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DirecTV CFO Sees Gross Ads, HD Uptake Trending Down

DirecTV group chief financial officer Patrick Doyle told an audience at an investor conference Tuesday that gross subscriber additions should decline in 2010, but that the satellite TV giant sees growth opportunities in apartment buildings and a more aggressive broadband offering.

Doyle, speaking at the Citigroup Global Media and Telecommunications conference in San Francisco, said that gross additions are expected to trend down this year, mainly because 2009 was characterized by one-time subscriber-boosting initiatives like the federally mandated digital transition.

But Doyle said that could be partly offset by growth in a newly untapped market for multiple dwelling units - a federal court ruling last year canceled exclusive contracts between apartment buildings and cable companies - and new broadband initiatives.

"We are going to be much more aggressive on broadband connection in the home now that we feel we have a very good technical solution with the introduction of our HR24 box and our H24 box," Doyle said. "We are going to launch multi-room viewing in the next couple of months."

Doyle said those initiatives could increase subscriber acquisition costs, which last year were in the $600 per customer range, to around $700 per customer in 2010.
"We are going to invest more in the home this year," Doyle said.

Doyle said DirecTV spent part of 2009 identifying MDU properties where it could offer service.

"We are probably a month or two away from seeing the final results," Doyle said. "The initial results are very good."
Doyle would not quantify how many additional new customers MDUs may bring, but said there is no shortage of potential units.

"At least for awhile we will have no issues with the availability of targeted MDU buildings where we will be able to negotiate entry into and build out," Doyle said.

While DirecTV expects to boost its HD lineup to about 200 channels after the Dec. 28 launch of its DirecTV-12 satellite (it becomes operational in the second quarter), Doyle agreed that the offering may be reaching the saturation point. DirecTV already has more than 150 HD channels, tops in the multichannel marketplace.

"HD has been really good to us for the last few years," Doyle said. "We think there is a little bit less in the tank there, but we also are continuously looking at how we can be different than our competitors."