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The DIRECTV Group Announces Second Quarter 2009 Results

Discussion in 'DIRECTV General Discussion' started by STEVED21, Aug 6, 2009.

  1. bonscott87

    bonscott87 Cutting Edge: ECHELON '07

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    Yep. I think there are a lot of people that "chase the deal" and switch all the time for the new user deals. More power to 'em. But I got better things to do. :D

    And people wonder why DirecTV and Dish (and now FIOS and cable with some deals) want to lock people in for 2 years. :rolleyes:
     
  2. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    You guys are apparently missing the word average in the statement. :rolleyes:

    You must also be totally disregarding renewals, which are not mentioned in the math either.

    If you honestly think that by using your fuzzy math they sign up 4+ million brand new subscribers every year to break even and over 5 million to gain the subscribers NET that they did last year....I want some of what you're drinking. :D
     
  3. Ken S

    Ken S RIP

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    Once again...read their financial statements before you start typing. I posted how many subs they signed up last quarter and for the six month period. Seems to indicate they're doing just what you say isn't happening. Then again, I guess we should be used to you spewing inaccuracies and un-researched comments over and over...maybe if you post it often enough someone will believe it?

    Just to repost what you failed to read either here or on DirecTV's site. They signed on almost 2,233,000 new subscribers in the first six months of this year. Hmm...double that and what number do you get?

    Please stop this...
     
  4. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    I read them sir.

    Apparently you wish to continue spewing your innaccuracies, or manipulations in how numbers are interpreted, or perhaps have some other agenda. I suspect that may indeed be the case.

    In any case, welcome to my ignore list. :rolleyes:
     
  5. DodgerKing

    DodgerKing Hall Of Fame

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    It is amazing how many people I run into that do not understand simple math and percentages. If the average churn rate per month is 1.51% every month, then the average churn rate per year is also be close to 1.51% per year, depending on the number of additions. You don't multiply the rate by 12, it is a lot more detailed than that.
     
  6. hdtvfan0001

    hdtvfan0001 Well-Known Member

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    Bingo.

    Now if a few others could only be as wise as you obviously are...;)
     
  7. Ken S

    Ken S RIP

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    Please tell me where I've been innacurate. I posted links to their financials. As for being on your ignore list...you seem to threaten that on a regular basis...Whether it happens or not..I'll sleep well.

    As for my agenda...I like discussing the financial aspects of the industry. There are some very intelligent people here who know and comment on the business and financial aspects. At the present time I have no investments in any company which could remotely be considered in that industry. I have owned stock in both Dish and DirecTV in the distant past.

    The question is what is your agenda and why continually deny company-stated numbers?

    For those of you that care (and I hope there are few.) here's the link to DirecTV's site and listing of financial reports. The latest quarterly report was filed on August 7, 2009. http://investor.directv.com/sec.cfm

    Here's a snapshot from the quarterly results showing the subscriber adds for the latest three-month period. The six month numbers which I quoted above are also in that report.

    I'm sorry a reasonable discussion had to turn into this.

    [​IMG]
     
  8. Ken S

    Ken S RIP

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    Feb 12, 2007

    Please do the math and compare it to the DirecTV financials and you will see you're mistaken. You might also want to read how DirecTV defines average monthly churn...it's not what you think.

    From the DirecTV 10Q:
    Average monthly subscriber churn. Average monthly subscriber churn represents the number of subscribers whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.


    Please do the calculations (your way and by totaling the monthly rate) and compare them to the real numbers. I understand it's confusing that's why companies like DirecTV do it that way. They want people to believe the number is very small. In reality DirecTV will lose somewhere over 3,000,000 customers this year and grow by adding well over 4,000,000 new customers...each new customer at a cost of ~$700.

    You don't have to believe me...the numbers are all in their financials. You don't have to believe those numbers, but if they're false someone is going to jail :)

    Here let's make it easy. I captured the pertinent data from the 2008 Annual Report.

    Last Day 2007
    Total Subs: 16,831,000

    Last Day 2008
    Total Subs: 17,621,000

    Subscribers added 2008:3,904,000
    Subscriber disconnections 2008: 3,043,000

    So...let's do some rithmitic and a simple annual churn rate: 3,043,000 divided by 17,621,000 = .1726 or 17.26% DirecTV stated their average monthly churn was 1.47% for 2008 1.47 multipled by 12 equals...17.64%.

    Figuring an accurate annual churn rate would take more information than we're given, but taking their monthly and multiplying by 12 is a decent starting point.

    Now please, if anyone wishes to dispute this do so using the actual numbers.
     
  9. Upstream

    Upstream Hall Of Fame

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    Let me give a simple example to help explain it.

    Let's say a company has 10 million subscribers and an average monthly churn rate of 1.5 percent. That means that each month they lose 150,000 subscribers on average. And let's assume that each month they exactly replace those lost subscribers with new subscribers, so their subscription base remains at 10 million (to make the math easier).

    So in January they lose (and gain) 150,000 subscribers, for a 1.5% churn rate.

    Same thing in February, and March, and April, etc.

    Over 12 months they lose 12 x 150,000 subscribers (and gain 12 x 150,000 new subscribers, to keep their subscription base at 10 million). So over the year, they lose 1,800,000 subscribers and sign up 1,800,000 new subscribers for an annual churn rate of 1,800,000 / 10,000,000 = 18%.

    The annual churn rate is 18% (1.5% x 12), not 1.5%.


    Now, before someone points out the word average, the exact monthly churn numbers can vary, as long as the average remains 1.5%. So in the following example, the average is 1.5% per month, although each month is different, and the annual churn is still 1.5% x 12 = 18%.

    Month subscribers-churned churn-rate
    Jan 150K 1.5%
    Feb 160K 1.6%
    Mar 140K 1.4%
    Apr 150K 1.5%
    May 160K 1.6%
    Jun 140K 1.4%
    Jul 150K 1.5%
    Aug 160K 1.6%
    Sep 140K 1.4%
    Oct 150K 1.5%
    Nov 160K 1.6%
    Dec 140K 1.4%

    AVERAGE 150K 1.5%
    TOTAL 1800K 18%
     
  10. Drew2k

    Drew2k New Member

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    Aug 16, 2006
    Time out!

    Can someone please define "churn" in the context of DIRECTV customer acquisition and loss? To me, churn implies turnover, so does it include customers lost and gained? Or is it only customers lost?

    If the churn average is 1.51% per month, does that mean they turnover 1.51% of the customer base (losses plus new users) or is that strictly the percentage of customers lost?

    Thanks.

    Now please just post answers and math but leave the personalities out of it and I'll be very happy. :)
     
  11. DodgerKing

    DodgerKing Hall Of Fame

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    That still makes my point.

    For example. Lets say company A had these losses and gains each month (we will use small numbers that are multiples of 5 to keep it simple). Lets say they started with 950 subs:
    Code:
    Month   Losses  Gains  Total subs  Churn Percentage for the month
    1              5      10        1000          0.5%
    2            10      20        1010          0.9%
    3             5       30        1035          0.48%
    Q1           20     60        1035          1.9%
    Average monthly losses 8.3
    Average number of subs 1015
    Average monthly churn 8.3/1015 = 0.8%

    The total churn rate for this made up quarter is 1.9%
    This is not 0.8 x 3 = 2.4%
    Like I said, you do not multiply by 12 to get the whole year.
    It is a rate, not a total. You cannot simply add or multiply (which is repeated addition) percentages.

    Lets take it a step further and do another made up quarter continuing from last quarter
    Code:
    Month   Losses  Gains  Total subs  Churn Percentage for the month
    4             20      40        1055          1.8%
    5             15      20        1060          1.4%
    6              5      60        1115          0.4%
    Q2           40     120       1115          3.5%
    Average monthly loss = 13.3
    Average number of subs = 1076.6
    Average monthly churn = 1.2%

    Total average monthly losses for both quarters = 10
    Total average monthly sub base for both quarters = 1045
    Average monthly churn for both quarters = 0.95%

    Total churn rate is 3.5%. This is not Q1 average monthly churn rate x 6

    If sub losses compared to net gain becomes even less, then the total churn rate gets closer to the average monthly churn rate.
     
  12. Upstream

    Upstream Hall Of Fame

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    Drew -- From the DirecTV financial report that Ken S quoted in post 108 in this thread, DirecTV calculates churn as the number of disconnects divided by the total number of subscribers.

    So a 1.51% average monthly churn means that DirecTV loses 1.51% of its subscribers on average every month. In the case of DirecTV, they sign up more new subscribers than they lose, so the subscription base increases.
     
  13. Ken S

    Ken S RIP

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    Dodger, you're not defining churn the way DirecTV does. USE ACTUAL DIRECTV NUMBERS...you will see you are in error.
     
  14. DodgerKing

    DodgerKing Hall Of Fame

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    This is my point. You cannot simply add percentages to get a total (multiplying is addition...it is just repeated addition).

    The total will be higher than 1.5%, but it is not going to be 18%. There are too many factors that change the denominator of your rates through the period.

    This is similar to the question that ask, if it takes you 6 hours to go from LA to SF and and 5 hours to go from SF to LA, is your average time 5.5 hours? The answer is no. It is not a simple mean problem of (6 + 5)/2 because the denominator (hours in this case) changes.

    IOW, each one of those months has a different total sub base (the denominator) and each month that denominator gets larger. You cannot simply do a total of the average over each month because the denominator changes. So the total churn rate for the year will be less than 18%
     
  15. DodgerKing

    DodgerKing Hall Of Fame

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    Average losses per month divided by average total subs per month. That is they way I did it.
     
  16. Ken S

    Ken S RIP

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    It means they lose an average of 1.51% of their total customers each month. The definition they use is in their financials and I posted it in a message above.

    So, if they have 1,000 customers and lose 100 customers their churn rate is 10%. Now, if they're adding more customers than that they will have a net increase and the new higher subscriber number will be used in future churn calculations. So, if they add 200 during the same period they'll end up with 1,100 customers.

    The next period if they lose 100 customers their churn rate will be 9.1%.
     
  17. Ken S

    Ken S RIP

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    Use the real numbers...give it a try. I'm really not trying to fool anyone.
     
  18. Ken S

    Ken S RIP

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    I agree with you here...you can't simply multiply by 10 and get an exact number, but you get pretty close. Certainly much closer than claiming the monthly churn rate and the annual churn rate are the same which another poster was trying to do.

    It boils down to my original point which is DirecTV will have somewhere around 3,750,000 disconnect their service (voluntarily and involuntarily) this year and will replace them with close to 4,500.000 new customers at a cost of about $700 a sub. The others in the industy are just as bad or worse...so the next time we wonder why our bills are going up it might have a lot to do with them spending so much to get new customers rather than finding ways to keep the old ones from leaving.
     
  19. DodgerKing

    DodgerKing Hall Of Fame

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    I realize you are not trying to fool anyone. I actually agree with your general point. I was simply pointing out common percentage mistakes people make all of the time. As a high school and JC math teacher, I just thought I would point this out. I see the same mistakes made when it comes to interest rates, ex. I guess I was just being a little anal. :D
     
  20. Upstream

    Upstream Hall Of Fame

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    Check your math.
    Average monthly losses = (5+10+5)/3 = 6.67
    Average monthly churn rate = 0.657%
    Total churn rate = 20/1015 = 1.97% (DirecTV expresses churn as a percentage of the average total number of subscribers)



    0.657*3 = 1.97%
     

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