The largest U.S satellite TV operator, DIRECTV (DTV) posted third-quarter 2013 financial results. Total revenue came in at $7,880 million, up 6.3% year over year, considerably outpacing the Zacks Consensus Estimate of $7,844 million. Quarterly GAAP net income was $699 million or $1.28 per share compared with $565 million or 90 cents in the year-ago quarter. However, earnings per share of $1.13 were significantly above the Zacks Consensus Estimate of $1.01.
Quarterly adjusted operating profit before depreciation & amortization (:OPBDA) was $1,933 million, up 14.7% year over year. Adjusted operating profit came in at $1,225 million, up 14.7% year over year.
During the first nine months of 2013, DIRECTV generated $4,355 million of cash from operations compared with $1,109 million in the prior-year period. Free cash flow was $1,884 million against $1,973 million in the year-ago period. At the end of the third quarter of 2013, DIRECTV had $1,622 million in cash & cash equivalents and $18,635 million of outstanding debt on its balance sheet compared with $1,902 million in cash & cash equivalents and outstanding debt of $17,170 million at the end of 2012.
DIRECTV U.S. Segment
Revenues from this segment stood at $6,170 million, up 7% year over year. Quarterly ARPU was $102.37 compared with $96.41 in the year-ago quarter. Quarterly operating profit before depreciation & amortization was up 11.6% to $1,396 million. Operating profit rose 12.7% to $987 million.
Average monthly subscriber churn rate in the reported quarter was 1.61% against 1.74% in the previous-year quarter. Quarterly net subscriber added was 139,000 compared with 67,000 in the year-ago quarter. On Sep 30, 2013, DIRECTV’s U.S. segment had 20.16 million subscribers, up 0.9% on an annualized basis.
In the U.S., the pay-TV operators are facing intense competition from large telecom operators and online video streaming service providers. In the quarter under review, the two large cable MSOs, namely, Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) also lost a large number of video subscribers. Notably, DIRECTV’s closest competitor DISH Network Corp. (DISH) will report earnings on Nov 12, 2013.
DIRECTV Latin America Segment
This segment posted revenues of $1,662 million, up 5.4% year over year. Quarterly ARPU was $49.42 compared with $55.97 in the prior-year quarter. Quarterly operating profit before depreciation & amortization increased 22.6% to $558 million while operating profit increased 18.6% to $262 million.
Average monthly subscriber churn rate in the reported quarter was 2.27% compared with 1.91% in the prior-year quarter. Quarterly net subscriber addition was 260,000 against 543,000 in the year-ago quarter. On Sep 30, 2013, DIRECTV’s Latin America segment had approximately 11.337 million subscribers, up 17.3% year over year.
DIRECTV currently has a Zacks Rank #3 (Hold).