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Wall Street Eyes DirecTV's 2003

Discussion in 'DIRECTV General Discussion' started by Steve Mehs, Jan 17, 2003.

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  1. Steve Mehs

    Steve Mehs Hall Of Fame

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    Those on Wall Street had different opinions on Hughes' fourth quarter and year-end results released earlier in the week.

    Armand Musey, satellite analyst with Salomon Smith Barney, said Hughes completed 2002 "with some of the wind knocked out of DirecTV’s sails, but managed to deliver on most of its financial targets."

    Hughes' DirecTV unit ended 2002 with growth (975,000 net additions) that was lower than management was forecasting earlier in the year (1 million to 1.2 million net adds), "which we believe reflects its failure to see the significance of allowing (EchoStar's) DISH to break into its formerly exclusive distribution channels," Musey said.

    The most striking item to come out of Hughes’ conference call Wednesday was its outlook for 700,000 to 800,00 net additions for DirecTV in 2003, Musey said. "We acknowledge DirecTV has been hit hard by DISH Network’s entry into its distribution channels," he said. "However, we still believe DirecTV will capture a larger share" in 2003 and 2004, he said.

    Another analyst, William Kidd of Lehman Brothers, said DirecTV's forecasted 2003 ARPU (average revenue per subscriber) growth appeared anemic at 1 percent. SAC (subscriber acquisition cost) is projected to rise 8 percent to 9 percent. And subscriber growth - at the gross level - also is expected to be flat to down year-over-year, he said.

    "In some respects we are sympathetic to the company's plight," Kidd said. "We do not fault them for the increase in SAC, as it's terribly important that DBS operators remain competitive with cable, and increasingly that DirecTV remain competitive with EchoStar."

    In order to achieve that competitiveness, money must be spent, Kidd said. That has been the trend in the business for several years, but 2003 may be unique in that it could the first time DirecTV's gross additions could be down despite of an increase in SAC.

    "It's counterintuitive and altogether disconcerting that DirecTV finds itself in a position of having to hang more bait on the lure in the pond of prospective subscribers, but expects to catch less than it did," Kidd said.

    From SkyReport (Used with Permission)
     
  2. Ronmort

    Ronmort Godfather

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    Apr 23, 2002
    What was exclusive to Directv? The only channels I can think of are the PPV channels which carry the NHL Center Ice and NBA League Pass? Am I missing something?
     
  3. raj2001

    raj2001 Icon/Supporter

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    Nov 2, 2002
    No, they meant distribution channels, not programming - i.e. Radioshack, Wal-Mart.
     
  4. Jacob S

    Jacob S Hall Of Fame

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    Apr 14, 2002
    But Dish Network will also experience more churn because of their choice in where to sell the systems but still gain more subs. Piracy will also increase as a result just as it did with DirecTv when they went to these outlets.
     
  5. Karl Foster

    Karl Foster Hall Of Fame

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    Mar 23, 2002
    I know they meant distribution channels, but the big exclusives on Directv are NFL Sunday Ticket and MLB Extra Innings. Most other programming is duplicated by both services.
     
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