MUMBAI: US pay TV platform DirecTV has reported third quarter net income of $95 million compared with a net loss of $1.01 billion last year and operating profit of $156 million compared with an operating loss of $1.55 billion in the same period of 2004.
In addition, revenues increased by 13 per cent to $3.23 billion and operating profit before depreciation and amortisation improved to $365 million from an operating loss before depreciation and amortisation of $1.35 billion.
DirecTV president and CEO Chase Carey says, "The more than doubling of operating profit before depreciation and amortisation to $338 million in the quarter provides us with another data point showing the substantial profit-generating potential of DirecTV. Much of this growth was fueled by the 22 per cent increase in revenues to $3.05 billion in the quarter along with higher operating margins attained through improved cost management in key areas such as subscriber acquisition and upgrade and retention marketing.
"Driven by these accomplishments we generated $230 million of free cash flow in the quarter compared to a negative $151 million in last year's third quarter. Another highlight in the quarter was gross subscriber additions of 1.1 million, demonstrating the continued consumer demand and strength of our brand and service. This demand -- which carried over to October when we added our 15 millionth customer -- is particularly meaningful because we have substantially improved the credit profiles of new subscribers due to the stricter credit policy we implemented at the beginning of the second quarter. In fact, we reduced the number of high-risk customers attained in the quarter by approximately 50 per cent compared to last year.
"However, DirecTV's average monthly churn rate of 1.89 per cent in the quarter remained unacceptably high primarily due to an increase in involuntary churn of high-risk customers attained in 2004 and early 2005 before the new credit policy was put in place. As we continue to churn out these subscribers and add new customers with better credit, we are confident that we will drive churn lower beginning in the fourth quarter and into 2006. After accounting for churn, DirecTV added 263,000 net subscribers in the quarter."
"As we approach the busy holiday selling season, we are excited about the many compelling offers that will be available -- including the NFL Sunday Tiecket SuperFan package, our new interactive DVR and the launch of high-definition local channels in a dozen major markets. All of them support our goal of making DirecTV the best television experience available anywhere."
The revenue growth was due to due to strong subscriber growth, higher average monthly revenue per subscriber (ARPU), and the consolidation of the full economics of the former National Rural Telecommunications Cooperative (NRTC) and Pegasus Satellite Television (Pegasus) subscribers acquired in the third quarter of 2004. These changes were partially offset by the absence of revenues at Hughes Network Systems (HNS) due to the sale of several HNS business units in 2004 and the sale of a 50 per cent interest in the remaining HNS business in 2005.
For the first nine months of 2005 revenues of $9.57 billion marked an increased of 20 per cent compared to the same period of 2004.
