Strong subscriber growth at Hughes Electronics' DirecTV, as well as increased average monthly revenue per subscriber (ARPU), drove up U.S. revenue for the company's direct broadcast satellite provider by 16 percent in the first quarter, hitting $1.7 billion, compared with $1.5 billion in the year-ago period.
The company reported results days after Hughes and General Motors announced their intentions to split off Hughes into an asset-based security that will be 34 percent owned by News Corp. Hughes is a unit of General Motors. (See story at right.)
The number of platform subscribers climbed to 11.4 million in the first quarter, compared with 10.5 million in the same three months in 2002. ARPU increased $2.40, to $59.10 in the three months.
U.S. DirecTV Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) more than doubled to a record $230.4 million, up from $93.7 million in the same three months in 2002. The company said the EBITDA increase reflected DirecTV's strong revenue growth, along with a sharp increase in operating margins, due to efforts to improve cost structure.
Operating profit for U.S. DirecTV in the quarter, ended March 31, climbed to $106 million, compared with $8.6 million in the first quarter a year earlier. Lower monthly customer churn rate of 1.5 percent during the quarter also contributed to DirecTV's strong financial performance.
"An outstanding first quarter performance by DirecTV U.S. drove Hughes' strong first quarter revenue and EBITDA growth," said Jack A. Shaw, Hughes president/CEO. First quarter revenue at Hughes climbed 10 percent, reaching $2.2 billion, up from $2 billion year over year.
Hughes EBITDA in the first three months was $305 million, compared with $164.5 million in the same three months last year. Impacting on the company's quarterly comparisons were a $95 million one-time gain in the first quarter of 2002, as well as a charge of $83 million in the same period.
Hughes operating profit in the first quarter was $41.9 million, compared with an operating loss of $87.7 million in the first quarter of 2002. Hughes said this was the first time the company had generated operating profit in a quarter in over four years. Net loss was reduced to $50.9 million in the first quarter, compared with a net loss of $861.8 million year-on-year.
First quarter revenue in Hughes' direct-to-home broadcast segment, which includes DirecTV, jumped 13.3 percent, hitting $1.8 billion, up from $1.6 billion in the first quarter of 2002. The segment reported EBITDA of $211.3 million in the first three months, compared with a negative EBITDA of $20.9 million in the first quarter of last year. Operating profit for the segment was $38.3 million in the first three months, compared with an operating loss of $164 million in the same period in 2002.
Due to the first quarter strength of DirecTV, full year subscriber estimates have been increased to the range of 800,000 to 850,000, up from an expected range of 750,000 to 800,000.