DirecTV Q4 Profit Down 14%, Revenues Beat View; Unveils $3.5 Bln Buyback

(RTTNews) - Satellite television company DirecTV Inc. (DTV) on Thursday reported a 14 percent decline in profit for the fourth quarter from last year as higher programming costs offset revenues that beat analysts' estimates. DirecTV also announced a new share repurchase program of $3.5 billion.

The increase in revenue for the quarter reflects subscriber growth over the last twelve months at DirecTV Latin America or DTVLA and DirecTV U.S., as well as higher average revenue per user or ARPU at DirecTV U.S.

Revenues from DirecTV U.S for the fourth quarter increased 7 percent to $6.77 billion, reflecting strong ARPU growth along with a larger subscriber base. ARPU increased 6.3 percent to $111.74, while average monthly churn rate declined to 1.41 percent from 1.43 percent in the year-ago quarter.

Net subscriber additions in DirecTV U.S declined to 93 thousand from 103 thousand in the prior-year period, principally due to lower gross subscriber additions partly offset by a lower average monthly churn rate.

DirecTV U.S. ended the quarter with 20.25 million subscribers, compared with 20.08 million subscribers in the same period last year.

DirecTV Latin America owns about 93 percent of Sky Brasil, 41 percent of Sky Mexico and 100 percent of PanAmericana, which covers most of the remaining countries in the region.

DirecTV Latin America revenues for the quarter rose 6 percent from the year-ago period to $1.77 billion.

However, net additions of 231 thousand were sharply lower than net additions of 658 thousand in the year-ago period due to a decline in gross subscriber additions and a higher average monthly churn rate.

When factoring in unfavorable changes in foreign currency, most notably in Venezuela, Argentina and Brazil, DTVLA ARPU declined 7.8 percent from the year-ago period to $51.47. Cumulative subscribers at DirecTV Latin America at the end of the quarter were 11.57 million, up from 10.33 million in the prior-year quarter.

DirecTV's net income for the fourth quarter declined to $810 million or $1.53 per share from $942 million or $1.55 per share in the prior-year period. On average, 23 analysts polled by Thomson Reuters expected the company to earn $1.28 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that higher operating profit in the latest quarter was more than offset by a pre-tax gain of $111 million in the related to the Game Show Network transaction as well as a lower effective tax rate in the year-ago period related to the resolution of prior-year income tax audits.

Also impacting the comparison was a $78 million rise in equity earnings from Sky Mexico related mainly to Sky Mexico's recognition of certain one-time tax benefits in 2013.

Revenues for the quarter grew 7 percent to $8.59 billion from $8.05 billion in the same period last year and beat analysts' consensus estimate of $8.47 billion.

Total operating costs and expenses rose 7 percent to $7.26 billion and includes an 8 percent increase in broadcasting programming and other expenses.

For fiscal 2013, DirecTV's net income declined to $2.86 billion from $2.95 billion last year, while earnings per share rose to $5.17 from $4.58 in the prior year. Adjusted earnings per share for the year were $5.42, compared to $4.58 last year.

Revenues for the year rose 7 percent to $31.75 billion from $29.74 billion in the previous year.

Street expected the company to earn $4.96 per share for the year on revenues of $31.64 billion.

Looking ahead, DirecTV noted that its 2014 financial results for Latin America will be pressured by macroeconomic conditions, foreign currency headwinds, higher programming expenses and production costs related to unparalleled coverage of the FIFA World Cup, and difficult comparisons related to one-time benefits in 2013.

In Thursday's regular trading session, DTV is trading at $74.63, up $1.69 or 2.32 percent on a volume of 531,918 shares.