DirecTV Subscriptions from Telcos Decline, As Net Subs Growth Slows
Subscription contributions for telecom companies that sell DirecTV services are slowing as TV competition intensifies and reliance on land lines declines, the company said in its Q1 earnings call. Generally sold as part of a bundle with telephone services and/or Internet, contributions have fallen to under 20 percent from about 25 percent, said DirecTV Chief Financial Officer Patrick Doyle. The continued roll out of Verizon’s FiOS and AT&T’s U-verse have contributed to the slide, he said.
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The company picked up 100,000 net subscribers in Q1, down from 460,000 net subscribers in the same quarter in 2009, it said. The decrease was largely due to last year’s DTV transition and a tougher competitive environment, it said. The company ended Q1 with 18.66 million subscribers, up 3 percent from a year ago. Despite the slowed subscription growth, the company had $4.8 billion in Q1 revenue, up 10.9 percent from the same quarter a year ago. Operating profit grew to $808 million in Q1 this year, more than doubling the $397 million in Q1 last year. The growth was attributed to “lower subscriber acquisition costs related to the decline in gross subscriber additions, as well as lower upgrade and retention costs,” it said.
The DirecTV board recently OK'd the beginning of the procurement process for a new satellite to serve as a replacement or backup, said CEO Michael White. The process won’t immediately affect the company’s capital expenditures because the procurement is still in its beginning phases, he said. DirecTV is expecting to see a TiVo box that works with DirecTV near the end of this year or early next year, he said. DirecTV has had several meetings with TiVo CEO Tom Rogers and is in the process of providing specifications, said White.
Sales of premium channels, pay-per-view events, and advertising improved in the quarter as the overall economy improved, White said. DirecTV hopes to take the “leadership position in 3D,” beginning with the company’s launch of three 3D dedicated channels. Multiroom viewing, which will be available June 3, will also help strengthen the company’s brand and reputation, he said.