Satellite Write-Downs Widen DirecTV's Loss
By KEN BELSON
The DirecTV Group, the largest satellite television programmer, said yesterday that its loss widened considerably in the third quarter because of a one-time charge to pay for new satellites.
The company lost $1.01 billion, or 73 cents a share, in the quarter, after losing $23 million, or 2 cents a share, in the period a year ago. The loss came despite a 20 percent rise in revenue, to $2.86 billion, from $2.38 billion in the third quarter of 2003, thanks to the addition of a record number of new subscribers.
DirecTV, which is 34 percent owned by the News Corporation, plans to launch four new satellites during the next three years to increase its high-definition and other programming. During the quarter, the company reconfigured two of these satellites to provide television instead of Internet services, and, in revaluing them, took a $903 million one-time after-tax charge.
DirecTV executives said in a conference call with analysts yesterday that they were pleased that customers had spent on average $66.46 a month in the quarter, a 4 percent increase. They also said they were happy with the record 484,000 new customers that DirecTV had added in the quarter, a 49 percent jump from the period last year.
The growth, the executives said, came at the expense of DirecTV's primary rivals, the cable companies.
"How close is the battle between cable and DirecTV?" said Mitch Stern, the chief executive of DirecTV's satellite operations. "Clearly, we are not seeing a polarized nation when it comes to choosing television."
It's "a landslide" in favor of satellite providers, he said.
Even so, the company and industry analysts expressed concern about the rise in turnover among customers, many of whom were dropped for not paying their bills. DirecTV said it was trying to fix this problem by doing a better job of screening customers' credit ratings.
The company also said that competition with cable companies had "reached a new level of intensity," and that DirecTV was adding more local programming and digital video recorders to give customers more reasons to not change television providers.
Shares of DirecTV fell 51 cents, or 3 percent, to $16.51 yesterday.
DirecTV said it was trying to fix this problem
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