- The DirecTV Group Inc. reported a $283 million loss for the fourth quarter on Thursday as the operator of the nation's biggest satellite TV service added a record number of subscribers at a higher cost.
The El Segundo-based company's net loss for the period amounted to 20 cents per share, compared to a net loss of $310 million, or 22 cents per share, in the same quarter last year.
The narrower loss was due to an income tax benefit, said the company, which is majority owned by media giant News Corp.
On an operations basis, excluding the benefit and other charges, the company reported a loss of $437 million, compared to a loss of $177 million in the same period last year.
Analysts surveyed by Thomson First Call had expected a loss of 8 cents per share. The estimates usually do not include one-time charges.
Revenue increased 22 percent to $3.362 billion from $2.754 billion in the same quarter last year. The increase reflected subscriber growth and the inclusion of new customers from the acquisition of two companies that serve primarily rural subscribers.
The increase in revenue was offset by the absence of revenue from its set-top box manufacturing segment, which the company sold last year as part of its transition to a pure satellite TV provider.
DirecTV shares closed down 57 cents, or 3.6 percent, to $15.23 on the New York Stock Exchange. Its shares have traded in a 52-week range of $14.70 to $18.81.
For the full year, DirecTV Group reported a net loss of $1.944 billion, or $1.40 per share, compared to a net loss of $361.8 million, or 26 cents per share, in 2003. Revenue increased to $11.360 billion in 2004, compared to $9.372 billion in the previous year.
During the most recent quarter, the company said it added a record 1.1 million gross subscribers. But after accounting for lost customers, the increase was 444,000.
The cost of attracting those subscribers also rose during the quarter as did retention and marketing costs related to the larger number of customers taking local channel and digital video recorder upgrades.
The company said its average revenue per subscriber increased 18 cents to $71.92 during the year. It intends to raise rates an average of 4 percent per customer in March.
Improving profit margins remains a challenge, executives said, but the rollout of the new Home Media Center later this year could decrease costs over time.
The device will link all the TVs in a home and allow access to different channels at the same time in separate locations. A future wireless feature will let customers add the satellite service to new rooms with no installation costs.
The company downplayed reports that the Securities and Exchange Commission was looking into certain accounting issues, including details of several large write-downs.
The SEC inquiry "was not a surprise" given the complexity of the transactions president and chief executive Chase Carey told investors during a conference call. The company followed proper procedures, he said.
For the full year, DirecTV's net subscriber base grew 14 percent to 13.94 million, compared to 12.21 million subscribers at the end of 2003.
"While we considered 2004 a transition year, DirecTV U.S. added more new customers in 2004 than any other pay television service in the country," Carey said in a statement. "Even with this strong growth, we recognize that we need to improve our operational performance and margins."
The company took several large one-time charges during the fourth quarter, including a $217 million pre-tax charge in connection with the expected sale of its Hughes Network Systems division and a $45 million pre-tax charge related to the closing of its DirecTV Latin America operations in Mexico.
no installation costs?
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