Bullish DirecTV (DTV) bodes well for MBND
DirecTV Sees More Than 30M Subscribers By 2013 >DTV
By Roger Cheng
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--DirecTV Group Inc. (DTV) expects to generate more than
$30 billion in annual sales and serve more than 30 million customers by
2013.
"We're continuing to see momentum," Chief Executive Michael White said
during the company's investor day event on Thursday. He added the company is
on track for the best quarter of the year in terms of revenue and subscriber
growth.
The company is expected to generate roughly $24 billion in revenue this
year.
DirecTV represents a rare case of a consumer-centric company that continued
to spend even as people trimmed their budgets. The company's decision to
focus on more upscale consumers kept it relatively insulated from the
downturn in consumer spending. As a result, its subscribers were more
willing to pay for premium services such as digital video recorders, extra
pay channels and pay-per-view events, resulting in improved profitability
and growth even as its cable competitors lost video subscribers.
For the fourth quarter, White said he expects the company to add 200,000
customers, bringing its total base to 19.1 million.
"Were gaining share," he said, adding that the rate of customer turnover is
also improving.
Looking ahead, White said the company will also deliver $5 a share in free
cash flow and earnings in 2013. He also expects the company to buy back a
third of its stock by then.
White said the company plans to take a more "segmented approach" in
marketing, acknowledging a wider fracturing of demographics in the country.
He added that with the issue of rising costs for media content, the company
will have to communicate, and eventually pass along those expenses to the
customer.
Unlike the regionally based cable providers, DirecTV benefited from higher
activity in its Latin America business, which was helped in the summer by
rabid interest in the World Cup, but continued through the third quarter.
In total, the company added 380,000 net new customers in the third quarter,
with most of the growth coming from Latin America.
"We have demonstrated success and proven ourselves a leader," said Bruce
Churchill, president of the company's Latin American arm. He added the
company has a number of competitive advantages that will help it maintain
its lead in the region.
The middle class in several of its regions, including Brazil, is growing, he
said, adding that he expects Brazil's market is expected to double.
DirecTV will soon have more competition in the area. Brazilian regulators
recently removed barriers to enter the pay-TV business, and the country's
largest landline phone company, Tele Norte Leste Participacoes S/A
(TNLP4.BR, TNE), also known as Oi, said recently it expects to launch an
Internet-based TV service in the next six months.
Churchill said the low-cost nature of the business gives satellite TV an
advantage over fixed-line companies because of the cost required to build
out the infrastructure. DirecTV, meanwhile, is able to take advantage of the
advanced services it delivers in the U.S. and eventually move those features
into Latin America.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
