The Benefit of No Blackouts: DirecTV Adds More Subscribers Than Expected

Gain Contrasts With Time Warner Cable's Recent Worse-Than-Expected Defections

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DirecTV posted third-quarter profit and revenue that beat analysts' estimates as it added 139,000 subscribers, the most since 2011, and increased prices.

Eli and Peyton Manning in a recent 'Football on Your Phone' video promoting DirecTV
Eli and Peyton Manning in a recent 'Football on Your Phone' video promoting DirecTV

The subscriber gain for DirecTV comes shortly after Time Warner Cable said it had lost 306,000 video subscribers in the third quarter, as customers fled the cable operator during its blackout of CBS. DirecTV, the biggest satellite provider in the U.S., did not have any big retransmission disputes with programmers to drive subscribers away.

Net income at DirecTV climbed 24% to $699 million, or $1.28 a share, from $565 million, or 90 cents, a year earlier, the company said today in a statement. Analysts had predicted earnings of about $1 a share on average, according to data compiled by Bloomberg. Revenue rose 6.3% to $7.88 billion, topping the $7.84 billion estimate.

Higher average revenue per user in the U.S. helped, DirecTV said. The figure, called ARPU for short, climbed 6% to $102.37 in the period, and the company lowered its rate of churn -- the percentage of customers who leave the service. Customers are paying more for premium TV packages, enhanced warranties and pay-per-view shows.

"It shows they have a very solid position at the high end of the market, with a better product and a better subscriber base," said Todd Mitchell, an analyst at Brean Capital in New York. "That insulates them a little bit from the churn you get in promotional subscriptions."

DirecTV showed signs of slowing in Latin America -- a region seen as the company's biggest growth opportunity -- as the 260,000 subscribers added there fell short of estimates as competition mounts, Adam Ilkowitz, an analyst at Nomura Equity Research, said in a note to clients.

~ Bloomberg News ~

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