DirecTV says targets on track despite economy

Thu Feb 16, 2012 4:14pm EST

(Reuters) - Satellite TV provider DirecTV said it was on track to meet its growth targets for 2012 and 2013 even as programming costs continued to rise and U.S. consumers are keeping a tight grip on their wallets.

"Macroeconomic weakness continues to pressure the U.S. consumer, driving them to be decidedly more cautious and focused on getting good value for every dollar they spend, even as the economy has marginally improved," Chief Executive Mike White said on Thursday on a conference call with analysts.

He added that competition has intensified and that programmers were seeking higher-than-expected rates for their content as well as digital rights.

The largest satellite TV provider in the United States said on Thursday that it was well positioned to deliver mid-single digit growth or higher in revenue and operating profit before depreciation and amortization (OPBDA) over the next three years in the United States.

However, it said that OPBDA and cash flow before interest and taxes would likely be "somewhat compressed in 2013 due to higher gross additions, higher investments in infrastructure".

DirecTV aims to increase earnings per share to $4 this year and said it was on track to meet or beat its profit target of $5 per share in 2013. Diluted 2011 earnings were $3.47 per share.

It forecast overall revenue and subscriber growth to be about 20 percent year-over-year.

DirecTV's fourth-quarter profit beat Wall Street estimates and the satellite TV provider said it would buy back $6 billion in stock.

Earlier this week, Buffett's Berkshire Hathaway increased its position in the company by nearly five-fold, giving it a nearly 3 percent stake, which makes the firm one of DirecTV's top-ten shareholders.

Its net income rose to $718 million, or $1.02 per share, compared with $618 million, or 74 cents per share a year earlier. This beat analysts' estimates of 92 cents per share.

DirecTV's revenue rose 13 percent to $7.46 billion, beating analysts' estimates of $7.41 billion, according to Thomson Reuters I/B/E/S.

The company added fewer U.S. subscribers than expected in the fourth quarter, but added more than expected in Latin America, as it pushed further into Brazil and Mexico, its hottest growth markets.

DirecTV added 125,000 subscribers in the fourth quarter as its churn rate, or rate of cancellations, increased to 1.52 percent. Analysts were expecting 176,000 subscribers would be added in the quarter, with a churn rate of 1.49 percent, according to StreetAccount data.

In the U.S., its average revenue per user rose $4.74 to $101.38. That gain was helped by its NFL Sunday Ticket package, which carries every out-of-market NFL game on Sundays during the football season.

In Latin America, the company added 590,000 subscribers, which beat analysts' forecasts of 528,0000 according to StreetAccount. The company said demand in Brazil was strong, as well as in Argentina and Venezuela.

DirecTV stock was down 2.2 percent at $45.36.

(Editing by Maureen Bavdek, Bernard Orr)