Satellite Video Demand Remains Strong in Q3

DirecTV Q3 net income grew to $366 million from $363 million a year ago as revenue rose 9.6 percent to $5.46 billion. The company’s U.S. segment posted $611 million in operating profit, up 15 percent. Revenue increased 8.8 percent to $4.7 billion. DirecTV added 136,000 subscribers on a net basis in the U.S., down from growth of 156,000 a year earlier, to end Q3 with 18.4 million customers. That’s up from 17.3 million. About 20 to 25 percent of the 1.1 million Q3 gross subscriber additions were derived from DirecTV’s telco alliances, including one renewed with AT&T earlier this year, company officials said. Monthly churn rose to 1.72 percent from 1.64 percent as per-subscriber acquisition costs declined to $697 from $715. Average revenue per user increased 2.1 percent to $85.32 as higher DVR and HD service fees were offset by “more competitive” promotions and one less week of NFL Sunday Ticket revenue, DirecTV said.

DirecTV’s Latin America group had a decline in Q3 operating profit to $103 million from $142 million despite a gain in revenue to $761 million from $658 million. DirecTV added 162,000 subscribers on a net basis in Latin America, an increase from growth of 79,000 a year earlier, to end Q3 with 4.3 million customers. Gross subscribers increased 38 percent in Brazil amid strong demand for HD service and a new lower priced Sky Digital Lite programming package. The HD service was introduced in Brazil in Q2. Monthly churn dropped to 1.75 percent from 2.13 percent. The downturn in operating profit was tied to $48 million in charges associated with the exchange rate of Venezuelan currency. The charges were a result of DirecTV Latin America repatriating cash from Venezuela. DirecTV Latin America’s average monthly revenue per user increased to $59.80 from $59.32. About 20 percent of new gross subscribers were pre- paid customers, up from 14 percent a year ago, DirecTV said. About 20 percent of new gross subscribers took HD or DVR services, up from 14 percent a year ago.

Video services also helped Eutelsat’s earnings, the company said. New capacity from three satellites that became functional over the last nine months helped it take advantage of requirements in several regions, including Eastern Europe the Middle East and Africa, where satellite capacity demand remains steady, the company said. Revenue grew across its three main segments, helping increase total revenue by 12 percent to $376 million during the company’s Q1. The company’s video applications accounted for 72 percent of revenue, generating $268.8 million for the company, up 8.5 percent over the previous year’s first quarter.

Other Satellite Financials

Sirius XM’s revenue grew 3 percent to $630 million in Q3 from a year earlier. That helped reduce the net loss to $181.9 million, from $217 million a year earlier. The company lost 2 percent of its subscribers, though it saw an increase over Q2 this year, leaving it with 18.9 million customers.

CEO Mel Karmazin said he was pleased with the quarter’s results in light of the slumping economy. The recent downturn in auto sales in particular has slowed the company’s growth in recent quarters, though the cash-for-clunkers program has helped offset that decrease, the company has said. Sirius XM is still working to increase its reach to second-hand car owners by establishing relationships with used car dealerships, Karmazin said Thursday.

Subscription revenue increased by 3 percent to $587 million from a year earlier. Self-pay subscribership grew by about 266,000. Self-pay subscriber churn in Q3 held at about 2 percent from the previous quarter, though up from 1.7 percent in 2008 Q3. Advertising revenue in Q3 fell 30 percent to $12.4 million.

Average revenue per subscriber increased to $10.87 from $10.51. The growth was due to sales of its “Best of” programming and increased rates on Internet packages, Karmazin said. The company also saw a 19 percent decrease in expenses compared to Q3 last year. Satellite and transmission costs fell by $6 million due to reduction in maintenance costs, repeater lease expense and personnel costs. Programming costs also dropped, falling by $38 million as a result of personnel and on-air talent costs reduction and changing content agreements.

The company is preparing for a massive TV-based marketing campaign in an effort to re-establish the brand and increase its presence in the used car market, said Operations and Sales President Jim Meyer.

ViaSat reported a $1.4 million revenue increase from a year earlier to $160.7 million for its fiscal year 2010 Q2, the company said on Thursday. Despite the revenue growth, net income fell by $100,000 to $9.2 million. The company saw $225.7 million in new contract awards during the quarter.

ViaSat’s highest grossing segment, Government Systems, saw $102.8 million in revenue during the quarter, marking a 5.6 percent increase from a year earlier. Higher revenue from next-generation military satellite communications systems and video data link systems primarily led that growth, it said. Commercial Network revenue fell 8.2 percent due to a decrease in consumer satellite broadband products and mobile communications systems.

CEO Mark Dankberg said the federal broadband stimulus application process still appears to be favoring terrestrial broadband projects even though they can be more expensive. “The process still favors smaller, more local projects,” he said. Still, there’s a growing awareness at a national level of the role satellite broadband can play, Dankberg said, noting that “other developed countries already have some form of satellite broadband subsidy at the state or national level.” The Rural Utilities Service and NTIA are in the process of awarding $7.4 million in federal broadband funds. EchoStar filed an application for $206.9 million in grants and $275.9 million in loans to construct a satellite and infrastructure to provide broadband in 20 states.

Norsat International revenue grew 4.1 percent from a year earlier to $5.1 million. Net income dropped to $600,000 from $700,000. Revenue growth was a result of consistent performance by its microwave and satellite systems segments, it said. Satellite systems accounted for $2.7 million while microwave products made $2.3 million in revenue.