# The DIRECTV Group Announces Second Quarter 2009 Results



## STEVED21 (Feb 6, 2006)

The DIRECTV Group Becomes the World's Largest Pay-TV Provider with Over 24.2 Million Subscribers

DIRECTV U.S. Net Additions Increase 74% to 224,000 Driven by a 17% Increase in Gross Additions and a Monthly Churn Rate of 1.51%
DIRECTV Latin America Adds 128,000 Net Subscribers
The DIRECTV Group Increases Revenues 9% to $5.2 Billion and Free Cash Flow by 47% to $550 Million

DIRECTV U.S. Revenues Grow 8% to $4.5 Billion
DIRECTV Latin America Revenues Up 11% to $680 Million


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## bonscott87 (Jan 21, 2003)

Link to the webcast at 11am: http://investor.directv.com/?footernavtype=5

I should be able to blog this, I've blocked it out on my calendar, just need to keep people out of my cube!


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## Stuart Sweet (Jun 19, 2006)

Thanks for posting this guys...


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## Stuart Sweet (Jun 19, 2006)

Full Press Release in HTML Format
Full Press Release in PDF Format


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## ATARI (May 10, 2007)

STEVED21 said:


> The DIRECTV Group Becomes the World's Largest Pay-TV Provider with Over 24.2 Million Subscribers
> 
> DIRECTV U.S. Net Additions Increase 74% to 224,000 Driven by a 17% Increase in Gross Additions and a Monthly Churn Rate of 1.51%
> DIRECTV Latin America Adds 128,000 Net Subscribers
> ...


That's some impressive numbers!


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## harsh (Jun 15, 2003)

The churn may be a near term record high.

Be careful when comparing to previous quarters that you distinguish between U.S. and combined (with Latin American) operations where appropriate.


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## hdtvfan0001 (Jul 28, 2004)

harsh said:


> The churn may be a near term record high.


*....perhaps as seen from a Dish "see if we can use this to try to make Dish look better" perspective*...

But the results yet incredibly solid in a bad economy from any kind of an objective view.

I bet the analysts rate all the numbers "above" expectations.

Compared to the competition....its negligible.

Its equally amazing that they continue to add net subscribers in this economy...likely at the expense of both Dish and cable. We'll have to see when those numbers come out to determine any correlations.

*Update from Marketwatch:*

DirecTV reported third-quarter earnings of $370.2 million, or *30 cents a share*, up from a year-ago profit of $94.6 million, or 7 cents a share. Revenue rose in the latest three months to $3.67 billion from $3.23 billion in the same period a year earlier.

The *average estimate of analysts *polled by Thomson First Call *was for a profit of 27 cents *a share in the September quarter on revenue of $3.61 billion. Shares were up 2% at $22.27.

This is where some folks might be tempted to say "I told you so"...but not me.


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## bonscott87 (Jan 21, 2003)

Key U.S numbers:

* 224,000 sub additions
* 18.31 total subs (increase of over 1 million since last year)
* 1.51% churn (up a bit from 1st qtr but still very low)
* SAC at a 6 qtr low of $694 ("A highlight in the quarter was cash SAC of $694 at DIRECTV U.S., reflecting the lowest level in six quarters despite significantly greater sales of HD and DVR services to new customers.")

All in all an excellent 2nd quarter, especially considering not only the economy but also that the 2nd qtr is usually the slowest of the year.

20 minutes to live.


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## DodgerKing (Apr 28, 2008)

STEVED21 said:


> *The DIRECTV Group Becomes the World's Largest Pay-TV Provider* with Over 24.2 Million Subscribers


This is the part that caught my eye. Is this really the case?


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## bonscott87 (Jan 21, 2003)

DodgerKing said:


> This is the part that caught my eye. Is this really the case?


Yes when you count Latin America and Mexico.


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## bonscott87 (Jan 21, 2003)

And we are up and running!

Remember this will mostly be financial numbers, not when X channel will launch.

Will be interesting if Tivo is ignored again.

I'll keep my personal comments in brackets.


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## bonscott87 (Jan 21, 2003)

Will continue to work on long term growth driven by high quality subscribers.

Going over the results as posted above.
Strong sub grown and good cost management.

Best 2nd qtr net add number in 4 years.

Benefited from first full quarter of AT&T bundling.
Modest growth due to digital transition, but not as much in 1st quarter.

Credit quality of new subs and uptake of advanced product.

Believe the 2nd quarter was a better balance of sub growth and churn then was the first quarter.


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## bonscott87 (Jan 21, 2003)

60% of new subs take up HD DVR boxes.
SAC is lower due to lower hardware costs and being able to reuse used boxes.


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## bonscott87 (Jan 21, 2003)

1st quarter were a bit high in sub growth and costs. 2nd quarter much more balanced.

Comcast announced over 200,000 losses this quarter so it's nice to see DirecTV still growing.
Telco channel contributed about 25% of gross adds.

1.51% churn was up a bit from last year but in line with what was expected.
Mainly due to tightened up free offers and retention offers. Balance between company profit and losing a customer. This balance can change from month to month or even week to week.

ARPU growth 1.71% which is down. Lower uptake with premiums.

Really did well controlling costs especially with SAC and retention.

Want slower sub growth along with this controlling costs for a better balance.

50% more advanced HD DVR boxes over last year but costs are actually down.


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## bonscott87 (Jan 21, 2003)

Programming costs going up at a slower rate then expected due to lower uptake on premiums and favorable contracts.

Higher overall service levels so far this year in terms of taking calls quicker, lower call abondonment and so forth. Want to continue this as improving support is a top priority.


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## bonscott87 (Jan 21, 2003)

3rd quarter, expecting net adds to be about the same as last year.
Looking for higher gross adds and a bit higher churn due to tightening of retention and offers to current subs.


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## bonscott87 (Jan 21, 2003)

ARPU growth will be slower mainly due to seeing people cut back on premium channels along with events and PPV. Mostly due to the economy but also due to less "must see" content.


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## bonscott87 (Jan 21, 2003)

Latin America info now.


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## harsh (Jun 15, 2003)

DodgerKing said:


> This is the part that caught my eye. Is this really the case?


As I said above, be careful which numbers are U.S. only and which are consolidated with DIRECTV Latin America. The number you cite is the consolidated number.


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## BennyGregg (Jul 17, 2009)

I think that the decreasing cost of HD television sets helps to drive the increase in satellite TV subscriptions; as more and more have HD tv's, they want HD content. I just changed from cable to DirecTV. The number of HD channels I could get on cable was much less than I can get from DirecTV. The DirecTV cost is a bit more, but with much greater channel choice. So, I changed from 30 years or so with cable to DirecTV last month. Also, I chose DirecTV partly because I thought the Dish web site makes it too hard to calculate what your real subscriber costs will be; DirecTV's site was just more forthcoming and easier to navigate (although it tends to hide costs and conditions more than it should).


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## DodgerKing (Apr 28, 2008)

harsh said:


> As I said above, be careful which numbers are U.S. only and which are consolidated with DIRECTV Latin America. The number you cite is the consolidated number.


Which is why I asked.

Direct is number 3 in the US only (behind only CC and TWC) and number 1 in the world. Does it really make a difference if you are number 1 world wide or number 1 US only? They still have more subs than any other provider.


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## bonscott87 (Jan 21, 2003)

Near term priorities. Continue to launch new products and further differentiate themselves.

Live NFL games on cell phones. 
A trial to deliver NFL games to non DirecTV subs in Manhattan.
TV Apps to officially launch.
D12 sat going up and will be operational in 1st quarter 2010. Increase national HD channel capacity by 50%.


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## bonscott87 (Jan 21, 2003)

Time for Q&A!


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## bonscott87 (Jan 21, 2003)

IRS question.


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## spartanstew (Nov 16, 2005)

harsh said:


> The number you cite is the consolidated number.


As was mentioned 9 posts above you.


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## bonscott87 (Jan 21, 2003)

Sorry, I missed the question about where subs were coming from but I caught a dig on Dish and then they mentioned that they are starting to see a migration of subs actually coming from the telco TV services. If someone else caught it feel free to post it.


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## hdtvfan0001 (Jul 28, 2004)

The Q & A part is typically "interesting".

Nice work so far Bonscott!!


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## bonscott87 (Jan 21, 2003)

Q: Taking subs from Dish?

A: It's been pretty steady over the years and nothing much changed now.


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## bonscott87 (Jan 21, 2003)

hdtvfan0001 said:


> The Q & A part is typically "interesting".
> 
> Nice work so far Bonscott!!


Q&A has been pretty boring this time around. Nothing juicy so far and mostly boring financials. Usually there is a good question or two of interest to us but nothing much so far.


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## bonscott87 (Jan 21, 2003)

Q: Question on premiums and loss of premium subs.

A: Looking at an acceleration of premium downgrades in the 2nd half. A lot of it is "right sizeing" and we'd like to keep them as a sub right they are. We do have some offers to help people stay in a premium but it's like pushing a rock uphill right now.
Right now about 92% of subs take a premium and expect that to decline more.


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## bonscott87 (Jan 21, 2003)

Q: Are you seeing any customers cancel Sunday Ticket package?

A: ST is off to a really good start and haven't seen signs that people are giving that up.


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## harsh (Jun 15, 2003)

spartanstew said:


> As was mentioned 9 posts above you.


Yet DodgerKing still felt compelled to ask.


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## bonscott87 (Jan 21, 2003)

How is the telco partnership?

Been working great and they heavily market DirecTV bundles.
AT&T definately sells where they have Uverse, Verizon not so much when FIOS Tv is available


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## DodgerKing (Apr 28, 2008)

harsh said:


> Yet DodgerKing still felt compelled to ask.




Dude, 9 posts above yours was post #10. My question was post #9. IOW, someone else answered my question in post #10 before your post, is the point he was making.

If you still don't get it, it was a shot at you, not me.

Nice try attempting to play gotcha...


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## bonscott87 (Jan 21, 2003)

[Surprised questions still ongoing, I need to get to lunch!]

Q: Any thought of HD capability into every box vs. having to roll a truck every time someone wants to upgrade to HD

A: Something they are looking at all the time. Haven't come to the conclusion the time is right just yet to pull the trigger on that.


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## Justin23 (Jan 11, 2008)

DodgerKing said:


> Which is why I asked.
> 
> Direct is number 3 in the US only (behind only CC and TWC) and number 1 in the world. Does it really make a difference if you are number 1 world wide or number 1 US only? They still have more subs than any other provider.


I thought D* is the #2 pay TV provider in the US....only behind Comcast?

J


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## DodgerKing (Apr 28, 2008)

Justin23 said:


> I thought D* is the #2 pay TV provider in the US....only behind Comcast?
> 
> J


It could be. Someone else posted in another forum that both Comcast and TWC were ahead of DirecTV. I just took their word on it since they are usually pretty reliable.


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## bonscott87 (Jan 21, 2003)

Q: Any major programming negotiations coming up this year?

A: Quite a few coming up by the end of the year but just normal course of business.

Q: Will the Epix movie channel will be added?

A: No interest really in it at this time.


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## bonscott87 (Jan 21, 2003)

And with that it's all done. I'm off to lunch!


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## Justin23 (Jan 11, 2008)

Thanks for the updates!

J


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## Sixto (Nov 18, 2005)

bonscott87 said:


> And with that it's all done. I'm off to lunch!


Great job!

Followed you post-by-post, word-by-word. Thanks!


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## hdtvfan0001 (Jul 28, 2004)

Thank you as always for your fine recordations!


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## 474137 (Feb 17, 2008)

Great job. Thanks for the coverage!


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## RAD (Aug 5, 2002)

Justin23 said:


> I thought D* is the #2 pay TV provider in the US....only behind Comcast?
> 
> J





DodgerKing said:


> It could be. Someone else posted in another forum that both Comcast and TWC were ahead of DirecTV. I just took their word on it since they are usually pretty reliable.


It was me that posted that, guess working off of old memory, cable numbers are:

1 Comcast Corporation 24,182,000 
2 Time Warner Cable, Inc. 13,069,000

So it looks like DirecTV is #2 behind Comcast now.


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## JosephB (Nov 14, 2005)

Too bad for News Corp. If they had held on to DirecTV and consolidated it with Sky then they would be by and far the largest pay tv provider for a very long time.


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## DodgerKing (Apr 28, 2008)

RAD said:


> It was me that posted that, guess working off of old memory, cable numbers are:
> 
> 1 Comcast Corporation 24,182,000
> 2 Time Warner Cable, Inc. 13,069,000
> ...


Yes...It was you. Not use to seeing you without the dog pic. 

OT: Interesting...As I am posting this it started to snow.


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## DJPellegrino (Nov 18, 2005)

...but appears to be recovering. Probably the 'analysts' didn't read it too well and now have digested it more...


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## phrelin (Jan 18, 2007)

Congratulations to DirecTV. Based on all the deeper analysis of buying habits in The Great Recession the trend was that people were spending more on home entertainment. It appears that we can see where many of them went for HD for those new TV's and I suspect the numbers will not be similar for my signal provider.


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## tkrandall (Oct 3, 2003)

No mention of DirecTV 12?


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## RunnerFL (Jan 5, 2006)

bonscott87 said:


> And with that it's all done. I'm off to lunch!


Great job as always, thanks!

Hope lunch was worth the wait.


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## Thaedron (Jun 29, 2007)

tkrandall said:


> No mention of DirecTV 12?


was covered above, 1Q 2010



bonscott87 said:


> Near term priorities. Continue to launch new products and further differentiate themselves.
> 
> Live NFL games on cell phones.
> A trial to deliver NFL games to non DirecTV subs in Manhattan.
> ...


Oh and thanks again Bonscott!


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## Drew2k (Aug 16, 2006)

World #1 ... impressive!


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## bonscott87 (Jan 21, 2003)

Thanks for the kind words guys.

* I think the #1 take away from this is that their strategy of tighter credit standards and "high quality" customers has really paid off for DirecTV during the "Great Recession". People with DirecTV are not dropping service, they are just cutting back premiums. Unlike with Dish where they take anyone with a pulse, those people are dropping the service completely.

* *Interesting new tidbit about a trial in Manhattan* (this fall I'd guess) for the Sunday Ticket service to people without DirecTV. This was announced as a future product for 2010 and beyond in the latest contract renewal with the NFL so looks like they are ready to start a test market for it this year already.

* Uptake on Advanced products (HD DVR) is now over 60% of new subs.

* AT&T and other telco partnerships really working well.

* They have been and will continue to cut back on retention and current customer deals but it will be balance act for keeping customers

* D12 going up later this year with more HD national channels early next year (but we already knew that)

* They are not moving to an HD only box yet, time isn't right for them. But it's something they keep an eye on. So I'd guess their long term vision from a couple years ago for an HD only box by early 2010 is probably being pushed back. We probably see that in the R22 being discontinued.

* So far Sunday Ticket sales are doing really well, not a lot of cancellations. Of course we see a lot of deals being given for ST in various threads around here so they obviously want to keep the ST sub and give deals in this case. However, the people that post on this forum that get deals are just a small spec of total subs so don't really count that much.


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## RAD (Aug 5, 2002)

Guess you can count me as one of those subs that's cut back on premium services, dropped from Premier to Choice Extra HD+DVR package. I did add back Starz/Encore mainly to have some movie channels and Showtime because of Weeds and Penn & Teller BS (which will be dropped once those seasons end). Part of it was due to cost but as they mentioned, just not that many movies/shows on that I want to see that I haven't already seen via NetFlix.


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## harsh (Jun 15, 2003)

bonscott87 said:


> * Uptake on Advanced products (HD DVR) is now over 60% of new subs.


More importantly, the uptake for combined advanced products (which includes SD DVRs) last quarter was 60% and now the HD households alone are apparently 60% of the new installs (if I read your reporting correctly).

I wonder if making a single dish solution available where they didn't before had something to do with this.


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## mreposter (Jul 29, 2006)

RAD said:


> It was me that posted that, guess working off of old memory, cable numbers are:
> 
> 1 Comcast Corporation 24,182,000
> 2 Time Warner Cable, Inc. 13,069,000
> ...


I believe Comcast fell below 24m with the most recent quarterly report, stating that they lost over 200,000 video customers.

Directv with over 18m customers in the US is an impressive number. With nearly every other provider shrinking, Directv really stands out.


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## dreadlk (Sep 18, 2007)

Very true, it was a good idea when they expanded to keep on having a Quality fleet of satellites and the foresight to go big and move quickly into the HD market. This is the year of HD and they did a great job of being prepared, the only down side is that they are now lagging and I suspect that is going to have repercussions on next years numbers.



bonscott87 said:


> * I think the #1 take away from this is that their strategy of tighter credit standards and "high quality" customers has really paid off for DirecTV during the "Great Recession". People with DirecTV are not dropping service, they are just cutting back premiums. Unlike with Dish where they take anyone with a pulse, those people are dropping the service completely.


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## smiddy (Apr 5, 2006)

Thanks Scott,

Excellent rendition of events.


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## RAD (Aug 5, 2002)

dreadlk said:


> This is the year of HD and they did a great job of being prepared, the only down side is that they are now lagging and I suspect that is going to have repercussions on next years numbers.


IMHO, not that much of an impact due to HD. For a number of quarters Dish had more HD then DirecTV and DirecTV kept growing, even on the 1st quarter when Dish had more national HD channels DirecTV grew and Dish shrank.


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## bonscott87 (Jan 21, 2003)

dreadlk said:


> Very true, it was a good idea when they expanded to keep on having a Quality fleet of satellites and the foresight to go big and move quickly into the HD market. This is the year of HD and they did a great job of being prepared, the only down side is that they are now lagging and I suspect that is going to have repercussions on next years numbers.


Why would it? They are "lagging" with a few niche channels. DirecTV keeps growing, Dish keeps shrinking. In 6-9 months they'll add those niche channels and more. Them lagging by a couple channels for a few months will have *zero* effect on their numbers. None.

Heck, it had little to no effect on their numbers a couple years ago when they were stuck at 9 HD channels and Dish had 30+ for a while.

Total numbers is frankly a useless thing. It's about what you watch.


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## spartanstew (Nov 16, 2005)

DodgerKing said:


> Dude, 9 posts above yours was post #10. My question was post #9. IOW, someone else answered my question in post #10 before your post, is the point he was making.
> 
> If you still don't get it, it was a shot at you, not me.
> 
> Nice try attempting to play gotcha...


You'll soon discover that harsh only reads the posts he can respond too.


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## harsh (Jun 15, 2003)

bonscott87 said:


> They are "lagging" with a few niche channels. DirecTV keeps growing, Dish keeps shrinking.


Do you subscribe for the channels or is the size of the subscriber base more important?


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## hdtvfan0001 (Jul 28, 2004)

harsh said:


> Do you subscribe for the channels or is the size of the subscriber base more important?


*Both.*

One for the available service, and the second reason for the future stability of the provider.


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## houskamp (Sep 14, 2006)

harsh said:


> Do you subscribe for the channels or is the size of the subscriber base more important?


 If you bothered to read the whole post you might havesaw this part:"Total numbers is frankly a useless thing. It's about what you watch."


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## David MacLeod (Jan 29, 2008)

harsh said:


> Yet DodgerKing still felt compelled to ask.


and you felt compelled to offer your obvious insight into directv all over the thread.


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## Ken S (Feb 13, 2007)

It's interesting that the opinions here differ so greatly from those on the street. The financial press focused on profits being down 11%, the slowing of ARPU and the comment about customers dropping premiums.

I won't link all the stories...here's one for a taste.

http://finance.yahoo.com/news/DirecTV-CEO-sees-customer-apf-2581139562.html?x=0&.v=1


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## Hound (Mar 20, 2005)

D* is number 2 in us behind comcast. E* had been 3 and TWC 4.


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## kevinwmsn (Aug 19, 2006)

Thanks for the typing up the call. I was hoping to see a launch date not just(Sept/October) for D12. It makes sense on people cutting down on premiums when netflix and similiar are available. Maybe one day they will announce a new Tivo or at least give some info about it.


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## Sixto (Nov 18, 2005)

kevinwmsn said:


> I was hoping to see a launch date not just(Sept/October) for D12.


Predicting a future satellite launch and quarterly analyst financial calls don't mix very well. 

It's always best to be very fuzzy and just refer to Quarter's or Half's.

Too much uncertainty.

AsiaSat 5 needs to launch successfully.

Nimiq 5 needs to launch successfully.

And then D12's time will come.

And D12 needs to launch successfully.

And get to the proper slot.

And test all systems on board.

A long way to go ... with many parts outside DirecTV's control ...


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## bonscott87 (Jan 21, 2003)

Ken S said:


> It's interesting that the opinions here differ so greatly from those on the street. The financial press focused on profits being down 11%, the slowing of ARPU and the comment about customers dropping premiums.
> 
> I won't link all the stories...here's one for a taste.
> 
> http://finance.yahoo.com/news/DirecTV-CEO-sees-customer-apf-2581139562.html?x=0&.v=1


It is interesting, isn't it. It's more a "bottom line right now" thinking on Wall Street usually. They aren't making the connection that DirecTV customers are just trimming back services (premiums) instead of dropping the service completely like with Dish and cable.

Half full or half empty I guess.


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## VARTV (Dec 14, 2006)

bonscott87 said:


> Q: Question on premiums and loss of premium subs.
> 
> A: Looking at an acceleration of premium downgrades in the 2nd half. . .
> Right now about 92% of subs take a premium and expect that to decline more.


Wow. Would have never guessed it was that high...


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## wmj5 (Aug 26, 2007)

been with D* since sept. 1995 and I think they should come out with a cheaper package, I don't watch sports ,but I know thats where D* money comes from, I have put me a antenna up and if things don't get any better thats where I will be going, I am on a fixed income and I just can't pay that much to watch about 4 or 5 channels.


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## Drew2k (Aug 16, 2006)

VARTV said:


> Wow. Would have never guessed it was that high...


My guess is the biggest "premium" is the Sports Pack.


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## RACJ2 (Aug 2, 2008)

wmj5 said:


> been with D* since sept. 1995 and I think they should come out with a cheaper package, I don't watch sports ,but I know thats where D* money comes from, I have put me a antenna up and if things don't get any better thats where I will be going, I am on a fixed income and I just can't pay that much to watch about 4 or 5 channels.


The family package is fairly inexpensive @ $29.99/mo, if it has the 4 or 5 channels you watch. Have you looked at it as an option?


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## smiddy (Apr 5, 2006)

Ya know, I like DirecTV. I like it a lot!


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## JLucPicard (Apr 27, 2004)

VARTV said:


> Wow. Would have never guessed it was that high...


I don't sub to premium channels, but I am in the middle of three months of free Showtime as an anniversary gift. I wonder if those go into their numbers, too?


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## DodgerKing (Apr 28, 2008)

harsh said:


> Do you subscribe for the channels or is the size of the subscriber base more important?


I subscribe for the same reason others subscribe, which is indicated by the growing number of subs. There is a reason why Dish is shrinking and Direct is growing. It is those reasons why I and others choose to sub with Direct over Dish.


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## Jhon69 (Mar 28, 2006)

RAD said:


> Guess you can count me as one of those subs that's cut back on premium services, dropped from Premier to Choice Extra HD+DVR package. I did add back Starz/Encore mainly to have some movie channels and Showtime because of Weeds and Penn & Teller BS (which will be dropped once those seasons end). Part of it was due to cost but as they mentioned, just not that many movies/shows on that I want to see that I haven't already seen via NetFlix.


I did the same too dropped Premier to Choice Extra w/DVR with HBO and Starz.Have no other plans to cut back more.


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## bonscott87 (Jan 21, 2003)

VARTV said:


> Wow. Would have never guessed it was that high...


Yea, that kind of surprised me too. But when I think about it, if they count the sports packages as "premiums" as well (which they probably do) then even though I don't have any of the premiums I do have Sunday Ticket and thus would count as a premium sub.

In any case their ARPU has been north of $80 for a while and since the top non premium package is now $75 or so, that means that a lot of people must take at least one of the premium packages. I do know quite a few people that have just HBO or just Starz for example.

Personally I am one of the people that dropped all premiums and save $45 bucks a month. That easily pays for Sunday Ticket, Netflix and some left over for beverages and pizza.


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## Ken S (Feb 13, 2007)

The question is HD Access considered premium?
How about DVR access...is that a premium?
HD Extra would be. What about Choice Xtra?

They don't really state how they count to get that percentage...for all we know it could be anyone with anything more than the Family Plan.


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## Ken S (Feb 13, 2007)

JLucPicard said:


> I don't sub to premium channels, but I am in the middle of three months of free Showtime as an anniversary gift. I wonder if those go into their numbers, too?


I'm sure they are...I'd also bet that everyone that gets a freebie when they sign up is counted as a premium subscriber.

The key number though is ARPU...which is about $81. If the 92% were strictly about the movie tier/sports packages you would think that ARPU would be higher...but I have the flu and my head hurts too much to run the numbers and figure it out


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## Newshawk (Sep 3, 2004)

harsh said:


> More importantly, the uptake for combined advanced products (which includes SD DVRs) last quarter was 60% and now the HD households alone are apparently 60% of the new installs (if I read your reporting correctly).
> 
> I wonder if making a single dish solution available where they didn't before had something to do with this.


Harsh, DirecTV has always had a single dish setup for HD. It was either the Oval 3 LNB dish for MPEG2 or the Sidecar/Slimline dish for MPEG4. Dish was the big proponent of two (or more) dishes to get to all the "wing" satellites needed to get all their programming.


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## JLucPicard (Apr 27, 2004)

bonscott87 said:


> In any case their ARPU has been north of $80 for a while and since the top non premium package is now $75 or so, that means that a lot of people must take at least one of the premium packages.


If someone had the $75 package and a couple of extra receivers, that would still put them over the $80 ARPU, right?


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## Drew2k (Aug 16, 2006)

The DIRECTV web site shows the following are premiums:


HBO
SHOWTIME Unlimited
Starz Super Pack
Cinemax
Sports Pack
Adult
Game Lounge
BabyFirst TV
HD Extra Pack


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## Ken S (Feb 13, 2007)

Drew2k said:


> The DIRECTV web site shows the following are premiums:
> 
> 
> HBO
> ...


Drew, that very well may be what they're using, but we can't be sure.


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## Movieman (May 9, 2009)

Considering all the marketing that is being put out there I'm not surprised. And next quarters numbers might be just as respectable considering the packages they are putting together with Sunday Ticket.


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## dcowboy7 (May 23, 2008)

Drew2k said:


> The DIRECTV web site shows the following are premiums:
> 
> HBO
> SHOWTIME Unlimited
> ...


92% still seems too high.

I mean thats like 94 out of every 100 people.


----------



## RAD (Aug 5, 2002)

Drew2k said:


> The DIRECTV web site shows the following are premiums:
> 
> 
> HBO
> ...





Ken S said:


> Drew, that very well may be what they're using, but we can't be sure.


From http://investor.directv.com/secfiling.cfm?filingid=909518-09-496 which is the earning call transcript:

_Q - Tom Eagan>: Right. And secondly, on premium takeup, you mention that you've seen a decline in the premium take rate. You mentioned adult. You mentioned the pay-per-view events. But what about the movie services, like HBO, Starz, and Cinemax? What have you seen in terms of a take rate of those services?

<A - Larry Hunter>: That's the premiums we're talking about - HBO, Starz, Cinemax is -

<A - Patrick Doyle>: Yeah, when we say premiums, it's -

<Q - Tom Eagan>: Oh, right. No, I figured. But the ones you mentioned though, you mentioned adult and you mentioned - I wasn't sure if that was also the other movie services as well. _

Hope that helps.


----------



## Drew2k (Aug 16, 2006)

Well, I started a poll thread to see how our forum members do in regards to Premiums. Will we reach 92%?

http://www.dbstalk.com/showthread.php?t=162740


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## Shades228 (Mar 18, 2008)

I could see 92% of all subs having subscribed to a movie channel in the quarter. Remember we're talking quarter results not on that specific day. The number is going to change daily.


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## Dolly (Jan 30, 2007)

Great job Scott and thanks  And a great job also for DirecTV :hurah: Now lets go after Comcast


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## hdtvfan0001 (Jul 28, 2004)

Just for comparison....Dish today reported a churn rate of 1.73%.

DirecTV's churn rate was 1.51%.


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## Ken S (Feb 13, 2007)

hdtvfan0001 said:


> Just for comparison....Dish today reported a churn rate of 1.73%.
> 
> DirecTV's churn rate was 1.51%.


I wonder when they'll start reporting churn on a daily basis to make the number seem even smaller. These are two companies...both which now demand two-year commitments from their customers that have annual churn rates over 20% per year (with more churn voluntary than non-voluntary). The majority of the churn is voluntary as well. In actual numbers that means DirecTV will have to completely replace its subscriber base in a little over four years....Any wonder why Subscriber Acquisition Costs are so high.

That's not to say cable is any better, the big cable companies are actually worse.


----------



## hdtvfan0001 (Jul 28, 2004)

Ken S said:


> I wonder when they'll start reporting churn on a daily basis to make the number seem even smaller. These are two companies...both which now demand two-year commitments from their customers that have churn rates over 20% per year.


Uh...those churn rates reported are quarterly....1.51% for DirecTV.

Hardly 20% churn annually.


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## Ken S (Feb 13, 2007)

hdtvfan0001 said:


> Uh...those churn rates reported are quarterly....1.51% for DirecTV.
> 
> Hardly 20% churn annually.


No, they're monthly. Read their financials before making incorrect statements. I'll save you a little work...here's how DirecTV defines it.

Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.

This puts DirecTV at over 20% and Dish just under 23%.


----------



## hdtvfan0001 (Jul 28, 2004)

Ken S said:


> No, they're monthly. Read their financials before making incorrect statements. I'll save you a little work...here's how DirecTV defines it.
> 
> Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.
> 
> This puts DirecTV at over 20% and Dish just under 23%.


Average means that - average...*not* accumulated.

If you took that same formula on annualized numbers, the % would remain about the same....you can't just add them all up and say its your total. 

Using your math, they'd have to add 20% new subscribers to their total subscriber base each year (about 4 million) just to keep the same number of subscribers without any net growth - and it simply ain't so.


----------



## Upstream (Jul 4, 2006)

Ken S said:


> that have annual churn rates over 20% per year (with more churn voluntary than non-voluntary). The majority of the churn is voluntary as well. In actual numbers that means DirecTV will have to completely replace its subscriber base in a little over four years....


1.51% monthly is 18.12% annually (just under 20%). That means DirecTV has to replace the volume of it's subscriber base every 5.5 years, not every 4 years.

Your point is the same, but it is not quite as severe as you portray it.

(And HDTVfan, your math is wrong. 1.51% average monthly churn means that 18.12% of DirecTV's subscriber base cancels over the year. And that does mean they need to add about 4 million new subscribers just to keep the subscriber base stable.)


----------



## bonscott87 (Jan 21, 2003)

In any case this is what it is in the multichannel pay TV industry. ALL of them (cable, FIOS, Uverse, DirecTV, Dish) have churn this high or higher. It just is what it is. Cable is much higher then either DirecTV or Dish most times.


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## Ken S (Feb 13, 2007)

Upstream said:


> 1.51% monthly is 18.12% annually (just under 20%). That means DirecTV has to replace the volume of it's subscriber base every 5.5 years, not every 4 years.
> 
> Your point is the same, but it is not quite as severe as you portray it.
> 
> (And HDTVfan, your math is wrong. 1.51% average monthly churn means that 18.12% of DirecTV's subscriber base cancels over the year. And that does mean they need to add about 4 million new subscribers just to keep the subscriber base stable.)


No 1.51% per month needs to be compounded since DirecTV's overall subscriber number is going up...you don't just add the numbers up. Actually compounding isn't exactly correct...the overall growth number should probably be used, but it's very close. Now, if the base was going down than we would have an annual number that was smaller than the total of 12 x monthly churn. It would be nice if all the companies in the same industry were required to use the same formulas for reporting so that investors/potential investors could better compare.

HDTVFan, you're just making things up. I guess from your silence you now realize it is a MONTHLY number?

On to your next incorrect statement:
What was DirecTV's GROSS subscriber adds for the last reported quarter? It was 1,048,000...guess what...that works out to over 4,000,000 per year...During the first six months of 2009 DirecTV added 2,233,000 subscribers and had 1,858,000 cancellations/terminations So, in your terms...it simply IS SO.

They had 894,000 people terminate service in the quarter. Now, I think it would be really helpful if you did even a modicum of research before posting and challenging the statements of others. There's nothing wrong with challenging someone's opinion, but when I'm stating the numbers as DirecTV posts them you are insulting me, badly impugning your own credibility and doing this forum a large disfavor by making false statements without bothering to do even the simplest research on your own.

These numbers all appear on page 25 of their most recent 10-Q which can be found here: http://investor.directv.com/secfiling.cfm?filingID=1047469-09-7315

I understand why DirecTV states the numbers the way they do...just about all companies try to paint every aspect of their financials 
with a "happy" face...however, I don't understand why you go even further and make baseless statements.


----------



## Ken S (Feb 13, 2007)

bonscott87 said:


> In any case this is what it is in the multichannel pay TV industry. ALL of them (cable, FIOS, Uverse, DirecTV, Dish) have churn this high or higher. It just is what it is. Cable is much higher then either DirecTV or Dish most times.


bon,

That's true...that's what I stated earlier and it coincides with the ACSI numbers on the industry as a whole. Pretty darn poor.


----------



## bonscott87 (Jan 21, 2003)

Ken S said:


> bon,
> 
> That's true...that's what I stated earlier and it coincides with the ACSI numbers on the industry as a whole. Pretty darn poor.


Yep. I think there are a lot of people that "chase the deal" and switch all the time for the new user deals. More power to 'em. But I got better things to do. 

And people wonder why DirecTV and Dish (and now FIOS and cable with some deals) want to lock people in for 2 years.


----------



## hdtvfan0001 (Jul 28, 2004)

Upstream said:


> 1.51% monthly is 18.12% annually (just under 20%). That means DirecTV has to replace the volume of it's subscriber base every 5.5 years, not every 4 years.
> 
> Your point is the same, but it is not quite as severe as you portray it.
> 
> (And HDTVfan, your math is wrong. 1.51% average monthly churn means that 18.12% of DirecTV's subscriber base cancels over the year. And that does mean they need to add about 4 million new subscribers just to keep the subscriber base stable.)


You guys are apparently missing the word average in the statement. 

You must also be totally disregarding renewals, which are not mentioned in the math either.

If you honestly think that by using your fuzzy math they sign up 4+ million *brand new* subscribers every year to break even and over 5 million to gain the subscribers NET that they did last year....I want some of what you're drinking.


----------



## Ken S (Feb 13, 2007)

hdtvfan0001 said:


> You guys are apparently missing the word average in the statement.
> 
> You must also be totally disregarding renewals, which are not mentioned in the math either.
> 
> If you honestly think that by using your fuzzy math they sign up 4+ million *brand new* subscribers every year to break even and over 5 million to gain the subscribers NET that they did last year....I want some of what you're drinking.


Once again...read their financial statements before you start typing. I posted how many subs they signed up last quarter and for the six month period. Seems to indicate they're doing just what you say isn't happening. Then again, I guess we should be used to you spewing inaccuracies and un-researched comments over and over...maybe if you post it often enough someone will believe it?

Just to repost what you failed to read either here or on DirecTV's site. They signed on almost 2,233,000 new subscribers in the first six months of this year. Hmm...double that and what number do you get?

Please stop this...


----------



## hdtvfan0001 (Jul 28, 2004)

Ken S said:


> Once again...read their financial statements before you start typing. I posted how many subs they signed up last quarter and for the six month period. Seems to indicate they're doing just what you say isn't happening. Then again, I guess we should be used to you spewing inaccuracies and un-researched comments over and over...maybe if you post it often enough someone will believe it?


I read them sir.

Apparently you wish to continue spewing *your *innaccuracies, or manipulations in how numbers are interpreted, or perhaps have *some other agenda*. I suspect *that* may indeed be the case.

In any case, welcome to my ignore list.


----------



## DodgerKing (Apr 28, 2008)

Upstream said:


> 1.51% monthly is 18.12% annually (just under 20%). That means DirecTV has to replace the volume of it's subscriber base every 5.5 years, not every 4 years.
> 
> Your point is the same, but it is not quite as severe as you portray it.
> 
> (And HDTVfan, your math is wrong. 1.51% average monthly churn means that 18.12% of DirecTV's subscriber base cancels over the year. And that does mean they need to add about 4 million new subscribers just to keep the subscriber base stable.)


It is amazing how many people I run into that do not understand simple math and percentages. If the average churn rate per month is 1.51% every month, then the average churn rate per year is also be close to 1.51% per year, depending on the number of additions. You don't multiply the rate by 12, it is a lot more detailed than that.


----------



## hdtvfan0001 (Jul 28, 2004)

DodgerKing said:


> It is amazing how many people I run into that do not understand simple math and percentages. If the average churn rate per month is 1.51% every month, then the average churn rate per year is also be close to 1.51% per year, depending on the number of additions. *You don't multiply the rate by 12*, it is a lot more detailed than that.


Bingo.

Now if a few others could only be as wise as you obviously are...


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## Ken S (Feb 13, 2007)

hdtvfan0001 said:


> I read them sir.
> 
> Apparently you wish to continue spewing *your *innaccuracies, or manipulations in how numbers are interpreted, or perhaps have *some other agenda*. I suspect *that* may indeed be the case.
> 
> In any case, welcome to my ignore list.


Please tell me where I've been innacurate. I posted links to their financials. As for being on your ignore list...you seem to threaten that on a regular basis...Whether it happens or not..I'll sleep well.

As for my agenda...I like discussing the financial aspects of the industry. There are some very intelligent people here who know and comment on the business and financial aspects. At the present time I have no investments in any company which could remotely be considered in that industry. I have owned stock in both Dish and DirecTV in the distant past.

The question is what is your agenda and why continually deny company-stated numbers?

For those of you that care (and I hope there are few.) here's the link to DirecTV's site and listing of financial reports. The latest quarterly report was filed on August 7, 2009. http://investor.directv.com/sec.cfm

Here's a snapshot from the quarterly results showing the subscriber adds for the latest three-month period. The six month numbers which I quoted above are also in that report.

I'm sorry a reasonable discussion had to turn into this.


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## Ken S (Feb 13, 2007)

DodgerKing said:


> It is amazing how many people I run into that do not understand simple math and percentages. If the average churn rate per month is 1.51% every month, then the average churn rate per year is also be close to 1.51% per year, depending on the number of additions. You don't multiply the rate by 12, it is a lot more detailed than that.


Please do the math and compare it to the DirecTV financials and you will see you're mistaken. You might also want to read how DirecTV defines average monthly churn...it's not what you think.

*From the DirecTV 10Q:
Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.*

Please do the calculations (your way and by totaling the monthly rate) and compare them to the real numbers. I understand it's confusing that's why companies like DirecTV do it that way. They want people to believe the number is very small. In reality DirecTV will lose somewhere over 3,000,000 customers this year and grow by adding well over 4,000,000 new customers...each new customer at a cost of ~$700.

You don't have to believe me...the numbers are all in their financials. You don't have to believe those numbers, but if they're false someone is going to jail 

Here let's make it easy. I captured the pertinent data from the 2008 Annual Report.

Last Day 2007
Total Subs: 16,831,000

Last Day 2008
Total Subs: 17,621,000

Subscribers added 2008:3,904,000
Subscriber disconnections 2008: 3,043,000

So...let's do some rithmitic and a simple annual churn rate: 3,043,000 divided by 17,621,000 = .1726 or 17.26% DirecTV stated their average monthly churn was 1.47% for 2008 1.47 multipled by 12 equals...17.64%.

Figuring an accurate annual churn rate would take more information than we're given, but taking their monthly and multiplying by 12 is a decent starting point.

Now please, if anyone wishes to dispute this do so using the actual numbers.


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## Upstream (Jul 4, 2006)

DodgerKing said:


> It is amazing how many people I run into that do not understand simple math and percentages. If the average churn rate per month is 1.51% every month, then the average churn rate per year is also be close to 1.51% per year, depending on the number of additions. You don't multiply the rate by 12, it is a lot more detailed than that.


Let me give a simple example to help explain it.

Let's say a company has 10 million subscribers and an average monthly churn rate of 1.5 percent. That means that each month they lose 150,000 subscribers on average. And let's assume that each month they exactly replace those lost subscribers with new subscribers, so their subscription base remains at 10 million (to make the math easier).

So in January they lose (and gain) 150,000 subscribers, for a 1.5% churn rate.

Same thing in February, and March, and April, etc.

Over 12 months they lose 12 x 150,000 subscribers (and gain 12 x 150,000 new subscribers, to keep their subscription base at 10 million). So over the year, they lose 1,800,000 subscribers and sign up 1,800,000 new subscribers for an annual churn rate of 1,800,000 / 10,000,000 = 18%.

The annual churn rate is 18% (1.5% x 12), not 1.5%.

Now, before someone points out the word average, the exact monthly churn numbers can vary, as long as the average remains 1.5%. So in the following example, the average is 1.5% per month, although each month is different, and the annual churn is still 1.5% x 12 = 18%.

Month subscribers-churned churn-rate
Jan 150K 1.5%
Feb 160K 1.6%
Mar 140K 1.4% 
Apr 150K 1.5%
May 160K 1.6%
Jun 140K 1.4%
Jul 150K 1.5%
Aug 160K 1.6%
Sep 140K 1.4% 
Oct 150K 1.5%
Nov 160K 1.6%
Dec 140K 1.4%

AVERAGE 150K 1.5%
TOTAL 1800K 18%


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## Drew2k (Aug 16, 2006)

*Time out!*

Can someone please define "churn" in the context of DIRECTV customer acquisition and loss? To me, churn implies turnover, so does it include customers lost *and gained*? Or is it only customers lost?

If the churn average is 1.51% per month, does that mean they turnover 1.51% of the customer base (losses plus new users) or is that strictly the percentage of customers lost?

Thanks.

Now please just post answers and math but leave the personalities out of it and I'll be very happy.


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## DodgerKing (Apr 28, 2008)

Ken S said:


> Please do the math and compare it to the DirecTV financials and you will see you're mistaken. You might also want to read how DirecTV defines average monthly churn...it's not what you think.
> 
> *From the DirecTV 10Q:
> Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.*
> ...


That still makes my point.

For example. Lets say company A had these losses and gains each month (we will use small numbers that are multiples of 5 to keep it simple). Lets say they started with 950 subs:

```
Month   Losses  Gains  Total subs  Churn Percentage for the month
1              5      10        1000          0.5%
2            10      20        1010          0.9%
3             5       30        1035          0.48%
Q1           20     60        1035          1.9%
```
Average monthly losses 8.3
Average number of subs 1015
*Average monthly churn 8.3/1015 = 0.8%*

The total churn rate for this made up quarter is 1.9%
This is not 0.8 x 3 = 2.4%
Like I said, you do not multiply by 12 to get the whole year.
It is a rate, not a total. You cannot simply add or multiply (which is repeated addition) percentages.

Lets take it a step further and do another made up quarter continuing from last quarter

```
Month   Losses  Gains  Total subs  Churn Percentage for the month
4             20      40        1055          1.8%
5             15      20        1060          1.4%
6              5      60        1115          0.4%
Q2           40     120       1115          3.5%
```
Average monthly loss = 13.3
Average number of subs = 1076.6
*Average monthly churn = 1.2%*

Total average monthly losses for both quarters = 10
Total average monthly sub base for both quarters = 1045
*Average monthly churn for both quarters = 0.95%*

Total churn rate is 3.5%. This is not Q1 average monthly churn rate x 6

If sub losses compared to net gain becomes even less, then the total churn rate gets closer to the average monthly churn rate.


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## Upstream (Jul 4, 2006)

Drew -- From the DirecTV financial report that Ken S quoted in post 108 in this thread, DirecTV calculates churn as the number of disconnects divided by the total number of subscribers.

So a 1.51% average monthly churn means that DirecTV loses 1.51% of its subscribers on average every month. In the case of DirecTV, they sign up more new subscribers than they lose, so the subscription base increases.


----------



## Ken S (Feb 13, 2007)

DodgerKing said:


> That still makes my point.
> 
> For example. Lets say company A had these losses and gains each month (we will use small numbers that are multiples of 5 to keep it simple). Lets say they started with 950 subs:
> 
> ...


Dodger, you're not defining churn the way DirecTV does. USE ACTUAL DIRECTV NUMBERS...you will see you are in error.


----------



## DodgerKing (Apr 28, 2008)

Upstream said:


> Let me give a simple example to help explain it.
> 
> The annual churn rate is 18% (1.5% x 12), not 1.5%.
> 
> ...


This is my point. You cannot simply add percentages to get a total (multiplying is addition...it is just repeated addition).

The total will be higher than 1.5%, but it is not going to be 18%. There are too many factors that change the denominator of your rates through the period.

This is similar to the question that ask, if it takes you 6 hours to go from LA to SF and and 5 hours to go from SF to LA, is your average time 5.5 hours? The answer is no. It is not a simple mean problem of (6 + 5)/2 because the denominator (hours in this case) changes.

IOW, each one of those months has a different total sub base (the denominator) and each month that denominator gets larger. You cannot simply do a total of the average over each month because the denominator changes. So the total churn rate for the year will be less than 18%


----------



## DodgerKing (Apr 28, 2008)

Ken S said:


> Dodger, you're not defining churn the way DirecTV does. USE ACTUAL DIRECTV NUMBERS...you will see you are in error.


Average losses per month divided by average total subs per month. That is they way I did it.


----------



## Ken S (Feb 13, 2007)

Drew2k said:


> *Time out!*
> 
> Can someone please define "churn" in the context of DIRECTV customer acquisition and loss? To me, churn implies turnover, so does it include customers lost *and gained*? Or is it only customers lost?
> 
> ...


It means they lose an average of 1.51% of their total customers each month. The definition they use is in their financials and I posted it in a message above.

So, if they have 1,000 customers and lose 100 customers their churn rate is 10%. Now, if they're adding more customers than that they will have a net increase and the new higher subscriber number will be used in future churn calculations. So, if they add 200 during the same period they'll end up with 1,100 customers.

The next period if they lose 100 customers their churn rate will be 9.1%.


----------



## Ken S (Feb 13, 2007)

DodgerKing said:


> Average losses per month divided by average total subs per month. That is they way I did it.


Use the real numbers...give it a try. I'm really not trying to fool anyone.


----------



## Ken S (Feb 13, 2007)

DodgerKing said:


> This is my point. You cannot simply add percentages to get a total (multiplying is addition...it is just repeated addition).
> 
> The total will be higher than 1.5%, but it is not going to be 18%. There are too many factors that change the denominator of your rates through the period.
> 
> This is similar to the question that ask, if it takes you 6 hours to go from LA to SF and and 5 hours to go from SF to LA, is your average time 5.5 hours? The answer is no. It is not a simple mean problem of (6 + 5)/2 because the denominator (hours in this case) changes.


I agree with you here...you can't simply multiply by 10 and get an exact number, but you get pretty close. Certainly much closer than claiming the monthly churn rate and the annual churn rate are the same which another poster was trying to do.

It boils down to my original point which is DirecTV will have somewhere around 3,750,000 disconnect their service (voluntarily and involuntarily) this year and will replace them with close to 4,500.000 new customers at a cost of about $700 a sub. The others in the industy are just as bad or worse...so the next time we wonder why our bills are going up it might have a lot to do with them spending so much to get new customers rather than finding ways to keep the old ones from leaving.


----------



## DodgerKing (Apr 28, 2008)

Ken S said:


> Use the real numbers...give it a try. I'm really not trying to fool anyone.


I realize you are not trying to fool anyone. I actually agree with your general point. I was simply pointing out common percentage mistakes people make all of the time. As a high school and JC math teacher, I just thought I would point this out. I see the same mistakes made when it comes to interest rates, ex. I guess I was just being a little anal.


----------



## Upstream (Jul 4, 2006)

DodgerKing said:


> For example. Lets say company A had these losses and gains each month (we will use small numbers that are multiples of 5 to keep it simple). Lets say they started with 950 subs:
> 
> ```
> Month   Losses  Gains  Total subs  Churn Percentage for the month
> ...


Check your math. 
Average monthly losses = (5+10+5)/3 = 6.67
Average monthly churn rate = 0.657%
Total churn rate = 20/1015 = 1.97% (DirecTV expresses churn as a percentage of the average total number of subscribers)

0.657*3 = 1.97%


----------



## DodgerKing (Apr 28, 2008)

Ken S said:


> It means they lose an average of 1.51% of their total customers each month.


This here is the best explanation yet.

IOW, average monthly churn rate is the average number of losses per month of the total losses per period (quarter in this case).


----------



## DodgerKing (Apr 28, 2008)

Upstream said:


> Check your math.
> Average monthly losses = (5+10+5)/3 = 6.67


Good catch. I kept changing numbers so I forgot the change the math after I changed the table.


> Average monthly churn rate = 0.657%
> Total churn rate = 20/1015 = 1.97% (DirecTV expresses churn as a percentage of the average total number of subscribers)


OK...Then shouldn't they also use the average number of losses over that period? Why would they use an average for the denominator and a total for the numerator?


> 0.657*3 = 1.97%


see above


----------



## Ken S (Feb 13, 2007)

DodgerKing said:


> I realize you are not trying to fool anyone. I actually agree with your general point. I was simply pointing out common percentage mistakes people make all of the time. As a high school and JC math teacher, I just thought I would point this out. I see the same mistakes made when it comes to interest rates, ex. I guess I was just being a little anal.


No, you're correct it was just getting lumped in with another poster's erroneous statements.


----------



## hdtvfan0001 (Jul 28, 2004)

Drew2k said:


> *Time out!*
> 
> Can someone please define "churn" in the context of DIRECTV customer acquisition and loss? To me, churn implies turnover, so does it include customers lost *and gained*? Or is it only customers lost?
> 
> ...


Of course, you are right....

It's also a big difference over the obviously misleading "adding up the numbers" to come up with a bigger number.

Thanks for pointing out the reality Drew.


----------



## BattleScott (Aug 29, 2006)

hdtvfan0001 said:


> Of course, you are right....
> 
> It's also a big difference over the obviously misleading "adding up the numbers" to come up with a bigger number.
> 
> Thanks for pointing out the reality Drew.


I am not sure what you are basing your argument with KenS on because you won't list what your "math" says, but you are wrong (and a little rude as well if I may add).

Churn does not include new subscribers as it is a specific reference to activity among existing subscribers. As defined by DirecTV in there own documents, the total churn for a period is the "disconnects - reconnects". I am not exactly certain what numbers go into those, but I would imagine it is basically (cancellations + suspensions) - (reactivations + returning customers) or something very similar.

The reason this number is sought out is that it tells the interested parties how many highly profitable "low-cost" customers are being lost and replaced with less profitable "high-cost" ones. 
Ken is stating that they, as most companies, like to "portray" that figure in the most positive light which is the lower monthly figure instead of the less appealing annual one.


----------



## Drew2k (Aug 16, 2006)

Ken S said:


> *From the DirecTV 10Q:
> Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.*





Upstream said:


> Drew -- From the DirecTV financial report that Ken S quoted in post 108 in this thread, DirecTV calculates churn as the number of disconnects divided by the total number of subscribers.


Thanks for the explanations .. I had missed it in Ken's original message.


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## BattleScott (Aug 29, 2006)

I can't find it in the results, does anyone know if the Subscriber Acquisition Cost figure is based on 1 year or is it based on the comitment term of the suscriber?


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## Ken S (Feb 13, 2007)

BattleScott said:


> I can't find it in the results, does anyone know if the Subscriber Acquisition Cost figure is based on 1 year or is it based on the comitment term of the suscriber?


Here's how DirecTV defined in their most recent 10-K. This may not be the way they define it next year or the way Dish defines it...same as churn...the secret to reading financials is in the notes. . I think they are stating it's just under $700 for each new user.

Subscriber Acquisition Costs. These costs include the cost of set-top receivers and other equipment, commissions we pay to national retailers, independent satellite television retailers, dealers, telcos, and the cost of installation, advertising, marketing and customer call center expenses associated with the acquisition of new subscribers. Set-top receivers leased to new subscribers are capitalized in "Property and equipment, net" in the Consolidated Balance Sheets and depreciated over their useful lives. The amount of set-top receivers capitalized each period for subscriber acquisitions is included in "Cash paid for property and equipment" in the Consolidated Statements of Cash Flows.


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