DirectTV Group Sales, Profits Increase In Q4

EL SEGUNDO, CALIF. — DirecTV Group reported double-digit sales and operating profit gains, but a 2 percent drop in net income for the fourth quarter.

In the fourth quarter of 2007 revenues increased 17 percent to $4.88 billion, operating profit before depreciation and amortization (OPBDA) increased 21 percent to $1.10 billion, and operating profit increased 4 percent to $617 million compared with last year's fourth quarter.

Net income for the quarter declined 2 percent to $348 million from a year ago, the satellite TV service provider reported.

DirecTV president and CEO Chase Carey said the satellite service saw "strong net subscriber gains of 275,000 in the quarter, as the company recorded its "lowest monthly churn rate in eight years." DirecTV's total subscribers now stand at nearly 16.9 million.

Carey said the 15-basis-point reduction in monthly churn to 1.42 percent was largely due to the significant growth in customers with HD and DVR services — increasing from about 30 percent of the subscriber base last year to more than 40 percent this year. The company also tightened its credit policies.

The continued strong subscriber growth coupled with an 8.3 percent increase in average revenue per unit (ARPU) drove revenues up 14 percent to $4.38 billion.

"As with churn, the strong ARPU growth reflects the improving quality of our customers who are purchasing an array of new services," Carey said.

"DirecTV's content and service leadership continue to drive superior results in a tougher marketplace that reflects increasing competition and a slowing economy," Carey added. "Advanced services — including the launch of the industry's best HD programming — played an increasingly important role in DirecTV U.S.'s top-line and bottom-line results."

DirecTV's OPBDA increased 14 percent to $1 billion primarily due to the gross profit generated from the strong revenue growth, the company said. A 23 percent OPBDA margin in the quarter "was unchanged from the prior year as operating efficiencies gained in subscriber services and G&A were offset by higher acquisition and upgrade costs associated with the significant increase in new and existing customers purchasing advanced services," Carey said.

Looking forward, he said, "With the launch of our next satellite in a couple of months, we will extend DirecTV's leadership by introducing even more local and national HD channels. With full awareness of an industry that will be characterized by increasing competition and a slowing economy, we're continuing to target extremely strong results in 2008 highlighted by a material increase in free cash flow driven by DirecTV's brand and content leadership, along with improved operating scale and efficiencies."