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DirecTV's earnings grow as subscriber base climbs

February 08, 2007|From the Associated Press

DirecTV Group Inc., the nation's largest satellite TV operator, said Wednesday that its fourth-quarter earnings more than doubled as its subscriber base grew and it changed from selling set-top boxes to leasing them.

The company also said it was still on track to offer 100 high-definition channels by the end of the year, despite damage done to a key satellite launch platform this month.

The El Segundo-based company said net income surged to $356 million, or 29 cents a share, from $121 million, or 9 cents, in the same period a year earlier.

Analysts polled by Thomson Financial were looking for profit of 30 cents a share.

Revenue rose 16% to $4.18 billion, surpassing Wall Street's average estimate of $4.1 billion.

DirecTV shares rose $1.38, or 5.8%, to $25.35.

Financial results were affected by the company's decision to capitalize customer equipment under a lease program. That delays the recognition of the equipment as an expense by spreading it out over years instead of booking it all at once. It also enables the company to reuse the boxes.

The increased revenue came from a larger subscriber base and higher revenue per subscriber, as customers spent more for pay-per-view and high-definition programming.

Net subscriber additions rose 38% to 275,000, leaving DirecTV with just under 16 million subscribers at the end of the year.

A year ago, the company changed its customer acquisition practices by targeting those more likely to make monthly payments. The move caused a slowdown in subscriber growth but increased revenue per customer.

The monthly churn rate, or the pace of customer defection, fell during the most recent quarter to 1.6% from 1.7% a year ago.

Average revenue per subscriber should grow 5% in 2007, and operating profit before depreciation and amortization should climb 15% to 20%, said Chase Carey, DirecTV's president and chief executive.

The company said it would launch a satellite as planned this year that will increase its national offering of high-definition channels.

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