twice connect
careers

Hughes DirecTV Revenue Jumps 20%

10/14/2003 02:06:00 PM Eastern

El Segundo, Calif. - Continued strong subscriber growth as well as higher average monthly revenue per subscriber helped push up third quarter U.S. revenue for Hughes Electronics' DirecTV satellite TV service by 20 percent, reaching $1.9 billion, compared with $1.6 billion in the year-ago period.

Third quarter operating profit before depreciation and amortization for DirecTV U.S. increased 15 percent, hitting $235 million, up from $205 million in last year's third quarter. The rise was attributed to the additional gross profit gained from increased revenue, an improved mix of higher margin revenues and the favorable impact from cost management.

Factoring in augmented marketing expenses associated with the larger gross subscriber additions, higher acquisition costs per subscriber and increased interest expense, net income for DirecTV U.S. dropped to $36 million in the third quarter, ended Sept. 30, down from $151.5 million.

DirecTV U.S. added 811,000 gross subscribers in the third quarter, and, after accounting for churn, 326,000 net subscribers in the same three months, a 58 percent increase over last year's third quarter. Total owned and operated subscribers at the end of the third quarter reached 10.3 million, up from 9.2 million at the end of the same three months in 2002.

DirecTV average revenue per subscriber climbed 8 percent in the third quarter, or $4.50 monthly, to $63.70. The company said additional revenue was stimulated by increased demand for National Football League games, to which the provider has exclusive rights. Average subscriber acquisition costs increased to $590 in the third quarter, up from $555 in the same quarter in 2002.

For the nine months, U.S. revenue for DirecTV rose to $5.4 billion, up from $4.6 billion in the same period a year ago. Operating profit reached $418.9 million for the period, compared with $171.6 million a year earlier, while net income increased to $171.1 million, up from $160.3 million in the same nine months in 2002.

The Hughes direct-to-home broadcast segment, the company's largest, saw third quarter revenue jump 18 percent, hitting $2.1 billion, while the third quarter of 2002 came in at $1.8 billion. The segment registered operating profit before depreciation and amortization of $221.8 million, compared with $177.1 million in the third quarter of 2002. Operating profit for the segment reached $42.1 million, more than double the year-ago figure of $20.8 million.

Consolidated Hughes revenue increased 17 percent in the third quarter, hitting $2.6 billion, compared with $2.2 billion year-on-year. Operating profit before depreciation and amortization for the quarter rose 33 percent, to $359 million, up from $270 million in the same three months in 2002. Operating profit soared to $76.5 million in the third quarter, compared with $16 million year over year, but Hughes widened its net loss to $23 million in the quarter, compared with $13.6 million in the year-ago period. The higher net loss was due primarily to a $159 million pre-tax gain in 2002 and a $65 million third-quarter 2003 non-cash charge.

Looking ahead, Hughes is anticipating DirecTV U.S. fourth quarter revenue of about $2.2 billion and about $7.6 billion for the 12 months. It expects an operating profit of about $60 million for the fourth quarter and about $475 million for all of 2003. Net subscriber additions for the year are anticipated at about 1.1 million.

Consolidated Hughes revenue for the fourth quarter should range from $2.75 billion to $2.8 billion, while full-year revenue is anticipated at $9.9 billion to $9.95 billion.

Hughes, which is the satellite communications unit of General Motors, is set to be taken over by News Corp. by the end of 2003, following regulatory approval.