DirecTV Surpasses Analysts Expectations; Posts 6% Rise in Revenues to US $7.88 Bil.

El Segundo, Calif., Nov. 7, 2013 — DirecTV increased its third quarter 2013 revenues by 6% to US$ 7.88 billion, operating profit before depreciation and amortization (OPBDA) by 15% to US$ 1.93 billion, operating profit by 15% to US$ 1.23 billion, and earnings per share by 42% to US$ 1.28 exceeding financial analysts’ expectations.

The company said DirecTV U.S. attained net subscriber additions of 139,000, driven by the lowest third quarter churn in 6 years, while Sky Brasil and PanAmericana added 260,000 net new customers in the quarter. DirecTV Latin America and Sky Mexico surpassed 17 million customers. DirecTV subscribers at the end of the quarter was pegged at 37 million.

Mike White, President and CEO of DirecTV, said the company’s commitment to profitably grow its businesses through disciplined expense management and productivity improvements was clearly a highlight as operating profit before depreciation and amortization margin expanded driving double digit OPBDA and cash flow growth in the quarter.

DirecTV's attributed its third quarter revenues of US$7.88 billion 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. Third quarter 2013 OPBDA and operating profit increased 15% to US$1.93 billion and $1.23 billion, respectively, while OPBDA and operating profit margin increased to 24.5% and 15.5%, respectively. In the third quarter, DTVLA also settled a fee dispute and paid US$92 million to Escritorio Central de Arrecadacao, or ECAD, the organization in Brazil responsible for collecting performance rights fees under Brazilian law.

DirecTV's revenues for the first nine months of 2013 of US$23.16 billion increased 7% principally 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 changes in exchange rates.

Year to date adjusted OPBDA increased 9% to US$6.10 billion and adjusted operating profit increased 5% to US$3.98 billion compared with the same period of 2012. Adjusted OPBDA margin increased to 26.3% in the first nine months of 2013 as the ECAD settlement at DTVLA and lower subscriber acquisition costs at DirecTV U.S were partially offset by higher programming costs at DirecTV U.S.

In the quarter, DirecTV U.S. revenues increased 7% to US$6.17 billion compared with the third quarter of 2012 primarily due to strong ARPU growth along with a larger subscriber base. DirecTV U.S. net subscriber additions increased in the quarter relative to the prior year period principally due to a lower average monthly churn rate of 1.61%.

In the third quarter of 2012, churn was unfavorably impacted by a contract dispute with a large programmer that resulted in the removal of several channels for nine days. ARPU increased 6.2% to $102.37 mostly due to higher advanced receiver service fees, price increases on programming packages, higher fees for a new enhanced warranty program, as well as higher pay-per-view revenues. These improvements were partially offset by increased promotional offers to new and existing customers. DirecTV U.S. ended the quarter with 20.16 million subscribers compared with 19.98 million subscribers reported for the quarter ended September 30, 2012.

Third quarter OPBDA increased 12% to US$ 1.40 billion and operating profit was 13% higher at US$ 987 million. OPBDA and operating profit margin increased to 22.6% and 16.0%, respectively in the third quarter, driven principally by the incremental margin generated by the higher revenues combined with relatively unchanged subscriber acquisition costs due mostly to the flat gross additions in the quarter compared to the year ago period.

Also contributing to the margin improvement was relatively unchanged subscriber services and broadcast operations expenses mainly due to productivity improvements and disciplined cost management. These margin improvements were partially offset by higher programming costs mostly related to programming supplier rate increases.

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