NEW YORK – DirecTV Group Inc. (DTV), the top U.S. satellite television operator, Monday said its first-quarter loss narrowed as it grabbed subscribers from cable operators, sparking a 6 percent rise in its stock.
Analysts applauded the company's ability to gain new subscribers and improve its profit margin amid competition from cable companies that have added new digital services to keep its customers. The stock
"The numbers were pretty good. They beat our estimates on almost all the metrics," said Oppenheimer & Co. analyst Thomas Eagan.
The El Segundo, California, company controlled by News Corp. (NWS) posted a first-quarter net loss of $41 million, or 3 cents a share, compared with a net loss of $639 million, or 46 cents a share, a year earlier, when it took a big charge from the sale of a satellite unit.
News Corp. (NWS) is the parent company of the FOX News Channel, which operates FOXNews.com.
Revenue rose 26 percent to $3.15 billion.
Wall Street expected the company to post a loss of a penny a share on revenue of about $3 billion, according to Reuters Estimates.
DirecTV, which said it will launch three new satellites in the coming months, added 505,000 net additional subscribers to end the quarter with 14.45 million subscribers.
Average monthly churn, or the rate at which customers defect, increased to 1.49 percent from 1.43 percent, but below analysts' expectations of 1.5 percent to 1.6 percent. The company also spent less on subscriber acquisition costs than some analysts expected.
"The quarter was stronger. Net additions driven by lower than expected churn was encouraging for DirecTV in the quarter," said UBS analyst Aryeh Bourkoff.
"It looks like the telcos partnership and entry to rural markets have begun to yield results," Bourkoff added, referring to marketing partnerships with telephone companies to resell satellite television service.
DirecTV's quarterly profit margin, which rose to 7.7 percent, improved from 6 percent levels in 2004. But they remained below loftier 2003 levels of 12 percent due to higher programming expenses, Eagan said.
"It does appear they're starting to get back the margins from 2003. That's the most important thing for the company," Eagan said.
Average revenue per user rose 3.5 percent to $65.78.
The company said it intends to redeem $490 million of its senior notes on May 19, and expects to record a pretax charge of about $56 million in the second quarter.
Shares jumped 88 cents to $15 on the New York Stock Exchange.