El Segundo, Calif. — Heartened by a move into the black and 1.1 million gross subscriber additions, television service provider DirecTV posted a 13 percent increase in consolidated third-quarter revenue, climbing to $3.2 billion from a year-ago $2.9 billion.
The company attributed this revenue rise to strong DirecTV U.S. subscriber growth, higher average monthly revenue per subscriber and the consolidation of the full economics of subscribers acquired in the third quarter.
Revenue in the company’s DirecTV U.S. business jumped 22 percent in the third quarter, reaching $3 billion, up from $2.5 billion year-on-year. Average monthly revenue per subscriber rose over 3 percent, hitting $68.65 in the three months, ended Sept. 30, up from last year’s $66.46, due mainly to programming package price increases and higher fees from an increasing number of set-top boxes.
DirecTV U.S. operating profit before depreciation and amortization more than doubled to $338 million from $145 million, while operating profit increased to $171 million from $3 million, due to the revenue increase, combined with higher operating margins primarily resulting from cost stabilization in subscriber acquisition and upgrade and retention marketing. This improvement was partially offset by a $14 million charge related to the impact from Hurricane Katrina, said the company.
Although DirecTV nailed down more than 1 million gross subscriber additions in the third quarter, the number was below the 1.2 million garnered in the same three months last year. The company currently boasts 14.9 million total subscribers, compared with 13.5 million after the third quarter of 2004.
Average monthly churn came in at 1.89 percent in the third quarter, up from a year-on-year 1.82 percent — what the company called unacceptably high — primarily due to an increase in involuntary churn of high-risk customers attained in 2004 and early 2005 before a new credit policy was instituted.
At the same time, DirecTV reported higher average subscriber acquisition costs per subscriber, rising to $626 in this year’s third quarter, compared with $617 in the same period the prior year.
Consolidated DirecTV third-quarter operating profit before depreciation and amortization hit $365 million, compared with a loss of $1.4 billion year-over-year. Operating profit was $156 million, compared with last year’s loss of $1.6 billion. Net income rose to $95 million, compared with a loss of $1 billion in the third quarter of 2004.
DirecTV U.S. recorded nine month revenue of $8.8 billion, up from $6.8 billion the previous year. Operating profit increased to $542 million for the nine months, compared with a profit of $87 million a year earlier.
Gross subscriber additions for the nine months at DirecTV U.S. reached 3.2 million, up from 3.1 million the previous year. Average monthly revenue per subscriber for the nine months climbed to $67.52 from $65.02, while average monthly churn for the period rose to 1.70 percent from 1.58 percent.
Consolidated DirecTV revenue for the nine months came in at $9.6 billion, from $8 billion year-over-year, with net income for the period reaching $215 million, compared with a net loss of $1.7 billion in the same nine months in 2004.
