Today, DirecTV Group released its third quarter earnings to the public. To the disappointment of investors, they posted flat earnings due to higher subscriber acquisition costs as well as sluggish subscriber gains. With stronger competition from DISH Network and others and increased disconnects, DirecTV fell short of their projections. Their quarterly profit edged up 1% to $366 million despite a decent revenue gain of 10% to nearly $5.5 billion.
The group added more new customers in the U.S. and Latin America, the majority of them signed up for its high-definition TV packages and DVRs. While this might seem to be good, DirecTV spent more money trying to attract new subscribers. This unbalanced expenditure and revenue hurt their bottom line. Combine that with people tightening up in the wallet and DirecTV is just many of the companies taking losses.
Domestically the group recorded only 136,000 additions in subscription which was down from 156,000 at this point last year. With DISH Network cutting into their market share, DirecTV must find a way to cost-effectively attract more subscribers. They won’t do it by dropping channels like Versus either. DirecTV must find a way to reinvent itself slightly, offer something that DISH doesn’t.
This news is bad especially a day after Apple said that they want to get more into the television industry. Right now there is a battle going on in the industry. While the power players are still managing to stay afloat, there are new players entering into the ring. If this losing trend continues, look for the board and investors to get restless.
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