Sub jump a boost for Rupe’s satellite

DirecTV gains ease 1Q loss for Hughes

DirecTV parent Hughes Electronics on Monday posted a narrowed first-quarter loss of $50.9 million amid rising revenue and U.S. subscriber gains, strengthening Rupert Murdoch’s argument that he’s not overpaying for the satcaster.

Murdoch’s News Corp. agreed to pay $6.6 billion last week for a controlling 34% stake in Hughes, which is controlled by General Motors (Daily Variety, April 10). News Corp. vet Chase Carey has been tapped to run Hughes once the transaction is finalized.

El Segundo, Calif.-based company’s quarterly loss compared with year-earlier red ink of $837.7 million. The big year-ago loss included $557 million in writedowns after a change in accounting rules on goodwill and intangible assets.

First-quarter revenue rose 10% to $2.23 billion.

“An outstanding first-quarter performance by DirecTV U.S. drove Hughes’ strong first-quarter revenue,” said Jack Shaw, Hughes’ CEO. “Also contributing … was a monthly customer churn rate of only 1.5% during the quarter, representing the lowest level attained in a first quarter in four years.”

DirecTV U.S. added 275,000 subs for a total of 9.77 million by the end of the first quarter. Subscribers at DirecTV’s Latin America unit dipped 7% to 1.5 million.

Execs vowed to improve customer retention companywide. And Shaw — who in an earnings conference call disputed “things in the press” suggesting DirecTV management woes — also touted “ongoing efforts to improve our cost structure.”

Cost-cutting could take on increased emphasis under News Corp. if the go-go years of subscriber growth prove to have ended. But DirecTV did boost its sub projections as a result of the quarterly retention figures.

Company prexy Roxanne Austin expressed confidence the satcaster can still show good revenue and subscriber growth throughout its operations.

“There are 50 million analog cable homes that haven’t made a digital decision yet,” Austin said in an interview. “I’d say cable’s got a big battle ahead of it.”

Holding the line

She also signaled a get-tough stance on programming costs, saying, “We have to be aggressive on programming costs. You can’t continue to insist on significant increases every year. It can’t simply be passed on to customers.”

Hughes’ financial results were better than expected, and execs also upped their year-end earnings projections as a result. Shares in the GM tracking stock rose on the news, along with an upbeat broader market.

Hughes shares climbed 3¢, or 3%, to close at $10.85. News Corp. stock — which fell after the DirecTV deal was announced on investor concern over acquisition costs — rose 50¢, or 2%, to $27.35.

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