EL SEGUNDO, Calif. (AP) – DirecTV Group Inc., the nation's largest satellite TV provider, said Thursday that its first-quarter profit dropped 46 percent as costs and expenses increased on promotions offered to draw in new customers and keep existing ones.
The El Segundo, Calif.-based company, which will combine with Liberty Media Corp.'s entertainment unit and spin-off into a separately traded company, earned $201 million, or 20 cents per share, for the period ended March 31. That's down from $371 million, or 32 cents per share, a year ago.
Analysts expected profit of 33 cents per share, according to a Thomson Reuters poll. Analysts' estimates normally exclude one-time items.
Revenue climbed 7 percent to $4.9 billion from $4.59 billion as U.S. net subscriber additions surged 67 percent to 460,000 – the highest in four years.
The satellite TV provider credited its 22 percent increase in gross subscriber additions to its high-definition, interactive, sports and digital video recorder services.
But average monthly revenue per U.S. subscriber (ARPU) only managed to edge up to about $80.4 million from $79.7 million.
"Increased economic and competitive pressures limited our ARPU growth to 0.8 percent due to more promotional offers given to new and existing customers, as well as lower premium movie, pay-per-view and advertising revenues in the quarter," DirecTV President and CEO Chase Carey said.
The U.S. division's churn rate, or customer turnover, declined to 1.33 percent – a 10-year low.
At its Latin America division, revenue improved to $598 million from $542 million, but ARPU fell to $50.4 million from $53.5 million. The unit's churn rate rose to 1.86 percent on growth in its pre-paid business, increased competition and the ongoing economic slowdown.
Shares of DirecTV fell 25 cents to $24.08 in morning trading Thursday.
Separately, DirecTV is now offering local high-definition programming to customers in the Butte-Bozeman, Mont., designated market area. The following broadcast networks are now available in HD: KTVM/NBC and KBZK/CBS. DirecTV now offers local HD broadcast channels in 124 cities, representing 89 percent of U.S. TV households.