DIRECTV US down 34,000 subscribers; DTVLA up 543,000 in 2Q 2014

EL SEGUNDO, Calif. — DIRECTV (NASDAQ:DTV) today reported that second quarter 2014 revenues increased 5% to $8.11 billion, reported operating profit before depreciation and amortization (OPBDA) increased 3% to $2.15 billion, reported operating profit increased 5% to $1.42 billion and reported diluted earnings per share increased 35% to $1.59 compared to last year’s second quarter.

DIRECTV U.S. Segment

DIRECTV U.S. net subscriber losses of approximately (34) thousand improved compared to the prior year period primarily due to an 8% increase in gross additions to approximately 908 thousand, partially offset by a slightly higher average monthly churn rate of 1.55% principally resulting from a more competitive environment. The improvement in gross additions was primarily driven by streamlined promotional offers and investments in retail distributors. DIRECTV U.S. ended the quarter with 20.23 million subscribers.

Subscriber Data (in 000’s except Churn)

                                   Three Months Ended    Six Months Ended
                                             June 30,            June 30,
                                   ------------------  ------------------
                                       2014      2013      2014      2013
                                   --------  --------  --------  --------
Gross Subscriber Additions              908       839     1,799     1,732
Average Monthly Subscriber Churn      1.55%     1.53%     1.50%     1.49%
Net Subscriber Disconnections          (34)      (84)      (22)      (63)
Cumulative Subscribers               20,231    20,021    20,231    20,021

DIRECTV Latin America

DIRECTV Latin America owns approximately 93% of Sky Brasil, 41% of Sky Mexico and 100% of PanAmericana, which covers most of the remaining countries in the region. Sky Mexico, whose results are accounted for as an equity method investment and therefore are not consolidated by DTVLA, had approximately 6.36 million subscribers as of June 30, 2014, bringing the total subscribers in the region to 18.83 million.

Subscriber Data (in 000’s except Churn)

                                               Three Months Ended    Six Months Ended
                                                         June 30,            June 30,
                                               ------------------  ------------------
                                                   2014      2013      2014      2013
                                               --------  --------  --------  --------
Gross Subscriber Additions(2)                     1,311     1,189     2,422     2,370
Average Monthly Total Subscriber Churn(1)         2.10%     3.10%     2.11%     2.51%
Average Monthly Post-paid Subscriber Churn(1)     1.90%     2.86%     1.88%     2.31%
Net Subscriber Additions(1)(2)                      543       165       904       748
Cumulative Subscribers (1) (2)                   12,472    11,077    12,472    11,077

Sky Brasil Segment

Second quarter net subscriber additions of approximately 137 thousand were higher than the prior year period due to record gross additions, as well as a lower average monthly churn rate. The increase in gross additions was primarily driven by demand related to the FIFA World Cup. Churn in the quarter was lower than the prior year period due to the termination of subscribers related to the improper crediting of certain customer accounts in the second quarter of 2013.

Subscriber Data (in 000’s)

                                       Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                       ------------------  ------------------
                                           2014      2013      2014      2013
                                       --------  --------  --------  --------
Net Additions (Disconnections)(1)(2)        137      (80)       246       128
Cumulative (1)(2)                         5,617     5,167     5,617     5,167

PanAmericana and Other Segment

Subscriber Data (in 000’s)

                                       Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                       ------------------  ------------------
                                           2014      2013      2014      2013
                                       --------  --------  --------  --------
Net Additions                               406       245       658       620   
Cumulative                                6,855     5,910     6,855     5,910

1. Based on the results of an internal investigation, DTVLA determined that, beginning in 2012, certain employees of Sky Brasil directed activities which were inconsistent with Sky Brasil’s authorized policies for subscriber retention and churn management. These activities had the effect of artificially reducing churn and increasing the Sky Brasil subscriber base during portions of 2012 and the first quarter of 2013. See DIRECTV’s Current Report on Form 8-K filed with the SEC on June 27, 2013 for further details. Prior year results for subscribers, churn and ARPU have not been adjusted for the findings of this investigation.
2. DIRECTV Latin America subscriber data exclude subscribers of the Sky Mexico service. In addition, DTVLA gross and net additions exclude 1,000 video subscribers acquired in transactions in Brazil during the six months ended June 30, 2013. DTVLA cumulative subscriber counts include these acquired customers.