DirecTV Rolls Along

U.S., Latin America shine in Q1
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DirecTV continued to outpace analysts' estimates in the first quarter, with better than expected subscriber growth in its domestic operations and another strong performance in its Latin America operations.

DirecTV reported consolidated revenue of $6.3 billion (up 12.7%) and operating profit before depreciation and amortization rose 12.1% to $1.8 billion in the period. Net new subscriber additions of 184,000 in the United States outpaced analyst consensus estimates of 169,000 additions in the period.

On a conference call with analysts, DirecTV CEO Mike White said strong performance in premium channels and pay-per-view movies helped drive results in the U.S. Pay-per-=view revenue was up 30% in the period, an all-time high.

White added that DirecTV had a solid quarter domestically, adding that a rise in promotional offers from telco and cable competitors could have a modest impact on churn and net adds for the year.

"An increase in competitive activity was fully contemplated when we put our 2011 guidance together, and we are still on track to hit our key metrics for the U.S. business," White said on the call.

But Latin America, once again, was the more dramatic growth story. Building on a strong performance in the fourth quarter (when it added 378,000 customers and revenue rose 23%) DirecTV Latin America added 429,000 net new customers in the first quarter, more than 60% better than consensus. Revenue at $1.1 billion was 10% ahead of estimates (and 43% above last year) and operating income before depreciation and amortization at $384 million, was 21% better than consensus and 57% better than the prior year.

At DirecTV U.S., revenue was up 7.8% to $5.1 billion and OIBDA rose 4.4% to $1.4 billion.

"All in all, it's hard not to like DirecTV," Sanford Bernstein cable and satellite analyst Craig Moffett wrote in a research note. He wasn't alone.

Investors shared the enthusiasm, driving the stock up as much as $1.10 per share in earlier trading (2.4%) to $49.64 per share before settling back to $49.10 (up 60 cents or 1.2%) later in the day.