DirecTV beamed ear-to-ear Monday, as it reported record customer growth in the first quarter, stealing a net total of 505,000 subscribers from cable competitors.
Country’s largest satcaster also dramatically reduced losses from $638.8 million a year ago to $41.4 million. Revenue grew 27% to $3.15 billion, compared to $2.49 billion in the first quarter of 2004.
Wall Streeters cheered over the better-than-expected earnings, saying the company — now part of Rupert Murdoch’s News Corp. empire — is a smoother operation. Analysts noted that DirecTV was able to add new clients at the same time that it reduced marketing expenses.
While most media companies lagged in trading Monday, DirecTV shares jumped 5.31% to close at $14.87, a gain of 75¢.
DirecTV did report a $20 million charge for severance pay for a handful of recently departed execs, including former vice chair Eddy Hartenstein, who left at the end of the year.
All told, DirecTV added 1.14 million subscribers in the first quarter of 2005 and 505,000 net subs, bringing its total customer roll to 14.4 million, second only among pay TV providers to cable operator Comcast.
“This growth is a testament to the basic superiority of DirecTV over our competitors, cable and otherwise,” DirecTV CEO Chase Carey said during an earnings call.
Subscriber growth was particularly strong among Hispanic viewers, with DirecTV netting 120,000 new customers. That’s double where the company was at the beginning of 2004.
At the same time, Carey tempered the good news by warning investors that overall subscriber growth is likely to slow in the coming quarters, as price increases take effect and DirecTV adopts a more stringent credit policy.
Major charges last quarter included $479 million related to the sale of a satellite and a $311 million charge for an accounting change.
In the hunt for new customers, Carey said DirecTV will target its marketing, such as going after multi-dwelling buildings, an area in which it has lagged.
DirecTV has a number of initiatives in the wings to improve its service and ensure it remains competitive with the advanced digital services being offered by cable companies.
Last week, DirecTV launched the first of three new satellites that will enable it to offer a hi-def signal to markets in over half the U.S. by the end of the year. Later this month, it will make available new software that would allow iinteractive boxes that provide such info as an electronic weather guide.
Over the summer, DirecTV is skedded to introduce the next-generation digital video recorder (DVR). Still, while DirecTV says the new box will have video-on-demand capabilities, the service can’t equal the breadth of VOD offerings by cable operators, with Comcast and Time Warner Cable being the leaders.