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The largest U.S satellite TV operator, DIRECTV (DTV - Analyst Report) posted weak second-quarter 2013 financial results. Total revenue came in at $7,770 million, up 6.6% year over year, and marginally beating the Zacks Consensus Estimate of $7,767 million.

Quarterly GAAP net income was $660 million or $1.18 per share compared with $711 million or $1.09 in the year-ago quarter. However, second-quarter earnings per share of $1.18 were significantly below the Zacks Consensus Estimate of $1.29.

Quarterly adjusted operating profit before depreciation & amortization (OPBDA) was $2,081 million, up 3.6% year over year. Adjusted operating profit came in at $1,350 million, down 4.3% year over year.

During the first half of 2013, DIRECTV generated $3,010 million of cash from operations compared with $3,024 million in the prior-year period. Free cash flow was $1,430 million in the reported period compared with $1,607 million in the year-ago period.

At the end of the first half of 2013, DIRECTV had $2,365 million in cash & cash equivalents and $18,813 million of outstanding debt on its balance sheet compared with $1,902 million in cash & cash equivalents and outstanding debt of $17,162 million at the end of 2012.

DIRECTV U.S. Segment

Revenues from this segment were $5,943 million, up 5.2% year over year. Quarterly ARPU was $98.73 compared with $94.40 in the year-ago quarter. Quarterly operating profit before depreciation & amortization upped 4.2% to $1,651 million.  Operating profit grew 2.1% to $1,241 million.

Average monthly subscriber churn rate in the reported quarter was 1.53%, remaining same year over year. Quarterly net subscriber loss was 84,000 compared with 52,000 in the year-ago quarter. On Jun 30, 2013, DIRECTV U.S. segment had 20.021 million subscribers, up 0.5% on an annualized basis.

In the U.S., the pay-TV operators are at present facing intense competition from large telecom operators and online video streaming service providers. In the quarter under review, the two large cable MSOs, namely, Comcast Corp. (CMCSA - Analyst Report) and Time Warner Cable Inc. (TWC - Analyst Report) also lost a large number of video subscribers. Notably, DIRECTV’s closest competitor DISH Network Corp. (DISH - Analyst Report) will report on Aug 6, 2013.

DIRECTV Latin America Segment

This Segment’s revenues were $1,686 million, up 11.8% year over year. Quarterly ARPU was $51.13 compared with $57.20 in the prior-year quarter. Quarterly operating profit before depreciation & amortization increased 2.3% to $455 million. However, operating profit decreased 38% to $139 million.

Average monthly subscriber churn rate in the reported quarter was 3.1% compared with 1.8% in the prior-year quarter. Quarterly net subscriber addition was 165,000 compared with 645,000 in the year-ago quarter. On Jun 30, 2013, DIRECTV Latin America segment had approximately 11.077 million subscribers, up 21.5% year over year.

DIRECTV currently has a Zacks Rank #3 (Hold). 

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