Revenues up despite low quarterly
HOLLYWOOD — Hughes Electronics posted a deepened third-quarter loss of $227.2 million Wednesday, with the steeper-than-expected red ink traceable in part to higher programming costs at its DirecTV satcasting unit.
The El Segundo, Calif.-based company’s loss in the latest quarter compares with $93.8 million in red ink in the same period last year.
Revenue climbed 25% to $2.1 billion in the latest quarter.
“I’m particularly pleased with (the) results, because despite a slowing economy we grew our revenues,” Hughes CEO Jack Shaw said.
The bottom line suffered as programming and related costs swelled 22% to $830.1 million. Hughes also acknowledged unspecified hikes in marketing expenses.
On the plus side, DirecTV’s U.S. subscriber growth exceeded expectations. Unit added 425,000 net new subs in the latest quarter.
Hughes parent General Motors has been trying to work out a deal to sell Hughes to Rupert Murdoch’s News Corp. or to satcasting rival EchoStar Communications. But the talks seemed to be treading water of late as Hughes shares floundered amid stock market turbulence.
In an earnings conference call with press and analysts, Hughes execs said they’re optimistic a deal to sell the company soon can be sealed. But they refused to discuss further details of the negotiations with News Corp. and EchoStar.
“We’re nearing the home stretch,” Shaw allowed.
In a related development, EchoStar reportedly has lined up UBS Warburg and Deutsche Bank to lend it more than $5 billion to bolster the satcaster’s ability to bid aggressively on Hughes.
GM has indicated it wants more than $5 billion cash for Hughes in addition to stock in any acquiring company. In an earlier offer, EchoStar had proposed a $30 billion stock-based deal and pledged to assume some $1.9 billion in Hughes debt.
Separately Wednesday, Hughes agreed to pay Raytheon $635.5 million to settle a 4-year-old dispute over the sale of another business unit.
Hughes shares fell 57¢, or almost 4%, to $14.35 on Wednesday. Traded as a GM tracking stock, the shares marked a 52-week high of $32.51 on Nov. 2 and sunk to a 52-week low of $12.15 on Sept. 21.
(Bloomberg News contributed to this report.)