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DirecTV's fourth-quarter profit rises 16%, topping estimates

February 16, 2012|Bloomberg News

DirecTV, the largest U.S. satellite TV provider, reported a 16% increase in fourth-quarter profit as customer gains in Latin America climbed to a record.

Net income rose to $718 million, or $1.02 a share, from $618 million, or 74 cents, a year earlier, the El Segundo company said Thursday. Analysts predicted a profit of 92 cents a share in a Bloomberg survey. The company also said it plans to start a $6-billion share-buyback program.

DirecTV gained 590,000 customers in Latin America, topping the record 574,000 achieved in the previous quarter as it added services to challenge pay TV rivals. U.S. subscriber gains were smaller than projected, which may concern investors as DirecTV battles rising programming costs and cable rivals such as Comcast Corp., said Michael McCormack, an analyst at Nomura Securities International Inc. in New York.

"It's costing more for DirecTV to acquire customers, and U.S. subscriber gains were weaker than expected," McCormack said. "At the same time, Comcast is limiting video customer losses. The dynamic is that cable's Internet bundling is becoming that much more important as the way people watch TV develops."

Sales increased 13% to $7.46 billion, exceeding projections.

DirecTV shares fell 92 cents, or 2%, to $45.38. The shares have gained 6.1% this year.

DirecTV said programming costs rose because of network fee increases and expenses related to its NFL Sunday Ticket football content. The programming expense will be exacerbated when DirecTV negotiates new contracts with CBS Corp. and Discovery Communications Inc. this year, McCormack said.

DirecTV is positioned to "deliver mid-single-digit or better" revenue growth over the next three years, Chief Executive Michael White said. Chief Financial Officer Patrick Doyle said earnings per share will be "well over $4" in 2012. Analysts estimated $4.36.

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