DirecTV 1Q profit almost triples as revenue rises

DirecTV Inc., the nation's largest satellite TV provider, reported Thursday that its net income nearly tripled after it added new video customers principally at the expense of rival cable companies. But growth appears to be slowing.

The El Segundo, Calif., company added 100,000 net U.S. customers in the quarter, down from last year's 460,000, which was inflated by long holdouts to subscription TV service finally signing up as the country switched to digital broadcasting from analog.

DirecTV, rival satellite TV company Dish Network Corp. and phone companies offering video service have been chipping away at cable's two-thirds share of the subscription TV market.

On Thursday, Cablevision Systems Corp. reported a gain of just 900 subscribers in the first quarter. Comcast Corp. lost 82,000 video customers in the same quarter while Time Warner Cable Inc. lost 42,000.

DirecTV's net gain of 100,000 customers was the company's smallest quarterly increase ever, according to Sanford Bernstein analyst Craig Moffett. DirecTV ended the quarter with 18.7 million subscribers.

Shares fell 29 cents to close at $34.94.

DirecTV earned $558 million, or 59 cents per share, in the quarter ended March 31, up from $201 million, or 20 cents per share, a year ago.

Revenue rose 14 percent to $5.6 billion from $4.9 billion a year ago.

The results beat analysts' forecast for earnings of 45 cents a share and revenue of $5.4 billion.

"Customers do appear more willing to purchase additional content and premium services," said Michael White, DirecTV's chief executive, in a conference call with analysts.

Free cash flow, a key metric for subscription TV companies because they tend to have massive debt burdens, more than doubled to $1 billion.

DirecTV said the average monthly revenue per U.S. subscriber came to $85.47, up 6.4 percent. That's due to price increases, higher fees for high-definition TV and digital video recorders, higher advertising sales and an extra week of revenue for its NFL Sunday Ticket package.

DirecTV's Latin American operations saw revenue rise 30 percent to $779 million. It added 221,000 customers in the quarter.

Jeffrey Wlodarczak, an analyst at Pivotal Research Group, said in a research note that free cash flow came in much better than expected. He expects DirecTV to initiate a dividend once it releases second-quarter earnings in August.