DirecTV: Murdoch to Invest $2 Billion in Growth

11 February 2004

No mistaking the Murdoch touch. Today we sow; tomorrow we reap -- bigtime!

Hughes Electronics, owner of DirecTV, in which News Corporation now has a controlling stake, announced Tuesday it is shooting for a 25% increase in satellite subscribers over the next three years -- and has budgeted nearly $2 billion (€1.58bn; £1.07bn) in capital expenditure to achieve that goal.

According to Hughes' ceo Chase Cary, the recently acquired unit "will be a different company by year end", poised for faster growth and "much bigger changes" in the future. Cary projects that subscribers will soar from 12.1 million at the end of 2003, to some 15m by the end of 2006.

DirecTV's roadmap to megabucks not only includes a massive injection of capital but a repackaging of much Fox programming alongside the enlargement of its marketing and customer retention honeypot.

The good news, unveiled yesterday in a conference call to analysts, was much to the haruspices' liking. The bad news was less palatable.

Q4 saw a net loss of $309.5m (-$0.22 a share) compared year-on-year with net income of $112.6m ($0.08 a share). This despite a 20% rise in revenue to $2.95bn and the recruitment of 405,000 new DirecTV subscribers (after allowing for defections) -- a net increase of 39%.

The loss also included a pre-tax charge of $132m for severance and other employee costs. Plus a $193m charge for bankruptcy reorganization at DirecTV's Latin American unit.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff