DirecTV’s focus on high-margin customers appeared to pay off in the first quarter, as lower churn rates led to a gain of 60,000 net new subscribers in the U.S., a big boost from the prior year.
The gain was a marked improvement over the first quarter last year – when the satellite giant added 12,000 net new subscribers – and is tied to a strong improvement in customer churn. DirecTV said its average monthly churn declined 8 basis points in the period to 1.37%, mainly because of its focus on attracting quality new subscribers and improved macroeconomic conditions which resulted in higher customer pay rates, as well as successful winback offers. Gross additions of 895,000 were relatively unchanged from the prior year period. DirecTV U.S. ended the quarter with 20.41 million subscribers.
The stronger subscriber growth helped push domestic revenue up 6% to $6.46 billion and average monthly revenue per unit (ARPU) rose 5.5% to $105.62, mostly due to proice increases on programming packages and regional sports networks. Operating profit before depreciation and amortization (OPBDA, a form pof cash flow) increased 1% to $1.69 billion.
Overall, including its international operations, DirecTV added 279,000 net new subscribers in the quarter and revenue increased by 4%.
“Our U.S. business generated another strong quarter of results, further demonstrating our company's strong execution, as well as product and brand leadership,” said DirecTV president Mike Whitein a statement. “In the quarter, our focus on high-quality new customers combined with an improving economy to enable our lowest first quarter churn rate in six years. Just as impressive was our highest first quarter ARPU growth in five years, as we continue to generate demand for higher-end services and packages, as well as successfully pass through programming cost increases to our customers." White added, "In Latin America, challenging foreign exchange headwinds in Brazil weighed on our U.S. dollar results. However, performance in PanAmericana, excluding Venezuela, is exceeding our expectations as the unit grew revenues 19% and OPBDA 33% in U.S. dollar terms."
White concluded, "We remain confident that our transaction with AT&T will close in the second quarter, and we are excited to carry our strong operating momentum forward to help create a unique new market leading company."
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