# DIRECTV Announces Third Quarter 2011 Results



## Scott Kocourek (Jun 13, 2009)

DIRECTV Adds All-Time Record 1.14 Million Net New Subscribers in Latin America and the U.S. in the Quarter.
•DIRECTV Latin America sets records with 957,000 gross and 574,000 net additions in the quarter while Sky Mexico adds 238,000 net new subscribers.
•DIRECTV U.S. gross additions of 1.28 million and lower churn of 1.62% fuel the highest third quarter net additions in 7 years to 327,000

Revenue Growth of 14% Accelerates to $6.84 Billion
•Increase driven by DIRECTV Latin America's record subscriber growth and 11% higher Average Revenue per Subscriber, as well as 8% revenue growth at DIRECTV U.S.

DIRECTV Diluted Earnings per Share Increases 27% to $0.70
•EPS growth driven by 37% increase in operating profit at DIRECTVLatin America as well as share repurchases of $5.9 billion over the last twelve months, including nearly $1.5 billion in the third quarter

EL SEGUNDO, Calif.--(BUSINESS WIRE)-- DIRECTV (NASDAQ: DTV) today reported increases in third quarter 2011 revenues of nearly 14% to $6.84 billion, operating profit before depreciation and amortization1 (OPBDA) of 7% to $1.58 billion and operating profit of 19% to $1.03 billion compared to last year's third quarter. DIRECTV also reported that third quarter net income increased 8% to $516 million while diluted earnings per share grew 27% to $0.70 compared with the same period last year.

"Third quarter net additions soared to an all-time record high of 1.14 million-or 901 thousand excluding Sky Mexico-as the strength of DIRECTV's brands and unparalleled video experience fueled the largest net subscriber gain in DIRECTV's history," said Mike White, president and CEO of DIRECTV. "This tremendous growth came throughout the Americas, as DIRECTV Latin America generated its best quarter ever with 574 thousand net additions while DIRECTV U.S. had its biggest third quarter in seven years with 327 thousand new subscribers. Combining this record performance with solid ARPU growth drove an acceleration of consolidated revenue growth to nearly 14% exceeding both last year and first half growth rates. Earnings per share in the quarter grew even faster to 27% fueled mostly by higher operating profit at DIRECTV Latin America and our share repurchase program, partially offset by higher programming costs and the short term impact from the additional acquisition costs related to the significant increase in gross additions at DIRECTV U.S."

White finished, "Looking forward, we plan to build on this momentum by debuting several compelling new products and services including a greatly enhanced DIRECTV Anywhere offering that will enable consumers to stream live-TV programming and on-demand movies to their mobile devices, as well as a brand new HD user interface and the much anticipated launch of our home media center. We also have exciting growth plans in Latin America as we expect to continue to greatly expand our subscriber base by offering the best video experience to a rapidly growing pay-TV market throughout the region."

More info Here.


----------



## dirtyblueshirt (Dec 7, 2008)

As always, news of growth for premium pay TV services is a good sign. I can only expect the release of the HR34 would improve on this for 4Q11.


----------



## hdtvfan0001 (Jul 28, 2004)

WOW - impressive numbers across the board.

Having seen how cable lost tons of subscribers the last quarter...we now know where many of them moved.


----------



## FHSPSU67 (Jan 12, 2007)

Great news, but of course "someone" will have a rebuttal


----------



## TomK (Oct 18, 2010)

Look at what the addition of a few HD channels accomplished. Solution to get even more subscribers? Add even more HD channels.


----------



## Drew2k (Aug 16, 2006)

Looks like DIRECTV is very stable right now... good sign for us.


----------



## ChicagoBlue (Apr 29, 2011)

Must have been all due to adding AMC in HD, right Swanni? LOL

More proof that Swanni has no clue what he is talking about. Time Warner Cable announced major losses last week as did Cablevision, yet they added HD. At the end of the day, the very few missing HD channels that DTV doesn't have isn't going to drive adds or cause losses. How many consecutive quarters of earnings of all the MSOs do we have to see to prove this out


----------



## maartena (Nov 1, 2010)

TomK said:


> Look at what the addition of a few HD channels accomplished. Solution to get even more subscribers? Add even more HD channels.


Correction: Look what the addition of mostly PREMIUM HD channels accomplished.... By the time 3d quarter started, they were in the last stages of adding HBO and Cinemax channels, AND they added a great NFL Sunday Ticket deal as well!

The only non-premium launch, AMC HD didn't hit until the end of the 3d quarter, and with all the "games" it was a guessing game whether that was even true until 2 days before the launch.

What this tells DirecTV is: "See, we don't have to launch BASIC HD. People won't leave because of lack of BASIC HD, and they still sign up for our service! Mr White, please give me another cigar!"


----------



## YakeVlad (Aug 12, 2011)

It's quite impressive for D* to be posting such strong numbers when other providers are suffering substantial subscriber losses. It's already been mentioned by others what TWC and Cablevision's results were, and Comcast's numbers were released yesterday showing a net loss of 165,000 subs. Way to continue bucking the industry trends D*. It should be interesting to see if the wide release of the HR34 and the addition of live-streaming TV to mobile devices mentioned in the Q3 results drives those numbers even higher, especially the live-streaming as it adds a service competitors have that D* does not currently. I'll be watching the posts here to see if any timelines are given for the release of those in the conference call today.

Keep the good news coming D*!


----------



## maartena (Nov 1, 2010)

ChicagoBlue said:


> Must have been all due to adding AMC in HD, right Swanni? LOL
> 
> More proof that Swanni has no clue what he is talking about. Time Warner Cable announced major losses last week as did Cablevision, yet they added HD. At the end of the day, the very few missing HD channels that DTV doesn't have isn't going to drive adds or cause losses. How many consecutive quarters of earnings of all the MSOs do we have to see to prove this out


Of course! It doesn't matter that AMC HD was added towards the END of the 3d quarter, and that the BEGINNING of the 3d quarter ended the introduction of a whole range of PREMIUM HD channels..... of course not!

It was ALL because AMC HD! As soon as AMC HD got added, over 300.000 new customers FLOCKED to DirecTV in those last three weeks of the 3d quarter! It had nothing to do with previous Premium additions, it was all AMC HD!

The reality of course is: NFL Sunday ticket promotion probably was the reason for the LION share of the subscriber additions. But it does show that DirecTV's focus on sports and premiums, is paying off.


----------



## harsh (Jun 15, 2003)

dirtyblueshirt said:


> I can only expect the release of the HR34 would improve on this for 4Q11.


Given that general release probably won't happen during Q4, I think that would be premature. The eerie absence of RVU clients isn't a positive indicator to wide uptake.


----------



## HoTat2 (Nov 16, 2005)

hdtvfan0001 said:


> *WOW - impressive numbers across the board.* ...


Sure are impressive, and I suppose would be even more so if I really understood what some of them mean 



> "operating profit before depreciation and amortization1?"
> 
> "diluted earnings per share?"
> 
> "share repurchase program?"


Sorry folks, but finance-speak and economics 101 have never been my strong suit. :sure:


----------



## Huskie_2009 (Jan 12, 2009)

> •DIRECTV U.S. gross additions of 1.28 million and lower churn of 1.62% fuel the highest third quarter net additions in 7 years to 327,000


They added 1.28 million customers and lost 953,000 customers? 
Is that right or do I have to change the batteries in this calculator?


----------



## bobvick1983 (Mar 21, 2007)

Huskie_2009 said:


> They added 1.28 million customers and lost 953,000 customers?
> Is that right or do I have to change the batteries in this calculator?


Yes, they lost 953,000. That is called churn, but their net GAIN was 327,000 over the 953,000 that they lost. Since they have roughly 19,000,000 subscribers it is about a 1.75% gain give or take.


----------



## hilmar2k (Mar 18, 2007)

Huskie_2009 said:


> They added 1.28 million customers and lost 953,000 customers?
> Is that right or do I have to change the batteries in this calculator?


Looks right to me.


----------



## TheRatPatrol (Oct 1, 2003)

Now how about adding some more basic HD channels? :sure:


----------



## sigma1914 (Sep 5, 2006)

TheRatPatrol said:


> Now how about adding some more basic HD channels? :sure:


Why? There's no reason to after seeing them continue to grow in subs.


----------



## hilmar2k (Mar 18, 2007)

TheRatPatrol said:


> Now how about adding some more basic HD channels? :sure:


Doesn't this have it's own thread?


----------



## hdtvfan0001 (Jul 28, 2004)

I would think years of sustaining growth and maintaining average or lower churn are a result of numerous factors, of which providing a service many people want nears the very top of the list.


----------



## yosoyellobo (Nov 1, 2006)

Anybody have any idea how much PPV contribute to the bottom line?


----------



## n3vino (Oct 2, 2011)

What contributed to me coming to d*, in spite of having to lose some HD channels, was that cable got to expensive. The one year relief in premium from d*, and the whole home dvr service, got me to change. We shall see what happens after two years.


----------



## Jaspear (May 16, 2004)

sigma1914 said:


> Why? There's no reason to after seeing them continue to grow in subs.


Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?

Just wondering.


----------



## inkahauts (Nov 13, 2006)

Jaspear said:


> Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?
> 
> Just wondering.


Does it matter? They always, and this is true for every provider out there, loose lots of customers like this every quarter, so in reality, I think its impossible to say any left simply because of the channel choices, although I am sure some tiny % of the people may have left for that one reason, its not really statistically important based on the fact the numbers aren't at all out of whack from quarters past.


----------



## APB101 (Sep 1, 2010)

Jaspear said:


> Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?
> 
> Just wondering.


Assuming this is positive: Good for DirecTV.

Jaspear does ask a good question.


----------



## Groundhog45 (Nov 10, 2005)

yosoyellobo said:


> Anybody have any idea how much PPV contribute to the bottom line?


Nothing from me. :lol:

Good news on all the growth. I do hope for a few more HD channels and the wider availability of the HR34 in the coming months.


----------



## Scott Kocourek (Jun 13, 2009)

Jaspear said:


> Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?
> 
> Just wondering.


It probably would not have made a difference. Many people switch providers as soon as contracts are up or when promotional discounts are no longer available. Your statement also assumes all or most even have HD service, there are many accounts that do not have HD.


----------



## YakeVlad (Aug 12, 2011)

There are usually folks here on the forums which listen in on the conference calls and post info gleaned from them. Did anyone do that for today's call?


----------



## cypherx (Aug 27, 2010)

I can usually find a transcript of the earnings call on Seeking Alpha, but I guess it wasn't posted yet?

I always find it interesting reading about the direction of the technical plans for DirecTV from Romulo and Mike. The Q/A at the end of the call is also sometimes interesting as well.


----------



## markrogo (Sep 18, 2007)

Churn will never, ever be 0%. So the question DirecTV always has to balance is "what do you do to reduce churn?" vs. "what does it cost to reduce churn?". Their overall churn figure is excellent. Some portion of DirecTV customers quite literally move somewhere where _you cannot get DirecTV_. Some of them lose their incomes. Some of them die. Some of them decide to stop paying for TV. Given that, the real minimum churn is probably around 1% or so, not 0%. Just food for thought.


----------



## TBlazer07 (Feb 5, 2009)

Since biz was so great I guess that mean no price increases early next year. Right? Right? :lol:


----------



## bones boy (Aug 25, 2007)

This really helps illuminate the point ... Baseball is popular, basketball is okay, hockey and soccer are niche offerings, Nascar, whatever... - but NFL IS KING!!! In my (uninformed) opinion, there is no other league or sport on the PLANET (yes that's right Premier League and Cricket) that can bring in the sheer dollars that the NFL does. I hope DTV never loses their Sunday Ticket exclusivity.


----------



## markrogo (Sep 18, 2007)

bones boy said:


> This really helps illuminate the point ... Baseball is popular, basketball is okay, hockey and soccer are niche offerings, Nascar, whatever... - but NFL IS KING!!! In my (uninformed) opinion, there is no other league or sport on the PLANET (yes that's right Premier League and Cricket) that can bring in the sheer dollars that the NFL does. I hope DTV never loses their Sunday Ticket exclusivity.


In a way they have already with the internet-based offering. Today, nearly no one takes advantage of it, but within the next several years it will become an increasingly viable option for more folks.


----------



## Shades228 (Mar 18, 2008)

markrogo said:


> In a way they have already with the internet-based offering. Today, nearly no one takes advantage of it, but within the next several years it will become an increasingly viable option for more folks.


The only stand alone is offered through the PS3. Otherwise you have to be a customer and the online part is an option with the main subscription. DIRECTV still owns the NFLST and they're the ones who provide it to the playstation network so they don't lose exclusivity. They still make money because there is no negotiating with those customers. You either pay full price or you don't get it.


----------



## wingrider01 (Sep 9, 2005)

hdtvfan0001 said:


> WOW - impressive numbers across the board.
> 
> Having seen how cable lost tons of subscribers the last quarter...we now know where many of them moved.


especially if you are a stock holder


----------



## gphvid (Jun 19, 2007)

TBlazer07 said:


> Since biz was so great I guess that mean no price increases early next year. Right? Right? :lol:


Oh yeah, let's tack on a 10% increase so we can say we are doing well next year too. And then repeat this each year....:yesman:


----------



## wingrider01 (Sep 9, 2005)

markrogo said:


> In a way they have already with the internet-based offering. Today, nearly no one takes advantage of it, but within the next several years it will become an increasingly viable option for more folks.


with the advent of hard and soft caps by broadband providers the internet option may be a poor choice for the folks depending on their provider.


----------



## Justin23 (Jan 11, 2008)

"Shades228" said:


> The only stand alone is offered through the PS3. Otherwise you have to be a customer and the online part is an option with the main subscription. DIRECTV still owns the NFLST and they're the ones who provide it to the playstation network so they don't lose exclusivity. They still make money because there is no negotiating with those customers. You either pay full price or you don't get it.


You can sign up for NFLST To-Go without needing a PS3, and without the need for a regular D* subscription. The sign up is online at www.DIRECTV.com/sundayticketspecial I believe


----------



## hdtvfan0001 (Jul 28, 2004)

wingrider01 said:


> especially if you are a stock holder


No kidding...wish I was one these past 15 years instead of just a customer.


----------



## Sixto (Nov 18, 2005)

DIRECTV's CEO Discusses Q3 2011 Results - Earnings Call Transcript:http://seekingalpha.com/article/305...sses-q3-2011-results-earnings-call-transcript​


----------



## Shades228 (Mar 18, 2008)

Justin23 said:


> You can sign up for NFLST To-Go without needing a PS3, and without the need for a regular D* subscription. The sign up is online at www.DIRECTV.com/sundayticketspecial I believe


Yes but there's a kicker:

NFL SUNDAY TICKET™ To-Go is available to anyone who cannot get DIRECTV service at their residence due to line-of-sight issues.

So you can't just sign up for it you have to not be able to get their service. Where as the PS3 offer doesn't require address validation so I should have been clearer in my meaning.

The post I was replying to was making it sound like everyone would start using the internet option rather than go through DIRECTV. Which the PS3 is the only option that any non DIRECTV subscriber would have the option of using.

Either way it's still a win for them because they pay full price.

Which will lead to more great earnings for my portfolio.


----------



## harsh (Jun 15, 2003)

bones boy said:


> This really helps illuminate the point ... Baseball is popular, basketball is okay, hockey and soccer are niche offerings, Nascar, whatever... - but NFL IS KING!!! In my (uninformed) opinion, there is no other league or sport on the PLANET (yes that's right Premier League and Cricket) that can bring in the sheer dollars that the NFL does. I hope DTV never loses their Sunday Ticket exclusivity.


It isn't that the NFL is king as much as you can't get it anywhere else. If DIRECTV had been successful in going after an MLB exclusive, there probably would have been a big impact from that as well.


----------



## cypherx (Aug 27, 2010)

Sixto said:


> DIRECTV's CEO Discusses Q3 2011 Results - Earnings Call Transcript:http://seekingalpha.com/article/305...sses-q3-2011-results-earnings-call-transcript​


Thanks!

I enjoy reading the QA sections. Mike White sounds like a real levelheaded guy. I think he's doing a stand up job at the reigns.

Also exciting is the talk about bringing VOD / PPV streaming to the ipad and desktops. Something I always thought would be a great idea. I also hope that they continue to see an uptick in the connected home strategy. More connected customers would drive more innovation with advanced 2-way services such as building up that VOD library. One of my wish items is streaming VOD, where I could get it in my other two rooms that only have HD boxes. Or even if I was at my DVR, I'd love to be able to click a VOD title and have it play, rather then waste hard drive space on it. This would be similar to the ipad app where you click watch on ipad and the content just starts playing. I know the technology is there... that's not my concern.


----------



## ffemtreed (Jan 30, 2008)

So does this mean they aren't going to raise the rates come February or March?


----------



## maartena (Nov 1, 2010)

Jaspear said:


> Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?
> 
> Just wondering.


That would be a pure guessing game, as it didn't happen. In all likelihood however, subscriber churn/losses are most often contributed to things that happen to all of us in life: Economy changes, job loss/change, people move, line of sight changes due to growing trees or buildings going up, people get better offers for the first 12/24 months, etc.

I know we here are only a SMALL fraction of the general DirecTV subscribers, but pretty much everyone that was pissed off about NO AMC in HD in the summer of 2010, was still here complaining about it in the summer of 2011. And my guess is..... when it comes down to it, missing a few channels in HD really isn't worth the hassle of changing providers. Especially since that other provider is also missing OTHER channels, that you might currently have.

One could, for instance, also wonder how many Dish subscribers finally got fed up with ESPN-U, ESPNNews, ABCFamily, Disney, etc not being available in HD, and made the switch to DirecTV.

I don't think we're talking about a significant number of subscribers. No provider has everything, and despite all the ruckus, it looks like DirecTV still has the most HD. (Just not the most BASIC HD).


----------



## Laxguy (Dec 2, 2010)

TomK said:


> Look at what the addition of a few HD channels accomplished. Solution to get even more subscribers? Add even more HD channels.


Nah. It was the HD Guide.....


----------



## maartena (Nov 1, 2010)

ffemtreed said:


> So does this mean they aren't going to raise the rates come February or March?


:lol::lol:

You should be a comedian!!


----------



## Laxguy (Dec 2, 2010)

Jaspear said:


> Do we know how many of those 953,000 might have stayed if they _had_ added more basic HD?
> 
> Just wondering.


No, we don't. Nor does DIRECTV® [!] t*o an exact degree*, though I bet their estimates are pretty accurate.

FWIW [nada], my estimate is 5.8% of that group would have stayed with the addition of one HD channel; 9.4% with the addition of two; and 14.9% with the addition of three-six, and 32.4% with the addition of ALL of them....

Don't forget, some are inveterate switchers, others leave due to economic situations, some move to places where reception isn't possible, still others are just p-o'ed.


----------



## mreposter (Jul 29, 2006)

As a customer, I've been disappointed by the limited number of new basic HD's this year, but Directv has done a bang up job of delivering new technologies to customers. iPad apps, Whole Home, new HDGUI and more have made 2011 an interesting year. 

I can understand their reluctance to invest in more HD programming when demands from content providers are going through the roof. Directv is a well run business, especially when you compare them to their competitors.


----------



## Shades228 (Mar 18, 2008)

The biggest thing that stood out to me in the QA was the 80% take rate on advanced equipment. I'm thinking 2014 is going to be a big year.


----------



## Jaspear (May 16, 2004)

Scott Kocourek said:


> It probably would not have made a difference. Many people switch providers as soon as contracts are up or when promotional discounts are no longer available. Your statement also assumes all or most even have HD service, there are many accounts that do not have HD.


Funny though, that HD becomes less important when it's convenient. But, ultimately, whatever portion of that 953K was attributable, the total basic churn would have been lower by that number, improving the 3Q results. Whatever that number was, I suspect that DirecTV was comfortable with it.

Many moons ago, when I used to pour over churn numbers, the reasons listed in the weekly reports were notoriously unreliable. Maybe the 'data mining' has improved since then, but I doubt it. "No reason", followed by "don't watch" were always the top two by a comfortable margin.


----------



## ChicagoBlue (Apr 29, 2011)

Jaspear said:


> Funny though, that HD becomes less important when it's convenient. But, ultimately, whatever portion of that 953K was attributable, the total basic churn would have been lower by that number, improving the 3Q results. Whatever that number was, I suspect that DirecTV was comfortable with it.
> 
> Many moons ago, when I used to pour over churn numbers, the reasons listed in the weekly reports were notoriously unreliable. Maybe the 'data mining' has improved since then, but I doubt it. "No reason", followed by "don't watch" were always the top two by a comfortable margin.


DISH has been adding more HD than DTV. Today, they announced another 111K net subs loss. 6th quarter in 7 that they have gone the wrong way.

Again, this HD argument about keeping subs is fantasy.


----------



## TheRatPatrol (Oct 1, 2003)

ChicagoBlue said:


> DISH has been adding more HD than DTV. Today, they announced another 111K net subs loss. 6th quarter in 7 that they have gone the wrong way.
> 
> Again, this HD argument about keeping subs is fantasy.


True. I'm sure some of it has do with the economy and people "cutting the cable" to save money.


----------



## Jaspear (May 16, 2004)

ChicagoBlue said:


> DISH has been adding more HD than DTV. Today, they announced another 111K net subs loss. 6th quarter in 7 that they have gone the wrong way.
> 
> Again, this HD argument about keeping subs is fantasy.


That 111K probably has a lot to do with the credit worthiness of the customers that Charlie constantly trolls for. Garbage in garbage out.


----------



## zlt1 (Jan 21, 2003)

Scott Kocourek said:


> DIRECTV Adds All-Time Record 1.14 Million Net New Subscribers in Latin America and the U.S. in the Quarter.
> •DIRECTV Latin America sets records with 957,000 gross and 574,000 net additions in the quarter while Sky Mexico adds 238,000 net new subscribers.
> •DIRECTV U.S. gross additions of 1.28 million and lower churn of 1.62% fuel the highest third quarter net additions in 7 years to 327,000
> 
> ...


I might not remember all the details but I think as part of a shareholders meeting there used to be a nice PowerPoint or document with a lot of information about future and current states of various areas. Is such an animal available for this release?


----------

