DirecTV's Latin American growth shines

NEW YORK Thu May 5, 2011 9:56am EDT

NEW YORK (Reuters) - DirecTV Group, the satellite TV provider, said its quarterly profit rose in the first quarter as it made further inroads into the TV market in Latin American countries such as Brazil and Mexico.

The company added 427,000 subscribers in the quarter in Latin America, which overshadows the 184,000 new subscribers it attracted in the United States. The company has been tapping into the growing middle class, especially in Brazil, to buy its subscription service.

"Latin America showed terrific numbers," said Kaufman Bros. analyst Todd Mitchell. "That's what led to the upside."

The weaker dollar rate helped revenue per subscriber numbers in Brazil.

DirecTV is marketing heavily in Brazil, where it launched a marketing campaign surrounding Zico, a famous soccer player, and Hebe Camargo, a popular personality the company called the "Brazilian Oprah," during an analyst day late last year.

DirecTV's net income rose to $674 million or 85 cents per share, up from $558 million, or 60 cents per share, a year earlier.

Adjusted for the sale of its 5 percent stake of the Game Show Network, it earned 83 cents per share, which beat analysts' average estimates of 71 cents per share, according to Thomson-Reuters I/B/E/S.

One concern surrounds the fate of the upcoming season for the National Football League, since one of DirecTV's main products is the exclusive "NFL Sunday Ticket," which carries almost every pro football game around the league.

The league is still embroiled in a lockout and the issue is making its way through court.

Much of DirecTV's U.S. growth can be attributed to "Sunday Ticket," for which the satellite company pays the NFL $1 billion a year.

In a protracted strike, DirecTV stands to lose some of the estimated 2.2 million football fans who pay $300 a year for the package.

The company has said that if a full season of play is lost, it is required to make payments to the NFL but the company gets to add on an extra season at the end of its contract. If only a couple of games are missed, their payments to the NFL are also reduced, the company said.

Revenue rose 13 pct to $6.32 billion. Analysts were expecting revenue of $6.23 billion, according to Thomson Reuters I/B/E/S.

The company added 184,000 new subscribers in the United States quarter. This surpasses Wall Street analysts' average estimates about 157,000 subscribers, according to Mitchell.

Earlier this week, Dish Network Corp, DirecTV's main U.S. rival in the U.S., said it added a better-than-expected number of subscribers and settled its drawn-out lawsuit with TiVo Inc.

DirecTV shares closed at $48.50 on the New York Stock Exchange on Wednesday.

(Reporting by Liana B. Baker; Editing by Derek Caney)

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