The DirecTV Group managed a 9 percent increase in second-quarter revenues, to $5.2 billion, compared with its 2008 second quarter, despite an 11 percent drop in net income, to $407 million.
Revenue was up due to subscriber growth, but costs associated with customer acquisition and retention, quality improvement, and capitalization of more expensive CPE (HD boxes and DVRs) and other charges more than offset the gains.
DirecTV’s second quarter was the first full quarter that the joint AT&T/DirecTV bundle was marketed, and the company said that was the major reason for the increase in subscribers, although higher demand for HD and DVR services also came into play.
The higher-than-expected growth in subscribers edged DirecTV to a total sub count that DirecTV says makes it the largest pay-TV company in the world.
"In a quarter in which DirecTV celebrated its 15th anniversary and became the world's largest pay-TV provider with over 24.2 million customers in the U.S., Latin America and Mexico, our momentum continued as DirecTV U.S. net subscriber additions grew 74 percent to 224,000," said interim CEO Larry Hunter.
"DirecTV's strong brand and unrivaled video experience, along with the first full quarter of marketing our bundled service with AT&T, contributed to a 17 percent increase in gross additions to 1.05 million and a monthly churn rate of 1.51 percent," Hunter added.
Of its 24.2 million subscribers, 18.3 million were in the U.S., DirecTV said, an increase of 7 percent over the 17.16 million subscribers reported on June 30, 2008.
In June, then DirecTV president and CEO Chase Carey said that he was resigning to return to News Corp. as Rupert Murdoch's second in command. Carey presided over the growth of the satellite provider from 12 million to 18 million subscribers. He was also in charge as DirecTV grew free cash flow from breakeven in 2003 to $1.7 billion in 2008.