DirecTV 1st Quarter Results Call...May 7th, 2pm

[bonscott87]

Link to the results: http://investor.directv.com/releasedetail.cfm?ReleaseID=308693

I will try to live blog this if I quit getting bothered at work. :)

[bonscott87]

Just to note a huge/rapid growth in HD and DVR uptake.

[bonscott87]

Over 7 million subs with "advanced" services (HD and/or DVR).

[bonscott87]

Low churn is helped by tighter credit policies and higher quality customers.
Both voluntary and involuntary churn is down.

Were surprised that tighter credit policies didn't reduce gross adds. In fact gross adds continue to go up.

[bonscott87]

D11 expected to deploy in 3rd quarter (July - Sept).

VOD out of beta and rolled out by end of 2nd quarter.

[bonscott87]

So far nothing earthshaking in the Q&A. Just a lot of financial questions. Imagine that on a financial call. :D

[bonscott87]

A Tivo question, first time I've ever heard one on these calls.

[bonscott87]

First off mentioned an SD DVR that is software upgradable to HD. The R22?

[harsh]

It sounds like the R22 can be upgraded to HD through software.

[bonscott87]

Tivo - Says they have a constructive relationship and they have a positive relationship and they keep looking at things where they can work together. Pretty standard answer and the same thing they have said in the past 2 years. Nothing new there.

[bonscott87]

And with that the call is over.

[harsh]

Another key number that came out was that the HD DVR cost was reduced from over $400 to somewhere in the low $200 range. It will be interesting to see the pricing relationship between the R22 and the HR21. Obviously, the HR21 would still require an HD subscription but it kind of marginalizes the R22.

[tcusta00]

Another key number that came out was that the HD DVR cost was reduced from over $400 to somewhere in the low $200 range. It will be interesting to see the pricing relationship between the R22 and the HR21. Obviously, the HR21 would still require an HD subscription but it kind of marginalizes the R22.

Cost for the two units should be the same if what was said on the call about software being able to change it from SD to HD is true. Unless they are going to account for them differently given the revenue each would generate, which is grey area accounting to me.

[cartrivision]

It sounds like the R22 can be upgraded to HD through software.

I think that we've pretty much determined that the R22 is just a repackaged HR21 with special software that locks it (for now) to act like an SD only DVR

[cartrivision]

Cost for the two units should be the same if what was said on the call about software being able to change it from SD to HD is true. Unless they are going to account for them differently given the revenue each would generate, which is grey area accounting to me.

Going by what was said at the investor’s presentation in February, I expect that we will see a new HD DVR model with a larger disk drive introduced very soon (an HR22?). That larger disk will then be what differentiates an HD DVR from the R22, and will be what they use to justify the lease price difference between the (upgradeable to HD) R22 SD DVR and the pure HD DVR, which will both be the same hardware except for the different size disk drive.

[tcusta00]

Going by what was said at the investor’s presentation in February, I expect that we will see a new HD DVR model with a larger disk drive introduced very soon (an HR22?). That larger disk will then be what differentiates an HD DVR from the R22, and will be what they use to justify the lease price difference between the (upgradeable to HD) R22 SD DVR and the pure HD DVR, which will both be the same hardware except for the different size disk drive.

I was talking about cost to DirecTV, not price paid by the consumer, but I see how the larger hard drive would be able to make that cost differential justifiable under GAAP.

[RobertE]

Going by what was said at the investor’s presentation in February, I expect that we will see a new HD DVR model with a larger disk drive introduced very soon (an HR22?). That larger disk will then be what differentiates an HD DVR from the R22, and will be what they use to justify the lease price difference between the (upgradeable to HD) R22 SD DVR and the pure HD DVR, which will both be the same hardware except for the different size disk drive.

I'd say the next "true" HR will be a HR-23 (or higher). Your thinking is correct though.
R-22 + HD upgrade = HR22
HR23 larger drive than current HR2x models.

The remainder of 08 and early 09 is going to be a very busy year in D* land. :D

[RobertE]

Tivo - Says they have a constructive relationship and they have a positive relationship and they keep looking at things where they can work together. Pretty standard answer and the same thing they have said in the past 2 years. Nothing new there.

I laughed at the way he said they were still talking. Almost how divorcees speak to each other. Yeah they talk, pretend to be nice for the sake of the kids, but other than that, all bets are off. :lol:

[Stuart Sweet]

I bet that's a pretty accurate description, too.

[Sixto]

The Earnings Call Transcript:

http://seekingalpha.com/article/76201-directv-q1-2008-earnings-call-transcript?page=-1

[Sixto]

Tivo - Says they have a constructive relationship and they have a positive relationship and they keep looking at things where they can work together. Pretty standard answer and the same thing they have said in the past 2 years. Nothing new there.
"I think we have a constructive relationship. We are not doing a lot in all honesty but I think we have an honest dialog that I think is sincere about seeing if there are things that make sense for us."

[Upstream]

Moving on to churn, on the last earnings call we talked about achieving an eight-year low monthly churn rate of 1.42% in the fourth quarter. We raised the bar a little bit in this first quarter by hitting a 10-year low rate for the first quarter of 1.36%. Consistent with recent quarters, most of our churn improvement came from lower involuntary churn due to our focus on higher quality subscriber growth and ongoing efforts to tighten our credit policies.

We also had a slight reduction in voluntary churn in the quarter, which speaks to the strength of our service in an increasingly competitive industry.


Actually a slight reduction in voluntary churn (as we have discussed extensively on other thread in this forum) speaks to the volume of customer who are under multi-year commitments.

While it is good that DirecTV's credit policy is reducing involuntary churn, DirecTV needs to address voluntary churn with something more substantial than commitments, or they will be in trouble as customers roll off commitment and DirecTV is unable to lock them into further commitments. (Although their solution may be to have CSRs add a two year commitment everytime you sneeze.)

[spartanstew]

DirecTV needs to address voluntary churn with something more substantial than commitments, or they will be in trouble as customers roll off commitment and DirecTV is unable to lock them into further commitments.

Haven't they been doing commitments for longer than 2 years now? If so, then customers have already started "rolling off" and churn has still been reduced.

Each day customers are "rolling off" and that number is probably consistent percentage wise, so if it were viewed as a potential problem, it would already show in the numbers.

[bonscott87]

Haven't they been doing commitments for longer than 2 years now? If so, then customers have already started "rolling off" and churn has still been reduced.

Each day customers are "rolling off" and that number is probably consistent percentage wise, so if it were viewed as a potential problem, it would already show in the numbers.

They've been doing commitment for at least 5 years now I believe. Last 2 DirecTivo's I activated came with 1 year commitments and that was a long time ago. 2 year commitments of the first R15 years have been rolling off for a while now. Yet churn is down as you point out. The first HR20 commitments will start rolling off this fall.