DirecTV loves it south of the border.
Higher-than-expected gains in Latin America helped boost the satcaster’s revenues in the first quarter by 13% to $6.3 billion and net profits by 21% to $674 million. Net subscriber gains at DirecTV Latin America were 427,000, more than double those from the first quarter of 2010 and higher than the flurry of additions in the months leading up to last year’s World Cup.
“This far exceeded our expectations,” said CEO Mike White, noting that the region’s emerging middle class “is the demographic sweet spot for any pay TV service.” Big gains came in Brazil, Argentina, Colombia and Peru. Operating profits in Latin America jumped 74% to $219 million, on 43% revenue gains to $1.1 billion. The average revenue the company derives per subscriber grew to $61.69, based on higher rates and higher sales of HD and DVR services.
DirecTV’s U.S. operations saw revenue gains of 8% to $5.15 billion with net sub gains of 184,000, bringing its total to 19.4 million. What the company brings in per customers rose to $88.79, in part, due to higher prices for leased set top boxes.
In a note entitled “DirecTV: Muy Bueno!,” Sanford Bernstein analyst Craig Moffett wrote Thursday: “Whatever our reservations about their technology platform longer term, DirecTV remains the best-in-class in pay TV. All in all, their first quarter was simply another in a seemingly endless string of solid results.”
Yet White warned at the tail end of the quarter, they saw more promotional offers from competitors in cable and telco and sub growth may be flat or down for the rest of the year and churn will be higher.
When asked about sports rights costs, White said they are growing at “an unsustainable rate” in terms of what customers are willing to pay. He wouldn’t rule out buying a regional sports network to help curb those costs but “we won’t do anything unless it is disciplined.”