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Continued strong subscriber and average monthly revenue per subscriber growth pushed up fourth quarter revenue at the U.S. business of DirecTV by 15 percent, climbing to $3.4 billion from a year-ago $3 billion.
Operating profit in the company's U.S. business moved into the black in the fourth quarter, ended Dec. 31, reaching $260 million, compared with an operating loss of $65 million in the same period the prior year. The black quarter was due to the revenue increase combined with higher operating margins resulting primarily from lower subscriber acquisition costs due to a decline in gross subscriber additions and lower acquisition costs per subscriber.
DirecTV watched U.S. gross subscriber additions fall 13 percent in the fourth quarter, to 965,000, down from a year-earlier 1.1 million. This drop reflects primarily a more stringent credit policy implemented during the second quarter of 2005, said the direct broadcast satellite provider.
Average monthly revenue per subscriber in the United States climbed 5 percent, to $75.53 in the fourth quarter, up from a year-on-year $71.92. This was primarily due to programming package price increases and higher mirroring fees from an increase in the average number of set-top receivers per customer.
Average monthly churn in the three months increased to 1.7 percent from 1.6 percent, principally due to higher involuntary churn from customers with lower credit scores attained in the more competitive marketplace of 2004 and early 2005, as well as 10,000 disconnected subscribers resulting from Hurricane Katrina.
Chase Carey, president/CEO, said, “Subscriber growth in the quarter — although below expectations — was consistent with our initiatives to improve the quality of new subscribers and drive lower churn.”
In the past 12 months, the cumulative number of U.S. DirecTV subscribers increased 9 percent to 15.1 million from 13.9 million.
For the 12 months, U.S. DirecTV revenue soared 25 percent, hitting $12.2 billion from $9.8 billion. Operating profit for the year skyrocketed to $802 million from a year-on-year $22 million.
Average monthly revenue per U.S. subscriber increased 4 percent to $69.61, from $66.95 in 2004.
Gross subscriber additions in the 12 months decreased to 4.17 million from 4.2 million. Average monthly churn rose to 1.7 percent from 1.59 percent, for the period.
Consolidated fourth quarter revenue at DirecTV rose 7 percent to $3.6 billion from $3.4 billion the previous year.
Consolidated net income for the quarter also moved into the black, hitting $121 million, from a net loss of $289 million in the same three months the prior year.
DirecTV also said it will launch Turner Network Television's HDTV feed beginning Feb. 17. The HD channel will be added to DirecTV's HD package, joining ESPN HD, ESPN2 HD, Discovery HD Theater, HDNet, HDNet Movies and Universal HD. The package is priced at $10.99 per month.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.