DIRECTV share price down, beats profit estimates due to increased US subscription fees

DIRECTV, the biggest US satellite TV provider, reported quarterly profit above analysts expectations boosted by higher U.S. subscription payments.

DIRECTV announced a revenue increase of 6.3% to $8.37 billion in the recent quarter, compared to last years result of $7.88 billion, barely beating the Bloomberg-compiled analysts projection of $8.3 billion.

The company stated quarterly operating profit of $1.22 billion, down from $1.23 billion a year earlier. Net income fell 13% to $611 million versus $699 million in 2013s Q3.

DIRECTV reported earnings per share of $1.21 compared to last years result of $1.28 a share. Adjusted earnings per share were $1.33.

In May telecom giant AT&T agreed to acquire DIRECTV, making it a major player in pay television as more people switch to online video streaming. The deal follows Comcasts agreement to buy Time Warner Cable for $45 billion. The moves point towards merging the television and telecommunication industries.

Shareholders at DIRECTV approved the deal in September. The company said it expects the agreement, which still requires U.S. regulatory approval, to close in the first half of next year.

In the recent quarter DIRECTV lost 28 000 net subscribers in the U.S. versus 139 000 net additions last year. Analysts at StreetAccount expected a net addition of 66 000 subscribers. The total subscriber base was about 20.2 million at the end of the quarter. Revenue from the U.S. increased 5.4% to $6.5 billion, while average monthly revenue per subscriber gained $4.9 to $107.27.

In Latin America net subscriber disconnections were 119 000 compared with 260 000 net additions a year earlier. Revenue from the region increased 9.5% to $1.82 billion, while subscriber count stood at 12.4 million. The company paid $92 million to settle a dispute with a Brazilian agency.

In an effort to retain its remaining TV customers and encourage them to pay more in subscription fees, DIRECTV renewed its contract for NFL Sunday Ticket.

“Our third quarter financial results continue to demonstrate the strong execution of our operations,” said Mike White, President and CEO of DIRECTV. “In the U.S., although competition for subscribers continues to be intense, revenue growth was very solid while operating profit before depreciation and amortization margin expanded year-over-year for the fifth consecutive quarter.”

DIRECTV gained 0.45% on Wednesday and closed at $87.82 on the NASDAQ. On Thursday the stock fell 0.39% to $87.48, marking a one-year increase of 37.76%. The company is valued at $43.94 billion. According to the Financial Times, the 20 analysts offering 12-month price targets for DIRECTV have a median target of $95.00, with a high estimate of $97.00 and a low estimate of $81.00. The median estimate represents a 8.60% increase from the last price of $87.48