The satellite TV provider's earnings beat forecasts, but it unexpectedly lost subscribers in the latest quarter. Fred Katayama reports.
DirecTV, which has an uncanny knack for retaining and growing customers, unexpectedly lost subscribers in the latest quarter. Profit fell 13 percent. But charging them higher fees enabled the satellite TV services provider to boost revenue, and that revenue and profit topped analysts' expectations. Behind the surprising fall in U.S. subscribers: tighter credit policies and an increase in the number of canceled subscriptions amid heightened competition. DirecTV in the past has been able to keep its customers thanks to the popularity of its football program, NFL Sunday ticket. It recently paid a hefty premium to extend that deal with the NFL, clearing one potential hurdle to its merger with AT&T. DirecTV also lost subscribers In Latin America, much of it coming after the end of the World Cup. The region accounts for a third of the company's revenue and has been a big factor behind its recent growth, But DirecTV managed to boost sales despite the sharp rise in the dollar. Nomura analyst Adam Ilkowitz was alarmed by the subscriber losses and warns of more damage from currency translations. "Another $62 million write-down was taken for Venezuelan trapped cash, as the exchange rate worsened by 20 percent during the quarter. The headwind to reported results due to FX should worsen in coming quarters."