El Segundo, Calif. — Continued strong subscriber growth, higher average monthly revenue per subscriber (ARPU) and consolidation of subscribers for a portion of the third quarter propelled DirecTV U.S. to a 30 percent revenue increase for the three months, ended Sept. 30.
Revenue for the quarter climbed to $2.5 billion, up from $1.9 billion in the year-ago period.
ARPU increased 4 percent in the third quarter, reaching $66.46, compared with a year-on-year $63.69. The rise was attributed to a programming package price increase, higher mirroring fees from an increase in the average number of set-top receivers per customer, and an increase in the number of customers subscribing to local channels.
However, increased subscriber acquisition costs related to record gross subscriber additions, among other costs, brought about a drop in DirecTV U.S. operating profit before depreciation and amortization, to $145 million from $235 million in the same three months in 2003. Operating profit for the third quarter decreased to $3 million from a year-over-year $112 million.
Also impacting the quarter was higher upgrade and retention expenses due to an increase in the number of existing customers taking DVRs, high-definition equipment, local channel equipment upgrades and additional set-top receivers.
During the third quarter DirecTV U.S. added an all-time record 1.08 million gross owned and operated subscribers, up from 811,000 in the same three months a year ago, which translates to a 33 percent increase. After accounting for a monthly churn rate of 1.67 percent, compared with a year-ago 1.6 percent, net owned and operated subscriber additions climbed 484,000, a 49 percent jump over the 326,000 recorded in the same three months the previous year.
Consolidated DirecTV Group revenue rose 20 percent in the third quarter, hitting $2.9 billion, compared with a year-on-year $2.4 billion. DirecTV recorded an operating loss of $1.6 billion, compared with operating income of $8 million in the same quarter in 2003. Net loss for the three months climbed to $1 billion, up from a net loss of $23 million in the same period last year.
“While we are pleased with DirecTV’s performance in the quarter,” said Chase Carey, president/CEO, “we recognize that there continues to be room for improvement in areas such as managing our customer churn and operating margins.”
For the nine months, DirecTV U.S. revenue rose to $6.8 billion from a year-earlier $5.4 billion, while operating profit dropped to $87.2 million from $418.9 million in the same nine months in 2003.
ARPU for the nine months at DirecTV U.S. rose to $65.02 from $61.24 in the year-earlier time frame. Average monthly churn for the nine months dropped to 1.50 percent from a year-on-year 1.54 percent. The company boasts a current 13.5 million subscribers, up from a year-ago $11.9 billion.