to $33.61.
DirecTV stock fell 51 cents to $16.51.
DirecTV's revenue rose 20 percent to $2.9 billion in the quarter. Its loss a year earlier was $23 million.