DirecTV freezes hiring, postpones capital projects
DirecTV Group Inc. said Tuesday that while it remains bullish about 2009, hiring will be frozen and all but the most critical capital projects will be suspended as visibility on the economy remains poor.
The nation's largest satellite TV provider also has beefed up some promotions and plans to raise rates for next year.
Still, the El Segundo, Calif.-based company said the slowing economy hasn't made much of a dent in its business thus far. DirecTV expects fourth-quarter and full-year financial results to show an increase over 2007 and next year's subscriber rolls to grow.
"Despite the slowing economy, we remain quite bullish about 2009 to date. The economy has not had a material impact on our business," said Jonathan Rubin, senior vice president of financial planning and investor relations, at the 36th Annual UBS Global Media and Communications Conference in New York.
DirecTV's partnership with AT&T Inc. to resell each other's services in bundled packages next year should bring in additional subscribers, he said.
Rubin noted that DirecTV ended the third-quarter with net debt of less than $3 billion.
"If things get really bad, we suspect we might be hurt less than others due to our tight credit policies," he said.
DirecTV's strategy has been to go after customers with better credit histories who would rather have a good TV experience than cheap rates. These customers tend to be more loyal and buy more services.
Rubin said recent pay-TV subscriber gains by phone companies have come from cable operators and Dish Network Corp. Dish, unlike DirecTV, has pursued a strategy of going after cost-conscious customers and recently began ramping up its HD offerings.
Phone companies compete "based on price and saving money. DirecTV's message is on offering a superior TV experience and much less on price," Rubin said.
While there were competing claims about which pay-TV operator has the most high-definition content, Rubin said DirecTV remains "the clear leader and by a wide margin" with over 130 HD channels.
The company plans to continue to press its HD offerings, since over the next three years about 40 million U.S. households are expected to sign up for HD.
A key strategy for the company is offering plenty of sports in HD, such as its popular and premium-priced NFL Sunday Ticket.
Shares of DirecTV fell 54 cents to $22.79 Tuesday.
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