Viacom Dispute Impacts DirecTV Q3

Higher churn, slower net sub growth tied to blackout

A blackout of about 26 Viacom networks including MTV,
Nickelodeon and Comedy Central in July helped push up churn and temper net new
subscriber growth in the third quarter at satellite giant DirecTV.

DirecTV added just 67,000 net new subscribers in the period,
well below the 327,000 net new customers the satellite giant added in the same
period last year, and missing analysts' consensus estimates of a gain of
105,000. Churn for the period was 1.74%, 12 basis points higher than last year
and above analysts' expectations of 1.68%.

DirecTV did not name Viacom as the culprit for its
subscriber performance, adding in a press release that the higher than expected
churn "was principally driven by a contract dispute with a large programmer
that resulted in the removal of several channels for nine days in the third

Viacom pulled
its networks from DirecTV on July 10,
returning the channels to the
satellite giant after the
two reached a comprehensive carriage deal on July 19.

Aside from the slight downturn in subscriber growth, DirecTV
reported a strong quarter, with U.S. revenue up 6% to $5.8 billion and
operating profit before depreciation and amortization increasing 8% to $1.25
billion. On a conference call with analysts, CEO Mike White said that the
company showed solid topline and OPBDA growth in what has been a challenging
U.S. environment.

At its Latin American segment, revenue increased 16% to $1.6
billion and OPBDA was up 5% as the unit added 543,000 net new customers in the