DirecTV Revenues Rise to US$ 7.7-B, Profits Down to US$ 660-M
El Segundo, Calif., August 1, 2013 — DirecTV announced an increase in second quarter 2013 revenues by 7 percent to US$ 7.7 billion but the pay-TV company suffered a decline in its net profit to US$ 660 million.
The company said operating profit before depreciation and amortization (OPBDA) rose 4 percent to US$ 2.08 billion while operating profit declined by 4 percent to $1.35 billion. It also reported higher earnings per share of 8 percent to US$ 1.18 compared to last year's second quarter.
DirecTV grew its subscriber base to nearly 37 million customers, said Mike White, president and CEO, but macro-economic and operational challenges in Latin America impacted company results, particularly in Brazil.
DirecTV admitted in June that subscriber numbers for Sky Brasil, one of its fastest growing units, had been overstated. The total as of March 31 was overstated by about 200,000, while the total as of December 31 was overstated by 100,000, it said.
DirecTV attributed the increase in revenue to higher ARPU at DirecTV U.S., as well as subscriber growth at DirecTV Latin America (DTVLA) and DirecTV U.S. over the last twelve months. These increases were partially offset by lower ARPU at DTVLA primarily due to unfavorable exchange rates. Also in the quarter, OPBDA increased 4 percent to US$ 2.08 billion while operating profit fell to US$ 1.35 billion.
The company said OPBDA and operating profit margin declined to 27 percent and 17.5 percent, respectively, primarily due to higher programming costs at both DirecTV U.S. and DTVLA, as well as increased upgrade and retention spending at DirecTV U.S., partially offset by lower subscriber acquisition costs at DirecTV U.S.
Operating profit margin was also impacted by higher depreciation and amortization at both DTVLA and DirecTV U.S. resulting from higher leased equipment and infrastructure capital expenditures, as well as additional depreciation associated with capitalized installation costs and subscriber equipment related to the higher subscriber churn at Sky Brasil.
Net income declined to US$ 660 million mainly due to the lower operating profit. Also impacting the comparison was a $59 million non-cash pre-tax charge in 2013 due to the deconsolidation of DirecTV Sports Network (DSN) Northwest.
DirecTV’s revenues for the first six months of 2013 of US$ 15.28 billion increased 7 percent due to higher ARPU at DirecTV U.S. as well as subscriber growth over the last year at DTVLA and DirecTV U.S. These increases were partially offset by lower ARPU at DTVLA primarily due to unfavorable exchange rates.
Year to date adjusted OPBDA increased 7 percent to US$ 4.17 billion and adjusted operating profit increased 1 percent to US$ 2.76 billion compared with the same period of 2012. Adjusted OPBDA margin was relatively unchanged in the period as increased programming and upgrade and retention costs at DirecTV U.S., combined with higher general and administrative expenses at DTVLA were mostly offset by lower subscriber acquisition costs at DirecTV U.S. Adjusted operating profit margin was also negatively impacted by higher depreciation and amortization at both DTVLA and DirecTV U.S. resulting from higher leased equipment and infrastructure capital expenditures. Reported OPBDA increased 2 percent to $4 billion and reported operating profit declined to $2.59 billion in the first half of the year.
Net income for the first half of the year increased by 3 percent to US$ 1.49 billion compared with the first six months of 2012 due to the higher adjusted operating profit. Also impacting the comparison was the US$ 59 million non-cash pre-tax charge in 2013 due to the deconsolidation of DSN Northwest, as well as the US$ 64 million charge in 2012 for the loss on the early retirement of debt.
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