DIRECTV (DTV), the largest satellite TV operator in the U.S., recently launched a new value-added service providing live information on devastating storm Hurricane Irene to its subscribers.
Information regarding Hurricane Irene will be broadcasted from DIRECTV’s 259, 325 and 349 channels, respectively. These news channels will cover all the news and detailed information related to the storm and its affected areas. DIRECTV intends to offer the service until the storm losses its force.
The company also plans to provide graphical details to its subscribers regarding potential evacuations, closures, event cancellations and any vital news when required.
Thus, we believe that such value-added service by the company will not only retain its customer base but also help the company to win new subscribers.
Recently, the company declared excellent second quarter 2011 financial results, where both revenue and EPS surpassed the Zacks Consensus Estimates. The solid result was attributable to double-digit revenue growth, significant margin expansion, and better-than-expected net customer addition.
We believe that DIRECTV remains one of the few pay-TV service providers that are still generating commendable video subscriber growth. Strong fundamentals along with huge subscriber growth across all its segments make the company quite popular within its peer group.
However, within the satellite TV industry, DIRECTV is facing intense competition from its nearest rival DISH Network (DISH). Furthermore, U.S. telecom giants, AT&T (T) and Verizon Wireless (VZ) are increasingly rolling out their fiber-based network in order to provide video services. Additionally, the newly developed Internet video streaming companies like Netflix (NFLX), Hulu, YouTube have become major threats to the overall pay-TV industry.
We, thus, maintain our long-term Neutral recommendation for DIRECTV. Currently, DIRECTV has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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