Murdochization Kicks-In at DirecTV

04 May 2005

When Rupert Murdoch acquires a company it is because he sees profit underlying the red ink. Only in the case of Britain's The Times newspaper, once the voice of the UK establishment, has he been proved wrong.

Not so, however, at the loss-beset DirecTV Group, for long the prime US apple of the media mogul's eye and acquired by News Corporation in 2003.

Thanks to the (usually) infallible process of Murdochization, DirecTV's losses were spectacularly curtailed in this year's first quarter - down from $638.8 million in Q1 2004 to a meagre deficit of $41.4m (€32.20m; £21.84m) in the three months ended March 31.

Revenue grew 27% to $3.15 billion from $2.49 billion.

During the quarter, DirecTV added a gross 1.14 million subscribers, although after deducting 1.49% defections, net subscriber additions totalled 505,000. Total US subscribers hit 14.45 million at the end of March.

But according to ceo Chase Carey, future subscriber numbers are likely to be less rosy, thanks to tighter customer credit policies and recent price increases. Nonetheless: "This is a healthy reduction," he told analysts in a conference call.

"There was a segment of customers that had a level of churn that did not make sense for us to be pursuing them. This credit policy is geared to weeding those customers out," Carey explained.

Even if "quarter to quarter results will not always follow a straight line to our goals," he said, "DirecTV is on track to meet its targets.".

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