DirecTV Q2 Profit Slipped As Net Subscribers Gained

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El Segundo, Calif. - The DirecTV Group said Thursday its second-quarter earnings fell 11 percent on lower operating profit and margins, due mostly to rising customer acquisition and programming costs.

At the same time, the company managed to raise its net new U.S. subscriber level 74 percent to 224,000 in the period, on a 17 percent increase in gross additions.

The company reported a total of 18.3 million U.S. subscribers as of June 30, which was up 6.6 percent from a year ago.

But the company increased its marketing costs 17 percent in the period as it stepped up efforts against the economic downturn and strong promotions from cable and telco TV competitors.

Some of DirecTVs premium subscribers also cut back service packages in the period.

The satellite TV provider said its income for the quarter was $407 million, down from $455 million, a year earlier.

Revenue increased 8.6 percent to $5.23 billion.

The company's operating margin fell to 13.5 percent from 16.7 percent.

Programming costs rose 9.2 percent in the quarter, DirecTV said, which included a renewal of its exclusive and expensive agreement to carry the National Football League's Sunday Ticket package through 2014 in March.

The U.S. monthly churn rate rose to 1.51 percent from1.49 percent a year ago, while average U.S. monthly revenue per subscriber rose 1.7 percent.

Interim chief executive Larry Hunter said the company's Latin American operations posted an 11 percent increase in revenue on strong subscriber growth.


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