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DirecTV reported weaker second-quarter earnings on Thursday and a subscriber drop in the U.S., news that sent shares of the satellite TV company 2 percent lower to $62.
DirecTV lost 84,000 U.S. subscribers in the quarter, compared with a year-ago loss of 52,000. Analysts had mostly expected a smaller sub decline. Macquarie Equities Research analyst Amy Yong, for example, had predicted a U.S. subscriber drop of 74,000.
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DirecTV cited “lower gross subscriber additions associated with a continued focus on higher quality subscribers, as well as a more challenging competitive environment and mature industry.” It ended June with 20.02 million U.S. customers, up from 19.91 million as of mid-year 2012.
It added 165,000 net subscribers in Latin America, down from 645,000 in the year-ago period amid higher customer churn. DirecTV had previously also said that unauthorized retention practices had inflated its subscriber count by about 200,000 in Brazil.
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DirecTV, led by chairman and CEO Mike White, reported second-quarter earnings of $660 million, down from $771 million in the year-ago period. Revenue rose 7 percent to $7.7 billion. The results came in below Wall Street expectations. On a per-share basis, DirecTV earned $1.18 while analysts had predicted about $1.33.
On a conference call with analysts, White complained about what he called “excessive rises” in retransmission and sports fees, and said they represent a “significant challenge.”
He added: “We continue to do everything we can to fight on behalf of our customers to keep their bills down and slow these unsustainable cost increases.”
White also spent several minutes discussing the Brazil debacle.
“To address the improper credits issue in Brazil, we’ve already taken disciplinary action for the management that was involved and put new, rigorous control procedures in place.” He also said prices have been better aligned with consumer income levels.
“I’m confident that Sky Brazil will come out of this process as a stronger company with a smarter management team, with a higher quality and more profitable subscriber base,” White told analysts.
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