DirecTV adds U.S. customers, shares rise
(Reuters) - DirecTV (DTV.O), the No. 1 U.S. satellite TV provider, reported a higher-than-expected quarterly profit on Tuesday and said Los Angeles customers were not canceling their subscriptions even though they are shut out from watching LA Dodgers' baseball.
DirecTV Chief Executive Mike White said that the rate of cancellations, known as churn, was immaterial in Los Angeles, where Dodgers games are now being carried on a channel that an estimated 5 million local residents cannot see.
Dodgers games are being shown on the new SportsNet LA channel, which is owned by the team but operated by Time Warner Cable, which distributes the channel and paid billions for the rights. Time Warner Cable (TWC.N) and two smaller operators in the area are the channel's only carriers, while DirecTV, which has a large foothold in Los Angeles, has been holding out.
"The prices we've been quoted so far are so far beyond what a rational view of the market is, that we don't think that it's appropriate to put that on our pay TV customers," White said.
Time Warner Cable said in a statement that it is eager for fans to get the channel and "DirecTV has shown no sense of urgency in getting a deal done."
DirecTV declined to address any rumors related to mergers and acquisitions on its conference call. The Wall Street Journal reported on April 30 that telecom company AT&T (T.N) had approached the satellite operator about a potential takeover.
U.S. net subscriber additions fell to 12,000 from 21,000 a year earlier. Analysts were expecting net additions of 14,000, according to StreetAccount.
Net income fell to $561 million, or $1.09 per share, in the first quarter ended March 31 from $690 million, or $1.20 per share, a year earlier. On an adjusted basis, the company earned $1.63 per share, beating analysts' average estimates of $1.50 per share.
The growth in adjusted earnings per share was in part driven by stock repurchases of $895 million in the quarter, the company said.
Revenue increased 4 percent to $7.86 billion, but missed the average analyst estimate of $7.91 billion, according to Thomson Reuters I/B/E/S.
Revenue from its DirecTV Latin America unit - which accounts for 21 percent of total revenue - remained flat at $1.72 billion as average revenue per user fell 10 percent. That unit was hit with a $281 million charge related to devaluations of the Venezuelan bolivar.
Net subscriber additions in Latin America, its largest growth area, fell to 361,000 from 583,000 a year earlier, but came above analysts' estimates of 277,000.
DirecTV shares, which gained 16 percent this year, were trading 2.7 percent higher at $82.03 on Tuesday.