http://variety.com/2014/biz/news/di...-growth-slows-as-fees-keep-rising-1201113787/
DirecTV president and CEO Mike White said in the U.S., the satcaster expects to delivering “mid-single digit top- and bottom-line growth in 2014.”
DirecTV U.S. ended 2013 with 20.25 million subscribers, an increase of 0.8% compared with 20.08 million subscribers in 2012. The company attributed that minimal growth rate to its focus on “higher-quality subscribers, as well as a more challenging competitive environment and mature industry.”
The 93,000 U.S. net adds for the fourth quarter were down from 103,000 a year earlier, although churn declined slightly (from 1.41% to 1.43%). DirecTV beat analyst consensus expectations of 74,000 U.S. subscriber adds.
“This latest quarter shouldn’t obscure a larger trend: the U.S. is going to become a tougher and tougher place to do business,” MoffetNathanson analyst Craig Moffett wrote in a research note. “Cable’s advantage from cross-subsidizing video with broadband will eventually win out,” with the prospect of a merged Comcast-Time Warner Cable compounding the challenge, he added.
Indeed, DirecTV may be facing a bleak start to 2014. The Q4 results don’t take into account the latest fee hikes in the U.S. by DirecTV, which raised rates an average of 3.7% effective Feb. 6. DirecTV may also suffer customer attrition in the current quarter from its decision to yank the Weather Channel; the company dropped the NBCUniversal-owned cabler over fee dispute last month.
The ultimate endgame for DirecTV in the States is a merger with Dish Network, Moffett wrote, “but that merger still looks far off and uncertain.”
In the fourth quarter, DirecTV’s average monthly revenue per customer was $111.74 — 6.3% higher than Q4 2012. According to the company, that increase was mostly due to higher set-top fees, price increases on programming packages, higher fees for a new enhanced warranty program, and increased commercial business and ad revenue.
Meanwhile, DirecTV announced that it will buy back $3.5 billion in stock. “This repurchase program reflects our strong balance sheet and confidence in continued strong DirecTV revenue, earnings and free cash flow growth, as well as our belief that our stock is far below our intrinsic value,” White said.
White noted that DirecTV’s Latin America operations continue to have a much stronger growth profile. DirecTV Latin America full-year revenue for 2013 increased 10%, to $6.84 billion, mainly from the addition of 1.2 million net new subscribers during the year.
However, in the fourth quarter, DirecTV LA added 231,000 net subscribers — well below analyst consensus expectations of 359,000. In Q4 2012, the division netted 658,000 subs. White reiterated that 2014 financial results for that Latin America division will be “pressured by macroeconomic conditions, foreign currency headwinds, higher programming expenses and production costs related to unparalleled coverage of the FIFA World Cup and difficult comparisons related to one-time benefits in 2013.”
DirecTV president and CEO Mike White said in the U.S., the satcaster expects to delivering “mid-single digit top- and bottom-line growth in 2014.”
DirecTV U.S. ended 2013 with 20.25 million subscribers, an increase of 0.8% compared with 20.08 million subscribers in 2012. The company attributed that minimal growth rate to its focus on “higher-quality subscribers, as well as a more challenging competitive environment and mature industry.”
The 93,000 U.S. net adds for the fourth quarter were down from 103,000 a year earlier, although churn declined slightly (from 1.41% to 1.43%). DirecTV beat analyst consensus expectations of 74,000 U.S. subscriber adds.
“This latest quarter shouldn’t obscure a larger trend: the U.S. is going to become a tougher and tougher place to do business,” MoffetNathanson analyst Craig Moffett wrote in a research note. “Cable’s advantage from cross-subsidizing video with broadband will eventually win out,” with the prospect of a merged Comcast-Time Warner Cable compounding the challenge, he added.
Indeed, DirecTV may be facing a bleak start to 2014. The Q4 results don’t take into account the latest fee hikes in the U.S. by DirecTV, which raised rates an average of 3.7% effective Feb. 6. DirecTV may also suffer customer attrition in the current quarter from its decision to yank the Weather Channel; the company dropped the NBCUniversal-owned cabler over fee dispute last month.
The ultimate endgame for DirecTV in the States is a merger with Dish Network, Moffett wrote, “but that merger still looks far off and uncertain.”
In the fourth quarter, DirecTV’s average monthly revenue per customer was $111.74 — 6.3% higher than Q4 2012. According to the company, that increase was mostly due to higher set-top fees, price increases on programming packages, higher fees for a new enhanced warranty program, and increased commercial business and ad revenue.
Meanwhile, DirecTV announced that it will buy back $3.5 billion in stock. “This repurchase program reflects our strong balance sheet and confidence in continued strong DirecTV revenue, earnings and free cash flow growth, as well as our belief that our stock is far below our intrinsic value,” White said.
White noted that DirecTV’s Latin America operations continue to have a much stronger growth profile. DirecTV Latin America full-year revenue for 2013 increased 10%, to $6.84 billion, mainly from the addition of 1.2 million net new subscribers during the year.
However, in the fourth quarter, DirecTV LA added 231,000 net subscribers — well below analyst consensus expectations of 359,000. In Q4 2012, the division netted 658,000 subs. White reiterated that 2014 financial results for that Latin America division will be “pressured by macroeconomic conditions, foreign currency headwinds, higher programming expenses and production costs related to unparalleled coverage of the FIFA World Cup and difficult comparisons related to one-time benefits in 2013.”
