Satellite television company DirecTV Group Inc. said Wednesday that its first-quarter earnings rose 10.4% after it acquired a surprising number of new U.S. subscribers despite a housing meltdown.
The El Segundo company said net income climbed to $371 million, or 32 cents a share, in the three months ended March 31 from $336 million, or 27 cents, a year earlier. Revenue rose 17% to $4.59 billion.
It added 275,000 net U.S. subscribers, well above analyst expectations of about 180,000, and increased its domestic subscriber base by 5.2% to 17.1 million.
"The overarching question is where are all these subscribers coming from?" said analyst Craig Moffett of Sanford C. Bernstein & Co. "Last time I looked, the news said we were on or near a recession. And yet the pay-TV market seems to be undergoing some kind of renaissance."
DirecTV shares rose $1.21, or 4.7%, to $27.01.
Analysts surveyed by Thomson Financial expected profit of 31 cents a share on revenue of $4.47 billion.
Average monthly revenue per U.S. subscriber rose 8.6% from a year ago to $79.70, driven by price increases for programming, better pay-per-view sales and higher fees for high-definition and digital video recording equipment and services.
DirecTV also said John Malone's Liberty Media Corp. had agreed to restrict its voting interest to 48% to allow DirecTV to increase its share repurchase program to $3 billion, up from the $1 billion announced earlier, funded by as much as $2.5 billion in new debt.
In late February, Liberty Media acquired a 41% stake in DirecTV by swapping a 16% stake in News Corp. plus $625 million in cash.
In April, Liberty increased its stake in DirecTV to 48%, and analysts expected Liberty to attempt to buy the whole company.