DIRECTV Conference Call-Part 1

DIRECTV held their 1^st quarter conference call on May 7^th, here we will review some of the company’s comments and what they had to say regarding their future.

Chase Carey, CEO of DIRECTV kicked off the call with some general comments on why the company had such a strong quarter. Overall, the continued addition of quality subscribers continues to be the engine pushing DIRECTV forward. Strong growth and net additions, low churn rates, and high ARPU (average revenue per subscriber) as well as advanced services such as HD and DVR subscriptions were all attributed.

Carey mention that strong top-line numbers were starting to show up in the bottom line, as DIRECTV is continuing to get a hold on costs. One area singled out for improvement is subscriber acquisition costs or SAC. Latin America was mentioned as being even stronger than the U.S. market, with net subscriber growth doubling to over 200,000 in the latest quarter.

Carey then turned the call over to Patrick Doyle, CFO for DIRECTV. He plowed through the numbers, which are recapped here. One interesting note brought out is that DIRECTV has 7 million subscribers with advanced services, HD and/or DVR, and that these customers pay nearly $100 a month. Multiply that out and DIRECTV pulls in $700,000,000 a month from their top tier of customers.

In terms of customer churn, Doyle brought out that DIRECTV improved on their 8-year low in the fourth quarter of 2007 which was 1.42%. This quarters churn rate was 1.36%, this being attributed to seeking out high quality subscribers and tighter credit policies.

HD and DVR technology continue to be of interest to new subscribers. DIRECTV reports that 50% plus of new subscribers order advanced services, compared to 30% plus this time last year. SAC was $712, down from the fourth quarter 2007 but up 7% over the 1^st Within that number, hardware costs were describes as a “silver lining” dropping 17% over the last year. DIRECTV is using refurbished boxes as part of a cost slashing initiative in this area. quarter 2007.

DIRECTV also announced an increase in their stock buyback program, upping the ante to $3 billion. In order to do this, DIRECTV said they will be issuing debt totaling about $2 billion dollars. The company described the move as “improving our capital structure.” Carey said there will not be any timeline on completing the buyback, but it will be done “aggressively yet opportunistacally.”

Chase Carey then recapped DIRECTV’s standing before taking questions from analysts. Currently they offer 95 HD channels, and local HD in 77 markets. The acquisition of 180 Connect was described as something to maximize the efficiency and quality of the installation process. Carey said the full rollout of the DIRECTV Video-on-demand, or VOD will happen in the second quarter. DIRECTV also is slowly moving into the content arena, with the agreement to carry Friday Night Lights exclusively starting in October, before episodes are then shown on the network in 2009.

Next we will recap the question and answer session with Wall Street analysts.

Read DIRECTV Conference Call-Part 2

Read DIRECTV Conference Call-Part 3