DIRECTV U.S. up 119,000 subscribers and DTVLA up 254,000 in 4Q09

Thursday, February 18th, 2010
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EL SEGUNDO, Calif. — DIRECTV (NASDAQ:DTV) today reported that fourth quarter 2009 consolidated revenues increased 13% to $5.98 billion, operating profit before depreciation and amortization1 (OPBDA) increased 22% to $1.49 billion while operating profit increased 49% to $862 million compared to last year’s fourth quarter. Fourth quarter net income attributable to DIRECTV declined to a loss of $32 million while earnings per share fell to a loss of $0.03 compared with the same period last year. Excluding a pre-tax charge of $491 million ($486 million after tax) related to the merger with Liberty Entertainment completed on November 19, 2009, net income attributable to DIRECTV and diluted earnings per share increased 37% to $454 million and 50% to $0.48, respectively, compared with the fourth quarter of last year.

DIRECTV U.S. Segment

Gross additions of 964,000 combined with a monthly average churn rate of 1.52% resulted in net subscriber additions of 119,000 in the quarter. The decline in gross additions and the higher churn rate were mostly due to the competitive environment, a weaker economy and more stringent credit and spending policies. As of December 31, 2009, DIRECTV U.S. had 18.56 million subscribers representing a 5% increase over the 17.62 million subscribers as of December 31, 2008.

Gross additions in 2009 increased 9% to 4.27 million principally due to more aggressive promotions, marketing of the AT&T/DIRECTV bundle which began in February 2009, higher demand for advanced services and the impact of the transition to digital programming by broadcasters in the first half of 2009. Full year churn increased modestly to 1.53% primarily due to stricter upgrade and retention policies, as well as a more competitive marketplace. As a result of the changes in gross additions and churn, net subscriber additions increased 9% to 939,000.

Subscriber Data (in 000’s except Churn):

                                         Three Months       Twelve Months
                                   Ended December 31,  Ended December 31,
                                   ------------------  ------------------
                                       2009      2008      2009      2008
                                   --------  --------  --------  --------
Gross Subscriber Additions              964     1,044     4,273     3,904
Average Monthly Subscriber Churn      1.52%     1.42%     1.53%     1.47%
Net Subscriber Additions                119       301       939       861
Cumulative Subscribers               18,560    17,621    18,560    17,621

DIRECTV Latin America Segment

DIRECTV owns approximately 74% of Sky Brazil, 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 1.96 million subscribers as of December 31, 2009 bringing the total subscribers in the region to 6.55 million.

In the fourth quarter of 2009, DTVLA’s net subscriber additions increased 59% to an all-time record of 254,000 due to a 35% increase in gross additions to 460,000 and a 5 basis point decline in the average monthly churn rate to 1.54%. Gross additions increased principally due to strong subscriber demand across the region particularly in Venezuela, Brazil and Colombia resulting from increased demand for DVR, HD and pre-paid services, as well as more targeted customer promotions aimed at the middle-market segment. Average monthly churn declined in the quarter primarily due to a 9 basis point decline in DTVLA’s post-paid churn to 1.45% mostly due to increased penetration of DVR and HD services, as well as refined upgrade and retention strategies. The total number of DIRECTV subscribers in Latin America (excluding Sky Mexico) as of December 31, 2009 increased 18% to 4.59 million compared to 3.88 million as of December 31, 2008.

In 2009, DTVLA’s net subscriber additions increased 11% to a record 692,000 due to a 13% increase in gross additions to 1.58 million and a 3 basis point decline in the average monthly churn rate to 1.75%. Gross additions increased principally due to strong subscriber demand across the region, particularly in Colombia, Brazil and Puerto Rico, increased demand for DVR, HD and pre-paid services, as well as targeted customer promotions aimed at the middle-market segment. Average monthly churn for the year declined primarily due to two downward subscriber adjustments in 2008 totaling 78,000 at Sky Brazil. Excluding this impact, churn would have increased 17 basis points principally due to the growth of DTVLA’s prepaid business.

Subscriber Data* (in 000’s except Churn):

                                         Three Months       Twelve Months
                                   Ended December 31,  Ended December 31,
                                   ------------------  ------------------
                                       2009      2008      2009      2008
                                   --------  --------  --------  --------
Gross Subscriber Additions              460       341     1,575     1,393
Average Monthly Subscriber Churn      1.54%     1.59%     1.75%     1.78%
Net Subscriber Additions                254       160       692       623
Cumulative Subscribers                4,588     3,883     4,588     3,883

* DIRECTV Latin America subscriber data exclude subscribers of the Sky Mexico service. Gross and net subscriber additions as well as churn exclude the impact of the migration of approximately 13,000 net subscribers to DTVLA in 2009; 19,000 migrated from DTVLA to Sky Mexico in 2008 as well as the impact of the migration of 3,000 subscribers to DTVLA in the fourth quarter 2009 and 11,000 migrated from DTVLA to Sky Mexico in the fourth quarter of 2008. Cumulative subscriber totals include the impact of the migrated and acquired subscribers.

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