Tirconnell
02-28-2008, 04:01 PM
DirecTV Says It Will Miss '08 Subscriber Forecast
February 28, 2008
NEW YORK -(Dow Jones)- DirecTV Group Inc. (DTV) said its 2008 subscriber count will miss its original expectations.
The digital entertainment giant said Thursday at its investor conference in New York that it expects 17.5 million customers by the end of 2008, which falls short of its 2006 forecast of 18 million subscribers for the full year.
DirecTV has 16.8 million customers in the U.S. and 3.28 million Latin American customers, as of Dec. 31. The company said it is expecting $20 billion of U.S. revenue in 2010, compared with $15.53 billion in 2007. It also anticipates cumulative net subscriber additions of 1.5 million to 2 million over three years.
DirecTV's outlook comes as the satellite-TV company competes with telecom and cable rivals ability to sell packages of phone, video and high-speed Internet services. Satellite companies face a disadvantage because they don't have the technological capability to offer such packages as easily as phone and cable companies.
As a result, subscriber growth can vary. DirecTV's new-customer additions dropped from 1.2 million in 2005 to 800,000 in 2006, although that improved slightly to 900,000 last year. DirecTV finished last year with 16.8 million customers, making it the second-biggest TV provider in the U.S. after Comcast Corp (CMCSA, CMCSK).
Shares of the El Segundo, Calif., company closed down 45 cents, or 1.7%, at $ 26.04.
DirecTV's investor conference comes a day after Liberty Media Corp. (LCAPA, LINTA) and News Corp. (NWS, NWSA) completed their deal in which Liberty exchanged a 16% stake in News Corp., worth roughly $11 billion, plus $625 million in cash for a 41% interest in DirecTV.
At the conference, DirecTV said that it is seeing increased penetration of its high-definition and digital-video-recording services. It expects 50% of its customers to subscribe to its advanced products and 70% by 2010.
DirecTV said it is nearing the end of its satellite expansion plan. 2008 capital spending will be down $200 million. The company is also sustaining its capital-expenditures target of $500 million.
Cash flow before interest and taxes is expected to be more than $1 billion higher in 2008 than it was in 2007 and $4 billion higher in 2010.
Subscriber growth was expected to be affected by AT&T Inc.'s (T) decision to transition away from its BellSouth asset's agreement with DirecTV and move to push Dish Network Corp. (DISH) in BellSouth regions.
DirecTV is still in active discussions with AT&T to try to sign a new deal. Dish's deal with AT&T ends at the end of 2008, and DirecTV will then have a chance to negotiate a new deal.
"AT&T is talking to both of us. If we can have the right relationship with AT& T, we'd like to have it. Either way, we believe we can compete effectively," Carey said at the investor conference.
Carey said DirecTV will implement a 4% price increase in March to help manage the increased competitive pressures the company is facing.
Overall, Carey added he expects DirecTV to sustain a 5% compound annual growth rate over the next three years.
In recent months, DirecTV has changed its subscriber-growth strategy, focusing more on a customer base that is willing to pay more. It provides an NFL package and touts a higher amount of high-definition channels, which attract a higher tier of customers.
"I think we've got strength and we can drive that strength while others are tackling other issues," Carey said. "We'll continue to find ways to add more markets and find capacity to add channels."
More-affluent customers are less likely to cut off service in an economic downturn, which was evident in DirecTV's fourth-quarter results.
Fourth-quarter profit declined 2% as more subscribers snapped up more costly high-definition TV and digital recording features. The increased cost to add subscribers and market higher-end services hurt earnings.
DirecTV said net subscriber additions rose 35% to 474,000 in the fourth quarter, while average revenue per subscriber increased 8.3%.
February 28, 2008
NEW YORK -(Dow Jones)- DirecTV Group Inc. (DTV) said its 2008 subscriber count will miss its original expectations.
The digital entertainment giant said Thursday at its investor conference in New York that it expects 17.5 million customers by the end of 2008, which falls short of its 2006 forecast of 18 million subscribers for the full year.
DirecTV has 16.8 million customers in the U.S. and 3.28 million Latin American customers, as of Dec. 31. The company said it is expecting $20 billion of U.S. revenue in 2010, compared with $15.53 billion in 2007. It also anticipates cumulative net subscriber additions of 1.5 million to 2 million over three years.
DirecTV's outlook comes as the satellite-TV company competes with telecom and cable rivals ability to sell packages of phone, video and high-speed Internet services. Satellite companies face a disadvantage because they don't have the technological capability to offer such packages as easily as phone and cable companies.
As a result, subscriber growth can vary. DirecTV's new-customer additions dropped from 1.2 million in 2005 to 800,000 in 2006, although that improved slightly to 900,000 last year. DirecTV finished last year with 16.8 million customers, making it the second-biggest TV provider in the U.S. after Comcast Corp (CMCSA, CMCSK).
Shares of the El Segundo, Calif., company closed down 45 cents, or 1.7%, at $ 26.04.
DirecTV's investor conference comes a day after Liberty Media Corp. (LCAPA, LINTA) and News Corp. (NWS, NWSA) completed their deal in which Liberty exchanged a 16% stake in News Corp., worth roughly $11 billion, plus $625 million in cash for a 41% interest in DirecTV.
At the conference, DirecTV said that it is seeing increased penetration of its high-definition and digital-video-recording services. It expects 50% of its customers to subscribe to its advanced products and 70% by 2010.
DirecTV said it is nearing the end of its satellite expansion plan. 2008 capital spending will be down $200 million. The company is also sustaining its capital-expenditures target of $500 million.
Cash flow before interest and taxes is expected to be more than $1 billion higher in 2008 than it was in 2007 and $4 billion higher in 2010.
Subscriber growth was expected to be affected by AT&T Inc.'s (T) decision to transition away from its BellSouth asset's agreement with DirecTV and move to push Dish Network Corp. (DISH) in BellSouth regions.
DirecTV is still in active discussions with AT&T to try to sign a new deal. Dish's deal with AT&T ends at the end of 2008, and DirecTV will then have a chance to negotiate a new deal.
"AT&T is talking to both of us. If we can have the right relationship with AT& T, we'd like to have it. Either way, we believe we can compete effectively," Carey said at the investor conference.
Carey said DirecTV will implement a 4% price increase in March to help manage the increased competitive pressures the company is facing.
Overall, Carey added he expects DirecTV to sustain a 5% compound annual growth rate over the next three years.
In recent months, DirecTV has changed its subscriber-growth strategy, focusing more on a customer base that is willing to pay more. It provides an NFL package and touts a higher amount of high-definition channels, which attract a higher tier of customers.
"I think we've got strength and we can drive that strength while others are tackling other issues," Carey said. "We'll continue to find ways to add more markets and find capacity to add channels."
More-affluent customers are less likely to cut off service in an economic downturn, which was evident in DirecTV's fourth-quarter results.
Fourth-quarter profit declined 2% as more subscribers snapped up more costly high-definition TV and digital recording features. The increased cost to add subscribers and market higher-end services hurt earnings.
DirecTV said net subscriber additions rose 35% to 474,000 in the fourth quarter, while average revenue per subscriber increased 8.3%.