DirecTV beats estimates on Latam growth, shares jump

By Liana B. Baker

(Reuters) - Satellite TV provider DirecTV easily beat profit estimates for the first quarter on Tuesday, as better-than-expected growth in Latin America helped offset the negative effects of a currency devaluation in Venezuela, sending shares to a decade high.

The largest U.S. satellite television company, with more than 20 million customers, managed to boost subscribers even as cable companies have been losing video customers. Earnings were stronger than even the most optimistic Wall Street estimates.

Brean Capital analyst Todd Mitchell said DirecTV made more money off subscribers by charging higher advanced service fees, instituting price increases and adding more events and movies for customers to buy. It also charges extra for premium products such as NFL Sunday Ticket.

DirecTV, a longtime critic of escalating sports programming costs, left the future of that exclusive football package hanging in the air on Tuesday.

The company pays a reported $1 billion a year to the National Football League, in a deal that allows subscribers to watch football games outside of their local markets on game day. The exclusive package is an important tool for DirecTV to attract new subscribers.

Chief Executive Mike White told investors on a conference call that it has about 4 million Sunday Ticket viewers, with about half of those paying for the service and the rest getting it free as part of their subscription.

But DirecTV did not say whether it plans to renew its contract with the NFL when it expires in 2015. DirecTV has already said it would consider saving on costs by making its next deal nonexclusive and available to rival pay-TV companies.

White said he was "optimistic" about the relationship with the NFL but also hinted that the value to DirecTV of the heavily marketed package may not be what it once was.

"Let's keep in mind we've got a ways to go here" before the current contract expires, he said. "But I would say, you know, it is a pretty mature product as well."

LATAM SURGES

In Latin America, DirecTV added 583,000 subscribers in the quarter, while analysts polled by StreetAccount expected some 519,000 subscribers.

DirecTV's subscriber growth in recent years has stemmed from Latin America, where it has been tapping into an expanding middle class with more spending power in countries like Brazil. It also operates in Colombia, Argentina, Venezuela, Chile and Ecuador.

DirecTV took a $166 million charge in the quarter related to the devaluation of the Venezuelan currency in February.

In the United States, DirecTV added 21,000 net subscribers. Wall Street expected 25,000 net subscribers, on average, according to StreetAccount.

While the company missed estimates in that regard, it was still in positive territory. Comcast Corp and Time Warner Cable both lost tens of thousands of net video subscribers in the first quarter.

Net income attributable to DirecTV was $690 million, or $1.20 per share, compared with $731 million, or $1.07 per share, a year ago. Earnings per share rose, even though profit fell, as the company's share count declined sharply.

Revenue jumped 8 percent to $7.58 billion.

Analysts expected earnings of $1.07 per share on revenue of $7.5 billion, according to Thomson Reuters I/B/E/S.

DirecTV shares closed 6.9 percent higher at $61.95 on the Nasdaq on Tuesday. Since a recent low in late February, the stock is up about 30 percent, more than doubling the gains of its closest peers.

(Editing by Jeffrey Benkoe and Matthew Lewis)

Source: http://news.yahoo.com/directv-beats-estimates-latam-growth-shares-jump-204508064.html

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