DirecTV U.S. Revenue Increases 35%

El Segundo, Calif. — Continued strong subscriber growth helped the DirecTV Group U.S. segment increase first-quarter revenue by 35 percent, hitting $2.8 billion, up from $2.1 billion in the year-ago period.

Gross profit generated from the higher revenue pushed first-quarter operating profit at DirecTV U.S. to $38 million, close to doubling the $21 million reported in the first three months of 2004, a 48 percent rise before depreciation and amortization. This improvement was partially offset by increased subscriber acquisition costs principally related to record first-quarter gross subscriber additions.

Also impacting the first quarter, ended March 31, were higher upgrade and retention expenses, mostly due to an increase in the number of existing customers taking DVRs.

Cumulative U.S. subscribers reached 14.4 million in the first quarter, an increase of 14 percent, compared with 12.6 million in the same quarter a year earlier. Gross platform subscriber additions totaled 1.1 million in the first three months, up 20 percent from a year-on-year 951,000, while net platform subscriber additions came in at 505,000 for the three months, up 21 percent, compared with a year-ago 419,000.

Average monthly revenue per subscriber climbed to $65.78 in the first three months, an increase over the $63.57 recorded in the prior-year period. Average subscriber acquisition costs per subscriber climbed to $656, compared with $644 in the first quarter last year. The company's average monthly churn rose to 1.49 percent in the first three months, up from a year-over-year 1.43 percent.

The strong subscriber growth of DirecTV in the United States nurtured a 26 percent increase in consolidated revenue, rising to $3.1 billion, from $2.5 billion in the first quarter last year.

At the same time, DirecTV narrowed its consolidated operating loss in the first three months, down to a loss of $54 million, compared with a year-on-year loss of $96 million. The smaller operating loss was due mainly to a higher operating profit before depreciation and amortization. Consolidated operating profit before depreciation and amortization rose to $158 million in the first three months, due primarily to an increase in gross profit generated from higher revenue at DirecTV U.S. and a $33 million higher pretax charge in the first quarter of 2004.

The consolidated net loss was significantly reduced to a loss of $41 million in the first quarter, down from a year-ago net loss of $639 million. The loss was smaller due to several non-cash, after-tax charges included in the 2004 results that were partially offset by pretax gains in the same year.