Bird doesn’t satisfy

DirecTV disappoints as cable may fly again

News Corp.’s DirecTV narrowed net losses and added subscribers last quarter. But both figures fell short of Wall Street’s expectations, and costs were higher than forecast, knocking the stock down 3.61% to $15.23.

Satcasters DirecTV and EchoStar have been chipping away at cable’s market share, pushing cable stocks far out of favor last year. But Thursday’s results had some analysts wondering if cable was on the rise and predicting a cable resurgence this year.

“We think cable will have a much better year than they did in 2004,” said Oppenheimer & Co. analyst Thomas Eagan. “Maybe it’s already starting to happen.”

DirecTV lost $283 million in the fourth quarter, compared with $310 million the year before.

Revenue rose 22% to $3.4 billion from $2.8 billion on new subs.

Subs record

The company added a record 1.1 million gross subscribers for the quarter. But after accounting for subs lost, it added a net 444,000.

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The fourth quarter was down sequentially from the third for net additions.

And the cost of attracting those subscribers ballooned, as did retention and marketing expenses related to the larger number of customers taking local channel and digital video recorder upgrades.

For the full year, DirecTV’s net subscriber base grew 14% to 13.94 million compared to 12.21 million at the end of 2003.

Prudential analyst Katherine Styponias called the results “somewhat disappointing.” She said acquisition cost per subscriber of $669 was higher than her $657 forecast. Churn — the rate at which subs drop the service — was slightly higher than she’d expected.

‘Triple’ threat

She noted the “triple play” threat from cablers who are offering telephony along with video and high-speed Internet access, as well as cable’s advantage in video-on-demand.

DirecTV CEO Chase Carey called 2004 a “transition year” but said DirecTV U.S. added more new customers last year than any other pay television service in the country.

He and other execs acknowledged during a conference call that the company can do a better job managing costs — including cost reductions on set top boxes and installation and more focused marketing — as well as improving customer service.