Claris Law Legal Blogging Community

Name:

E-mail:

Phone Number:

Zip Code:

Your Question:

Editor: Kristian Rasmussen
Profession: Investment Fraud Lawyer

Category: Investment Fraud News

For all of you who lost money on Direct TV, you will be glad to hear the stock may bounce back. DirecTV Group is the nation's largest satellite TV company, Inc. and it returned to a profit in the first quarter of this year.
The company earned $235.2 million, or 17 cents per share, for the three months ended March 31, compared to a loss of $41.4 million, or 3 cents per share, a year earlier. Revenue grew 8 percent to $3.39 billion from $3.15 billion.

A lot of people who sign up for Direct TV service end up dropping it. The company's U.S. pay TV service added 919,000 subscribers during the quarter, but after accounting for subscribers who later dropped their service, the service only added 255,000 net subscribers. (They call it "churn".) The number of new sign ups was actually a drop of 19 percent from the same period last year.

The worldwide number of DirecTV subscribers increased 7 percent in the quarter to 15.39 million.

"Similar to recent quarters, this solid growth was driven by our large and growing subscriber base, strong ARPU (average revenue per subscriber) growth and higher operating margins due mostly to the significant scale and operating leverage of our business," Chief Executive Chase Carey said in a statement.

Analysts expected DirecTV to earn 10 cents per share, according to Thomson Financial.

Carey said the cost to add new subscribers was higher because of the cost of new set-top boxes with increased functionality. Those costs were also spread over few new subscribers as the company continues to tighten its credit policies to weed out those most likely to cancel their service early.

Carey said he continues to foresee a tough competitive environment as cable TV companies push bundled packages of services including phone and high-speed Internet access.

The company has not yet decided on its own strategy to offer broadband Internet service, Carey said.

DirecTV had been rumored to be discussing a partnership with rival Echostar Communications Corp., which operates the Dish TV service, to develop a broadband service to compete with cable.

But Carey said no progress has been made.

"It continues to be an area we spend significant time on," Carey said during a conference call with analysts. "We will move forward and do something when and if we have an arrangement that makes sense for us."

DirecTV offers customers its TV service along with DSL Internet from regional phone companies in many areas of the country.

Looking ahead, the company said two new additional satellites next year will drive future growth as they will make high definition TV signals available to three quarters of all U.S. households.

DirecTV shares fell 58 cents, or 3.4 percent, to close at $16.59 on the New York Stock Exchange. Company shares have gained 17 percent this year.