DirecTV sub growth slows to 21,000 in Q1; blames stricter credit policy and 'competitive environment'

Inflation reduces average revenue per subscriber from Latin America division
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DirecTV (Nasdaq: DTV) said it added 21,000 net U.S. subscribers in the first quarter, down sharply from the 81,000 it picked up in the same period last year.

Stricter credit policies implemented to help the company focus on "higher quality subscribers" impacted growth, as did the "competitive environment," DirecTV said. It had 893,000 gross subscriber additions, down from 941,000 in the first quarter of 2012. The average monthly subscriber churn rate in Q1 was 1.45 percent, up slightly from 1.44 percent in Q1 2012. DirecTV now counts 20.11 million subscribers and remains the second largest U.S. distributor, behind Comcast (Nasdaq: CMCSA), which had 22.3 million video customers as of March 31.

With DirecTV stepping up marketing efforts for its Genie DVR, capital spending on equipment for new subscribers increased by $14 million to $174 million. Spending on equipment to upgrade and retain existing customers jumped $26 million to $111 million. Cash spent on property and equipment, including DirecTV's expanded headquarters in El Segundo, Calif., increased by $2 million to $111 million.

The average DirecTV subscriber paid it $96.05 monthly in Q1, up $4.06 compared to the same period last year. DirecTV generated $5.79 billion in revenue from its U.S. business, up from $5.5 billion last year.

It was a tumultuous quarter for DirecTV Latin America, with average monthly revenue per subscriber plummeting to $54.23 compared to $60.59 in Q1 2012. Inflation in Venezuela and "unfavorable foreign exchange comparisons in Brazil and Argentina" were the cause, DirecTV said. The Latin America division added 583,000 net subscribers in Q1, down from 593,000 last year.

DirecTV posted $7.58 billion in total revenue in Q1, an increase of 8 percent compared to last year. Adjusted net income jumped 13 percent to $826 million, and earnings per share increased by 34 percent to $1.43.

Wall Street responded favorably to DirecTV's earnings report. Its stock was trading at $61.57 at noon ET, up $3.60, or 6.21 percent. Its earnings call is scheduled to begin at 2 p.m. ET.

For more:
- see the earnings release

Special Report: Cable in the first quarter of 2013

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