Copyright 2003 AAP Information Services Pty. Ltd.


July 17, 2003, Thursday 11:05 AM Eastern Time

American satellite television giant DirecTV has delivered a surprisingly healthy lift in earnings ahead of its takeover by Rupert Murdoch's News Corp Ltd. later this year.

DirecTV's parent, Hughes Electronics Corp, reversed its second quarter net loss of $US155 million from last year to post a net profit of $US21.6 million in the same period this year.

The result was given a boost by DirecTV's United States operations, which enjoyed a better-than-expected surge of 181,000 in subscriber numbers, taking the total to 11.56 million.

Hughes flagged it now expected even better operating profits from DirecTV for the full year, lifting its forecasts to $US475 million and subscriber number target to 900,000 from 850,000 previously.

The second quarter subscriber growth lifted revenues at DirecTV's U.S. division by 16.2 percent to $US1.8 billion, while operating profit before depreciation and amortization more than doubled to a record $US324.8 million.

DirecTV's ARPU, or average monthly revenue per subscriber, also grew by about $US2.80 to $US60.90 following price rises in March, an increase in customer purchases of local channels and extra fees from a rise in the number of customers with multiple set-top receivers.

However, DirecTV's troubled Latin American operations, which filed for Chapter 11 bankruptcy reorganization in March, lost about 10.5 percent of its subscribers with the total now at 1.493 million.

The result is a boon for News Corp., which announced in April that it would finally take control of DirecTV in a $US6.6 billion deal which involves it buying a 34 percent stake in Hughes from General Motors Corp.

The DirecTV deal, which is subject to regulatory approvals, will establish News Corp. as the world's only global satellite TV player.

Analysts said the DirecTV second quarter result was a positive for News Corp. as it was ahead of expectations and the division had lifted its full year operating profit forecasts to $US475 million from $US375 million.

"The segment that outperformed (in Hughes) was DirecTV," said one analyst, who asked not to be named.

"They grew their ARPU in the second quarter and they listed subscriber growth forecasts, so the business appears to be tracking quite well."

News Corp's shares closed 23 cents lower at $11.73 while its preferred scrip fell 14 cents to $9.80, mainly because of falls on Wall Street overnight.