DirecTV Grows Revenue by 5 Percent, Sees Slow Subscriber Growth in Q4 2012
DirecTV’s 2012 fourth-quarter revenue increased 8 percent to $8.05 billion, compared to the same period in 2011. The strength of DirecTV and the Sky Brasil premium brand continues to drive consumer demand, market share gains and top-line growth, said CEO Mike White. The full-year growth of the Latin America and U.S. markets “soared to all-time highs,” he said Thursday during a webcast. DirecTV had its largest annual net subscriber gain in history, at 3.8 million net customers added in 2012, he said. “We're exiting 2012 with over 35 million households throughout the Americas."
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DirecTV’s board also authorized a $4 billion share repurchase program, White said. The Latin America business had strong results and its full-year gross additions “shattered the record set by the U.S. business” in 2011, he said. This was due in part to strong growth from mid-market segments, he said. The U.S. market had a revenue growth of more than 6 percent in 2012, he said. This year, the DBS company plans to expand its TV Everywhere capability and improve user interface access on all devices with search discovery and social networking, he said. The key driver of the U.S. market revenue’s 5 percent increase was expanded penetration of new and existing customers who paid for advanced services, said Patrick Doyle, chief financial officer. DirecTV Cinema and Connect at Home revenue is up by 25 percent year-over-year. Net subscriber growth of 103,000 decreased from 125,000 the same period last year. Churn was influenced by the lapse in an agreement with Vietnam-based TVB USA, said Doyle. He said the company expects churn to be better in the second half of the year.
In the Latin America market, pay-TV is becoming more of a must-have, White said. Revenue for Latin America increased 22 percent to $1.67 billion in Q4, compared to $1.3 billion in the same period in 2011, said Bruce Churchill, president of DirecTV’s Latin America market. The company expects to experience a negative financial impact on Latin America’s revenue this year due to the devaluation of Venezuela’s currency, he said.
Due to rising programming costs in the U.S., the company is driving its top-line sales, which “has become critical to maintain strong profit margins,” White said. “We want to tightly manage costs across the organization to neutralize the impact of higher programming expenses in the U.S. market.” The sports business model is broken, said Doyle. The only alternative “we have if we're going to carry channels in a few markets that are unaffordable for the average consumer, is with a surcharge,” he said. The surcharge has been fully implemented with new subscribers and will be rolled out to existing subscribers this spring, he said. The surcharge “doesn’t come close to covering the total cost of sports in those geographies,” Doyle said.