Leading U.S. satellite TV operator, DIRECTV (DTV), posted fourth-quarter 2014 financial results wherein both its top and bottom line surpassed the Zacks Consensus Estimate.
DIRECTV reported earnings per share of $1.53, better than the Zacks Consensus Estimate of $1.39. However, the company’s earnings per share were flat year over year. The company reported net income of $778 million, down 2.7% from the fourth quarter of 2013.
Total revenue came in at $8,922 million, up 3.8% year over year and also ahead of the Zacks Consensus Estimate of $8,908 million.
Quarterly adjusted operating profit before depreciation & amortization (OPBDA) was $2,000 million, down 2.2% year over year. Operating profit came in at $1,255 million, down 5.9% from the year-ago quarter.
DIRECTV exited fourth-quarter 2014 with $1,643 million of cash from operations compared with $2,309 million in the prior-year quarter. At the end of the reported quarter, DIRECTV had $4,635 million in cash & cash equivalents and $19,327 million of outstanding debt on its balance sheet compared with $2,180 million and $18,203 million, respectively, at the end of 2013.
U.S. Segment
Revenues at this segment totaled $7,136 million, up 5.4% year over year. Quarterly average revenue per user (ARPU) was $117.30 compared with $111.74 in the year-ago quarter. Quarterly operating profit before depreciation & amortization was down 0.7% to $1,506 million. Also, operating profit declined 2.5% year over year to stand at $1,074 million.
Average monthly subscriber churn rate in the reported quarter was 1.37% as compared with 1.41% in the year-ago quarter. Quarterly net subscriber additions were 149,000 compared with the addition of 93,000 in the year-ago quarter. As of Dec 31, 2014, the U.S. segment had 20.352 million subscribers, up 0.5% on an annualized basis.
In the U.S., pay-TV operators are facing intense competition from large telecom operators like AT&T, Inc. (T) and Verizon Communications (VZ). Moreover, the presence of low-cost video streaming companies like Netflix Inc. (NFLX) and Hulu may increase the company’s churn rate going ahead.
Latin America Segment
This segment posted revenues of $1,731 million, down 2.1% year over year. Quarterly ARPU was $46.48 as against $51.47 in the prior-year quarter. Quarterly operating profit before depreciation & amortization fell 9.3% to $499 million while operating profit decreased 26.7% year over year to $189 million.
Average monthly subscriber churn rate in the reported quarter stood at 2.31% versus 2.21% in the prior-year quarter. Quarterly net subscriber additions were 118,000 compared with the addition of 231,000 in the year-ago quarter. As of Dec 31, 2014, DIRECTV’s Latin America segment had approximately 12.471 million subscribers, up 7.8% year over year.
DIRECTV currently carries a Zacks Rank #3 (Hold).
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