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Bird migration woes

Subs soar at DirecTV but sat switch fuels loss

NEW YORK — DirecTV, the nation’s largest satcaster, broke a record for new subscribers but also took a huge loss as three new satellites designed to provide Internet access were converted to provide bandwidth for high-definition TV.

The doomed Spaceway project took its toll on DirecTV’s books as satellites that had been valued at close to $1.9 billion were cut to just over $300 million apiece.

Company said the birds were less valuable than new satellites because they’ll have less capacity for TV than if they’d been designed for that purpose from the start.

The writedown left DirecTV with a loss of $1.01 billion, compared to a net loss of $23 million in the same quarter last year.

News Corp.-controlled DirecTV extended its string of huge subscriber additions, adding a record 484,000 in the third quarter. It was the fourth quarter in which it’s added at least 400,000 new subs.

Revenue increased 20% to $2.86 billion, driven by the record sub count rise and a 4% increase in the amount of revenue collected per subscriber. Subs now pay an average of $66.46 a month for service.

“Clearly, we’re not seeing a polarized nation as far as people choosing television service,” quipped DirecTV Holdings prexy-CEO Mitchell Stern, comparing DirecTV’s quarterly additions to the flat numbers for cable.

Major work ahead

DirecTV Group prexy-CEO Chase Carey called the company’s performance “mixed” and said he felt DirecTV had a lot of work to do to discover the right balance of investment needed to retain profitable customers.

Since Rupert Murdoch took control of DirecTV late last year, the company has grabbed more than a million subscribers from cable, boosting revenue but also costs as it foots the bill for heavily discounted DVRs and digital set-top boxes.

Company said spending customer acquisition doubled to $723.1 million in the third quarter and the cost of retaining those customers more than doubled to $261.3 million. But churn — or the percentage of customers that left the company — increased anyway to 1.67% from 1.6% a year ago.

Stern said he expected churn to continue to be affected as cablers fought back with their own programs to win subscribers back.

Company said it has been able to renegotiate contracts with cable networks favorably, lowering their yearly increases to between 4% and 6%, down from high single digits.

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