Mixed showing for DirecTV


Subscriber additions were more than Wall Street expected – but so were costs as DirecTV reported its Q4 results. Revenues for the quarter were up 9% to $5.31 billion and operating profit before depreciation and amortization increased 11% to $1.22 billion. But marketing, equipment and installation costs rose in the quarter, making the bottom line net income of $332 million, or 32 cents per share, miss the Thomson/First Call consensus target of 33 cents by a penny.

“Strong fourth quarter financial results capped the best year ever for DirecTV in both the United States and Latin America. Company highlights included revenue growth of over 14% to nearly $20 billion, the highest operating profit before depreciation and amortization (OPBDA) margin in our history increasing 130 basis points to 25.5% and most importantly, a 76% increase in free cash flow to about $1.7 billion,” said Chase Carey, President and CEO.

Indeed, DirecTV is showing much more resilience than most businesses in the current economic downturn – certainly outperforming advertising-supported media companies by a wide margin. Monthly customer churn has actually remained low, averaging only 1.42% for Q4 and 1.47 for all of 2008 – the lowest churn rate in nine years. Moreover, the company added 3.9 million gross subscribers in 2008, the highest number in three years.

RBR/TVBR observation: Just a few days ago, Rupert Murdoch was talking about how News Corporation has been working to increase the percentage of its revenues that comes from sources other than advertising, such as subscription fees. It was just a bit over a year ago that News Corp. was still the biggest shareholder of DirecTV, which added to that non-ad revenue. But it was necessary for Murdoch to swap that stake to John Malone’s Liberty Media in order to get back the big chunk of News Corp. stock that Malone held. So it goes in the business world.