DirecTV 1Q Profit Climbs 43 Percent

DirecTV dishes adorn the wall of an apartment building in Los Angeles, in this Feb. 7, 2007 file photo. DirecTV Group Inc., the nation's largest satellite TV operator, said Wednesday, May 8, 2007, its first-quarter profit rose 43 percent from a year ago as more subscribers signed on for its high-definition service and digital video recorders. (AP Photo/Nick Ut, file) (Nick Ut - AP)

LOS ANGELES -- DirecTV Group Inc., the nation's largest satellite TV operator, said Wednesday its first-quarter profit rose 43 percent from a year ago as more subscribers signed on for high-profit offerings and fewer canceled their service.

Still, shares slipped as the earnings missed Wall Street expectations and analysts expressed concerns about increased competition from telecommunications companies such as Verizon Communications Inc.

Net income climbed to $336.4 million, or 27 cents per share, in the three months ended March 31 from $235.2 million, or 17 cents per share, a year ago.

Revenue climbed 15 percent to $3.91 billion from $3.39 billion last year.

Analysts were expecting a profit of 30 cents per share on sales of $3.90 billion, according to a Thomson Financial poll.

The company, based in El Segundo, said its U.S. average monthly revenue per subscriber rose to $73.40 from $69.75 a year ago, and the churn rate _ a measure of customer defections _ declined to 1.44 percent from 1.45 percent in the previous period.

Net subscriber additions for the U.S. business totaled 235,000 in the latest quarter, compared with 255,000 a year ago, bringing its total subscriptions to 16.19 million _ a 5 percent increase over the same period last year.

"Increased sales of HD and digital video recorders are driving favorable results for most of our key operating metrics," said Chase Carey, president and CEO.

After-tax returns from customers who add HD or DVR services are two-to-three times higher than from customers with standard service, DirecTV chief financial officer Mike Palkovic told analysts on a conference call.

Returns from customers who have a high-def DVR are even greater, he said.

"As long as these types of results continue, adding subscribers with HD and DVR services will remain a top priority for us," Palkovic said.

The company said it remains on schedule to offer up to 100 HD channels by the end of this year.

DirecTV sells its service in part through partnerships with telecommunications companies that can offer high-speed Internet and phone service as part of a bundle.

But many of those companies, including Verizon, are rolling out their own TV services using fiber-optic cables. As those services grow, they will offer increased competition to DirecTV and rival satellite TV provider Echostar Communications Corp., analysts said.

Shares of DirecTV fell 63 cents, or 2.6 percent, to $23.75 on Wednesday.