* Q4 adj EPS $0.48 vs Wall Street view $0.40
* Added a net 119,000 U.S. subscribers
* Announces new share buyback of $3.5 billion
* Sees mid to high single digit revenue growth in 2010
* Shares close up 4.14 percent.
(Updates shares, adds executive comment, outlook)
By Yinka Adegoke
NEW YORK, Feb 18 U.S. satellite television
operator DirecTV Group Inc DTV.O posted a
better-than-expected quarterly profit and announced a $3.5
billion share buyback, sending shares up more than 4 percent.
The satellite company forecast 2010 revenue percentage
growth in the "mid to high" single digit range and said it
expects to add fewer subscribers than it did last year when it
got a bump from a marketing partnership with AT&T Inc (T.N).
DirecTV added 119,000 net subscribers in the United States
in the fourth quarter, less than the 301,000 it added in the
period a year earlier.
Kaufman Bros analyst Todd Mitchell had forecast that
DirecTV would add 200,0000 subscribers.
The company also announced a new share buyback of $3.5
billion as its free cash flow grew 40 percent to $2.4 billion.
"The thesis for owning DirecTV shares is they would
decelerate sub growth, accelerate free cash flow growth leading
to an equity shrink and that's what they've done," said
DirecTV will try balancing giving discounts to win
subscribers from cable rivals while maintaining its premium
brand image in a market that has become even more competitive,
said Chief Executive Michael White, a former Pepsi executive
who joined the company on Jan 1.
"We recognize that the industry has got a bit more
competitive in the last six months, but it doesn't do any good
to chase low quality subs," White told analysts on a conference
DirecTV has 18.6 million U.S. video subscribers, below
cable company Comcast Corp's (CMCSA.O) 23.6 million and above
fellow satellite operator DISH Network Corp (DISH.O), which has
DirecTV DTV.O on Thursday reported adjusted profit of
$454 million, or 48 cents a share, after excluding a pre-tax
charge of $491 million related to its November merger with
Analysts on average were expecting profit to come in at 40
cents a share, according to Thomson Reuters I/B/E/S.
Including the tax charge, DirecTV swung to a net loss of 3
cents a share.
Revenue rose 13 percent to $5.98 billion.
DirecTV expects less revenue contribution from subscriber
growth, but revenue could get a boost from growth in average
revenue per user as people subscribe to more advanced products
and services, said Chief Financial Officer Patrick Doyle.
The company will have better operating profit margins in
2010, Doyle said. DirecTV forecast operating profit growth in
the "low teens" range.
DIRECTV M&A TALKS
DirecTV, chaired by cable veteran John Malone, was split
off by Malone's Liberty Media last year and merged with Liberty
Entertainment to create a larger company that includes several
The creation of a newly independent DirecTV has fueled
speculation that a big phone company like AT&T or Verizon
Communications Inc (VZ.N) could buy the satellite provider.
Wall Street and investors have speculated that DirecTV
might eventually split off its fast-growing Latin American
operations. White said he has looked at options with "a couple
of bankers," but believes that it could be better to keep the
unit within the DirecTV family.
DirecTV Latin America saw strong growth in Venezuela,
Colombia and Brazil, with net subscriber additions of 254,000
during the quarter. It has 4.6 million subscribers across Latin
White said the company will assess international expansion
opportunities outside Latin America in emerging markets.
DirecTV shares closed up $1.31 at $32.96 on Nasdaq.
(Reporting by Yinka Adegoke, editing by Dave Zimmerman and