Back to top

Analyst Blog

The largest U.S satellite TV operator, DIRECTV (DTV - Analyst Report), posted fourth-quarter 2013 financial results where both its top and bottom line surpassed the Zacks Consensus Estimate. Following the earnings announcement, the company also authorized a new share buyback plan of nearly $3.5 billion.

Total revenue came in at $8,594 million, up 6.7% year over year, considerably outpacing the Zacks Consensus Estimate of $8,463 million. Quarterly GAAP net income was $810 million or $1.53 per share compared with $942 million or $1.55 per share in the year-ago quarter. Moreover, earnings per share of $1.53 were significantly above the Zacks Consensus Estimate of $1.28.

Quarterly operating profit before depreciation & amortization (OPBDA) was $2,044 million, up 6.2% year over year. Operating profit came in at $1,333 million, up 2.7% from the year-ago quarter.

DIRECTV exited fiscal 2013 with $6,394 million of cash from operations compared with $5,634 million in the prior-year period. Free cash flow stood at $2,985 million against $2,674 million in the year-ago period. At the end of the fourth quarter of 2013, DIRECTV had $2,180 million in cash & cash equivalents and $18,284 million of outstanding debt on its balance sheet compared with $1,902 million and $17,170 million, respectively, at the end of 2012.

DIRECTV U.S. Segment

Revenues from this segment totaled $6,773 million, up 7.2% year over year. Quarterly ARPU was $111.74 compared with $105.15 in the year-ago quarter. Quarterly operating profit before depreciation & amortization upped 22.4% to $1,516 million.  Operating profit rose 7.6% to $1,101 million.

Average monthly subscriber churn rate in the reported quarter was 1.41% against 1.43% in the previous-year quarter. Quarterly net subscriber added was 93,000 compared with 103,000 in the year-ago quarter. On Dec 31, 2013, the U.S. segment had 20.25 million subscribers, up 0.8% on an annualized basis.

In the U.S., the pay-TV operators are facing intense competition from large telecom operators like AT&T, Inc. (T - Analyst Report) and Verizon Communications (VZ - Analyst Report). Moreover, availability of low-cost video streaming companies like Netflix Inc. (NFLX - Analyst Report) and Hulu will further increase customer churn moving ahead.

DIRECTV Latin America Segment

This segment posted revenues of $1,768 million, up 5.6% year over year. Quarterly ARPU was $51.47 compared with $55.84 in the prior-year quarter. Quarterly operating profit before depreciation & amortization increased 11.3% to $550 million while operating profit decreased 1.1% to $258 million.

Average monthly subscriber churn rate in the reported quarter was 2.21% versus 1.75% in the prior-year quarter. Quarterly net subscriber addition was 231,000 against 658,000 in the year-ago quarter. As of Dec 31, 2013, DIRECTV’s Latin America segment had approximately 11.568 million subscribers, up 12% year over year.

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

Please login to Zacks.com or register to post a comment.