DirecTV, Cablevision Q3 Results Top Estimates

(RTTNews) - DirecTV, Inc. (DTV), which is being acquired by AT&T, Inc. (T), reported Thursday a profit for the third quarter that decreased from last year, despite revenue growth.

Both adjusted earnings per share and quarterly revenues topped analysts' expectations

DirecTV provides digital television entertainment to more than 39 million customers primarily in the U.S. and Latin America.

El Segundo, California-based DirecTV, the largest U.S. satellite TV company, reported net income of $611 million or $1.21 per share for the third quarter, lower than $699 million or $1.28 per share in the prior-year quarter.

Excluding $0.12 per share of Venezuelan currency devaluation charge, adjusted net income for the latest quarter was $673 million or $1.33 per share. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $1.30 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter increased 6 percent to $8.37 billion from $7.88 billion in the same quarter last year, and topped sixteen Wall Street analysts' consensus estimate of $8.30 billion.

The revenue growth was driven by 4.8 percent ARPU growth at Directv U.S. as well as subscriber growth at Directv Latin America (DTVLA), partially offset by lower ARPU at DTVLA due to unfavorable changes in exchange rates.

"Our third quarter financial results continue to demonstrate the strong execution of our operations. In the U.S., although competition for subscribers continues to be intense, revenue growth was very solid while operating profit before depreciation and amortization margin expanded year-over-year for the fifth consecutive quarter........," DirecTV President and CEO Mike White said in a statement.

DirecTV U.S. revenues grew 5 percent to $6.51 billion from a year ago, due to strong Average Monthly Revenue per subscriber, or ARPU, growth of 4.8 percent to $107.27, partially offset by increased promotional offers to existing customers and lower revenue from pay-per-view events.

DirecTV U.S. ended the quarter with 20.20 million subscribers after net subscriber losses of 28,000 during the quarter, compared to 139,000 subscribers added in the year-ago quarter.

Revenues for DirecTV Latin America, which owns about 93 percent of Sky Brasil, 41 percent of Sky Mexico and 100 percent of PanAmericana, was $1.82 billion, up from the prior-year quarter's $1.66 billion.

DirecTV Latin America ended the quarter with 12.35 million subscribers after net subscriber losses of 119,000 during the quarter, compared to 260,000 subscribers added in the prior-year quarter.

DirecTV's operating profit margin for the quarter contracted 90 basis points to 14.6 percent from last year's 15.5 percent, as higher margin at DIRECTV U.S. was more than offset by a decline in margin at DTVLA.

Meanwhile, rival Cablevision Systems Corp. (CVC) reported a profit for the third quarter that plunged from last year, which was boosted by a hefty gain from discontinued operations. However, both earnings per share and quarterly revenues topped analysts' expectations.

Bethpage, New York-based Cablevision reported net income of $71.49 million or $0.26 per share for the third quarter, sharply lower than $294.60 million or $1.10 per share in the prior-year quarter, which included $0.88 per share of income from discontinued operations.

However, income from continuing operations for the quarter grew to $71.9 million or $0.26 per share from $59.7 million or $0.22 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.18 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew 3.7 percent to $1.63 billion from $1.57 billion in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $1.61 billion by a whisker.

"Cablevision's third quarter results reflect a continuation of the strong financial performance that we delivered in the first half of the year. We have seen significant year-over-year improvements in revenue, AOCF, and free cash flow, and we are pleased with the results of our ongoing effort to transform the Optimum experience," Cablevision CEO James Dolan said in a statement.

Cable revenues for the quarter grew 3.7 percent to $1.46 billion, primarily reflecting rate increases, continued disciplined pricing strategies and higher advertising revenue, partially offset by a decline in customers. Cable advertising revenue growth was 6.8 percent.

Average monthly cable revenue per customer, or RPC, grew 5.7 percent to $154.50, and average monthly revenue per video customer, or RPS, improved 7.7 percent to $177.27 from the year-ago quarter.

Compared to the year-ago quarter, the company recorded total customer losses of about 66,000, video customer losses of about 116,000, and voice customer losses of about 32,000. The company also lost 23,000 High-speed data customers.

Lightpath revenue increased 6.3 percent to $87.89 million in the year-ago quarter, reflecting an increase in revenue from Ethernet services.

Other revenues edged up 1.1 percent to $88.59 million from last year, reflecting increased advertising revenue at News 12 Networks. partially offset by lower advertising revenue at Newsday.

On Wednesday, Cablevision's board of directors declared a quarterly dividend of $0.15 per share on each outstanding share of both its Class A and Class B stock, payable on December 12 to shareholders of record at the close of business on November 21, 2014.

"Looking ahead, we will continue to improve our products and services while remaining focused on enhancing shareholder value," Dolan added.

In Thursday's regular trading session, DTV is currently trading at $87.69, down $0.12 or 0.14% on a volume of 0.29 million shares. In the past 52-week period, the stock has been trading in a range of $62.24 to $89.46.

CVC is currently trading at $17.75, down $0.71 or 3.85% on a volume of 0.80 million shares. In the past 52-week period, the stock has been trading in a range of $14.65 to $20.42.