DirecTV Group Inc., the nation's largest satellite TV operator, reported an 11% drop in second-quarter profit Thursday as higher customer- acquisition costs offset revenue growth.
The El Segundo company said that customers were cutting back on premium channels and pay-per-view programming.
But DirecTV added 224,000 net subscribers in the quarter, 74% more than the same period last year, at a time when cable operators are losing basic video customers.
It was DirecTV's first full quarter of partnership with AT&T Inc. to cross-sell each other's services, which boosted customer rolls.
DirecTV earned $407 million, down from $455 million in the same quarter a year ago.
Earnings per share held steady at 40 cents, below the 43 cents forecast by analysts polled by Thomson Reuters.
Revenue rose 9% to $5.22 billion, beating analysts' average estimate of $5.18 billion.
DirecTV also said that its spin-off from Liberty Media Corp. is on track to be completed within the next couple of months.
Later this year, DirecTV plans to offer live streaming of NFL games on cellphones. It also plans to launch downloadable TV applications.
Shares of DirecTV slid 92 cents, or 3.6%, to $24.84.