DirecTV’s Gains Help Hughes Turn a Profit
Hughes Electronics Corp. swung to a net profit of $21.6 million in the second quarter as its DirecTV unit, the nation’s leading satellite service, added subscribers even as it raised prices.
The El Segundo-based company, which is soon expected to be acquired by News Corp., lost $155.1 million in the second quarter last year. Hughes does not report per-share results because it is a tracking stock of General Motors Corp.
Hughes’ revenue rose 8.1% during the quarter, to $2.37 billion.
During the quarter, DirecTV, Hughes’ dominant asset, added 181,000 net new subscribers, bringing its total to 11.6 million. That is 7.5% more subscribers than it had a year ago, with the additions greater than the 175,000 expected by Wall Street for the quarter.
Stronger-than-expected subscriber growth prompted the company to raise its 2003 financial expectations for revenue and operating profits.
DirecTV lost fewer customers to its rivals than it had a year earlier even after raising prices by about 3% in March. The turnover in customers, an important benchmark of performance, declined to 1.5% in the latest quarter, down from 1.7% a year earlier.
The March price hike increased the revenue DirecTV collects from each subscriber to an average of $61. In contrast, cable customers spend about $45 a month.
In a conference call with analysts Wednesday, Hughes Chief Executive Jack Shaw said the profit was its first in four years “excluding one-time gains.”
Yet the company’s Latin American DirecTV unit, which filed for Chapter 11 protection in March, continued to lose money and subscribers. It reported an operating loss before depreciation and amortization in the quarter of $29 million, compared with $99 million last year. Revenue fell to $143 million from $227 million.
Hughes shares Wednesday were unchanged at $13.80 in New York Stock Exchange composite trading.
Shaw also said News Corp.’s acquisition is proceeding smoothly through Washington and is on track to by completed by year’s end.
