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DirecTV posts Q3 results

Erik Hanson

So we got a chance to listen in on DirecTV's third quarter earnings call the other day, and reflect on some of the comments made by their top brass. Seems like things are going pretty well over there, even with the problems a few of their subscribers are having with their new HR20 set-top boxes. The satellite company added a million new subscribers in the quarter, with seven percent more of those being "high quality" than the same time last year. High quality is a sly industry term to describe those customers who spend more than the norm on their bills, especially for HD and PVR add-ons. Of course, that implies that those who just get the regular channel packages or movies are somehow "low quality," but we'll leave that for another article, as I'm sure Dish and every cable company describes their customers the same way. In any case, they are signing up more of those types of subscribers, while also adding HD services, with 10% more HD DVRs than previously, and double the amount in use compared to 2005. While those figures are good to show that high definition is becoming more and more common, only nine percent of those new subs are HD. Assuming we read the numbers right, out of the million new people with DirecTV, only 90,000 picked up HD packages. I guess there is a long way for the industry to go before HD is absolutely everywhere... moving on, profits are up 143% from last quarter for the sat co., due to some accounting maneuvers as well as the higher profits to be had from those "higher quality" subs and lower costs to sign them up. Churn is down from last year, but still not quite to their goal of 1.8%, and execs claim that is mostly due to service or internal issues, and not from competition.

While the company is still claiming the highest video quality (something that has been hotly debated and litigated about), they aren't feeling a lot of heat from the Fiber-to-the-Home crowd, and don't see much of an impact on their business from competition in that area. It makes sense considering most of the telecommunications companies are still in their beta stages, and have only in launched test communities. Once the telcos roll out on a larger scale, we'll see how it impacts the satellite and cable companies. Finally, DirecTV is looking to the future at possibly bundling their satellite video with WiMax or another wireless technology for data, much as their partners like AT&T and BellSouth do for their own triple-play voice/data/video combo packages. Next year's launch of two new satellites into orbit should also help with bandwidth issues and allow the launch of new HD channels to compete with the large number currently carried by cable and competitor satellite company Dish. All in all, I'd agree with the DirecTV execs who have a bullish outlook on the future of their company, and satellite in general, as there is plenty of HD to look forward to.

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