DIRECTV US down 28,000 subscribers; DTVLA down 119,000 in 3Q 2014

EL SEGUNDO, Calif. — DIRECTV (NASDAQ:DTV) today announced that third quarter 2014 revenues increased 6% to $8.37 billion, adjusted operating profit before depreciation and amortization (OPBDA) and adjusted operating profit both increased 5% to $2.04 billion and $1.28 billion, respectively, and adjusted diluted earnings per share increased 4% to $1.33 compared to last year’s third quarter.

DIRECTV U.S. Segment

DIRECTV U.S. subscriber net losses were approximately 28,000 in the third quarter of 2014 compared to subscriber net additions of 139,000 in the prior year period. The change was primarily due to a decrease in gross additions resulting mainly from stricter credit policies, as well as a higher average monthly churn rate of 1.73% principally resulting from a more competitive environment and subscribers rolling off larger average promotional offers. DIRECTV U.S. ended the quarter with 20.20 million subscribers.

Subscriber Data (in 000’s except Churn)

                                   Three Months Ended   Nine Months Ended
                                        September 30,       September 30,
                                   ------------------  ------------------
                                       2014      2013      2014      2013
                                   --------  --------  --------  --------
Gross Subscriber Additions            1,023     1,109     2,822     2,841
Average Monthly Subscriber Churn      1.73%     1.61%     1.58%     1.53%
Net Subscriber Additions               (28)       139      (50)        76
Cumulative Subscribers               20,203    20,160    20,203    20,160

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 6.52 million subscribers as of September 30, 2014, bringing the total subscribers in the region to 18.87 million.

Subscriber Data (in 000’s except Churn)

                                                 Three Months Ended   Nine Months Ended
                                                      September 30,       September 30,
                                                 ------------------  ------------------
                                                     2014      2013      2014      2013
                                                 --------  --------  --------  --------
Gross Subscriber Additions(2)                         993     1,023     3,415     3,393 
Average Monthly Total Subscriber Churn(1)           2.99%     2.27%     2.42%     2.43%
Average Monthly Post-paid Subscriber Churn(1)       2.06%     1.93%     1.94%     2.18%
Net Subscriber Additions (Disconnections)(1)(2)     (119)       260       785     1,008    
Cumulative Subscribers (1) (2)                     12,353    11,337    12,353    11,337

Sky Brasil Segment

Third quarter net subscriber additions of approximately 27,000 declined compared to the prior year period, as improved gross additions were more than offset by the impact of increased churn associated with a reduction in credits to existing customers and the introduction of a prepaid service in the fourth quarter of 2013.

PanAmericana and Other Segment

Subscriber net losses were approximately 146,000 in the third quarter of 2014 compared to subscriber net additions of 172,000 in the prior year period. The change was primarily due to lower prepaid reconnection rates following the completion of the FIFA World Cup tournament.

(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 nine months ended September 30, 2013. DTVLA cumulative subscriber counts include these acquired customers.