NEW YORK (Reuters) ? DirecTV Group, the largest U.S. satellite TV provider, lost market share in the second quarter to Verizon Communications and AT&T, which cut prices on their pay TV services.
The company, whose shares fell almost 6 percent on Thursday, added 26,000 U.S. subscribers in the quarter. That is less than half the number that analysts had expected.
Phone companies have gained traction with TV services. Last quarter, Verizon added 184,000 FiOS subscribers, while AT&T added 202,000 U-Verse TV customers.
"DirecTV is clearly feeling the pressure of telcos being aggressive," said Brean Murray analyst Todd Mitchell. DirecTV has never added fewer than 100,000 subscribers in a quarter, Mitchell said.
In Latin America, the company's biggest growth region, DirecTV added 472,000 subscribers. In Brazil, the company has been targeting the growing middle class with elaborate marketing campaigns to get more subscriptions.
In the United States, DirecTV has been trying to attract subscribers with a plan that lets new customers who sign up for two years receive a free subscription to its NFL Sunday Ticket package. The exclusive DirecTV-NFL deal allows viewers to watch football games outside their local markets on Sundays.
The goal of the program is to get subscribers to renew their subscription for the full price in the second year of the contract, finance chief Pat Doyle told analysts on the conference call.
"We're quite pleased with the results so far through July but the real test is when we do renewals next year," he said.
The football promotion is at the center of a lawsuit brought against DirecTV by Comcast Corp on Thursday.
Besides Sunday Ticket, the company is also looking to gain subscribers by boosting its online offerings.
Asked whether Hulu, the online TV website that is up for sale, could become part of DirecTV's long-term strategy, Chief Executive Michael White said "it is an interesting idea and we're looking at it."
He said the company had not made a final judgment on Hulu and added that it's not "something we have to have."
Yahoo Inc and Google Inc are reported to be among a dozen potential buyers of Hulu.
"Hulu software has some nice aspects to it but you also have to kind of form a judgment about its business model and what you think that business model can generate," White said.
DirecTV's net income rose to $701 million, or 91 cents per share, up from $543 million, or 42 cents per share, a year earlier. This beat Wall Street's average estimates of 85 cents per share, according to Thomson Reuters I/B/E/S.
Its revenue rose to $6.6 billion, which beat the average analyst estimate of $6.5 billion.
DirecTV shares fell as low as $43.23, before ending $2.84 lower at $46.63 on Nasdaq.
(Additional reporting by Sinead Carew; Editing by Dave Zimmerman, Derek Caney, Robert MacMillan and Richard Chang)
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