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The largest U.S satellite TV operator, DIRECTV (DTV - Analyst Report) posted third-quarter 2013 financial results. Total revenue came in at $7,880 million, up 6.3% year over year, considerably outpacing the Zacks Consensus Estimate of $7,844 million. Quarterly GAAP net income was $699 million or $1.28 per share compared with $565 million or 90 cents in the year-ago quarter. However, earnings per share of $1.13 were significantly above the Zacks Consensus Estimate of $1.01.

Quarterly adjusted operating profit before depreciation & amortization (OPBDA) was $1,933 million, up 14.7% year over year. Adjusted operating profit came in at $1,225 million, up 14.7% year over year.

During the first nine months of 2013, DIRECTV generated $4,355 million of cash from operations compared with $1,109 million in the prior-year period. Free cash flow was $1,884 million against $1,973 million in the year-ago period. At the end of the third quarter of 2013, DIRECTV had $1,622 million in cash & cash equivalents and $18,635 million of outstanding debt on its balance sheet compared with $1,902 million in cash & cash equivalents and outstanding debt of $17,170 million at the end of 2012.

DIRECTV U.S. Segment

Revenues from this segment stood at $6,170 million, up 7% year over year. Quarterly ARPU was $102.37 compared with $96.41 in the year-ago quarter. Quarterly operating profit before depreciation & amortization was up 11.6% to $1,396 million.  Operating profit rose 12.7% to $987 million.

Average monthly subscriber churn rate in the reported quarter was 1.61% against 1.74% in the previous-year quarter. Quarterly net subscriber added was 139,000 compared with 67,000 in the year-ago quarter. On Sep 30, 2013, DIRECTV’s U.S. segment had 20.16 million subscribers, up 0.9% on an annualized basis.

In the U.S., the pay-TV operators are 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 earnings on Nov 12, 2013.

DIRECTV Latin America Segment

This segment posted revenues of $1,662 million, up 5.4% year over year. Quarterly ARPU was $49.42 compared with $55.97 in the prior-year quarter. Quarterly operating profit before depreciation & amortization increased 22.6% to $558 million while operating profit increased 18.6% to $262 million.

Average monthly subscriber churn rate in the reported quarter was 2.27% compared with 1.91% in the prior-year quarter. Quarterly net subscriber addition was 260,000 against 543,000 in the year-ago quarter. On Sep 30, 2013, DIRECTV’s Latin America segment had approximately 11.337 million subscribers, up 17.3% year over year.

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

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