DIRECTV US up 149,000 subscribers; DTVLA up 118,000 in 4Q 2014

Thursday, February 19th, 2015

EL SEGUNDO, Calif. — DIRECTV (NASDAQ:DTV) today reported that fourth quarter 2014 revenues increased 4% to $8.92 billion, operating profit before depreciation and amortization (OPBDA) and operating profit decreased to $2.00 billion and $1.26 billion, respectively, and diluted earnings per share was unchanged at $1.53 compared to last year’s fourth quarter.

DIRECTV U.S. Segment

DIRECTV U.S. net subscriber additions of approximately 149,000 increased compared to the prior year period principally due to higher gross subscriber additions and a four basis point improvement in the average monthly churn rate. The increase in gross additions was mainly associated with a successful new ad campaign, enhanced promotions, wider distribution in the consumer electronics channel and competitor programming disputes. The decrease in the monthly churn rate was primarily due to lower voluntary churn from improved retention practices, as well as more successful winback offers.

Subscriber Data (in 000’s except Churn)

                                    Three Months Ended  Twelve Months Ended
                                         December 31,          December 31,
                                   -------------------  -------------------
                                        2014      2013       2014      2013
                                   ---------  --------  ---------  --------
Gross Subscriber Additions               982       949      3,804     3,790 
Average Monthly Subscriber Churn       1.37%     1.41%      1.52%     1.50%
Net Subscriber Additions                 149        93         99       169
Cumulative Subscribers                20,352    20,253     20,352    20,253

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’s results are accounted for as an equity method investment and therefore are not consolidated by DTVLA.

Subscriber Data (in 000’s except Churn)

                                                   Three Months Ended   Twelve Months Ended
                                                         December 31,          December 31,
                                                 --------------------  --------------------
                                                      2014       2013       2014       2013
                                                 ---------  ---------  ---------  ---------
Gross Subscriber Additions(2)                          980        989      4,395      4,382    
Average Monthly Total Subscriber Churn(1)            2.31%      2.21%      2.39%      2.37%
Average Monthly Post-paid Subscriber Churn(1)        2.00%      1.85%      1.95%      2.10%
Net Subscriber Additions (Disconnections)(1)(2)        118        231        903      1,239
  Sky Brasil(1)(2)                                     (1)        116        272        332
  PanAmericana and Other                               119        115        631        907
Cumulative Subscribers(1)(2)                        12,471     11,568     12,471     11,568
  Sky Brasil(1)(2)                                   5,643      5,371      5,643      5,371
  PanAmericana and Other                             6,828      6,197      6,828      6,197

Sky Brasil Segment

Subscriber net losses of approximately 1,000 in the fourth quarter of 2014 compared to subscriber net additions of approximately 116,000 in the prior year period. The change was primarily due to a higher average monthly churn rate driven by a higher mix of subscribers taking prepaid services, the migration of key systems that impacted existing subscribers and challenging macroeconomic conditions, as well as slightly lower gross additions also associated with the macroeconomic conditions.

PanAmericana and Other Segment

Subscriber net additions of approximately 119,000 increased slightly compared to the fourth quarter of 2013 due to slightly higher gross additions and a lower average monthly total churn rate driven by an improvement in prepaid reconnection rates.

(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 the full year of 2013.