DirecTV Loss Widens on Satellite Write-Down

DirecTV Group Inc. reported a significantly larger third- quarter net loss after writing down the value of two satellites that will be switched to transmit TV signals rather than provide Internet access.

The El Segundo-based company reported a net loss of $1.01 billion, or 73 cents a share, in the three months ended Sept. 30, compared with a loss of $23 million, or 2 cents, a year earlier.

Revenue increased 20% to $2.86 billion from $2.38 billion in the same quarter last year. The average estimate of analysts surveyed by Thomson First Call was $2.75 billion.

The company continued its trend of reporting record gains in subscribers in the quarter but said the cost of attracting and retaining those customers rose.

DirecTV said it added a record 484,000 net new subscribers in the quarter, 49% more than it signed up a year earlier.

At the same time, it reported a “churn” rate of 1.67%, a measure of how many customers left the service; that was up from 1.6% a year earlier.

The service had 12.1 million total subscribers at the end of the quarter, compared with 10.3 million at the end of the third quarter of 2003.

Subscriber acquisition costs rose during the quarter in part because of the larger number taking high-definition services and purchasing digital video receivers at discounted prices.

Chase Carey, DirecTV’s president and chief executive, said the quarter reflected the transition the company continued to undergo since News Corp. bought a controlling interest in DirecTV from General Motors Corp. last year. He also expressed disappointment in some of the higher costs associated with subscriber growth, saying the higher churn rate “did not meet our expectations.”

The company took a non-cash write-down of $903 million after it recalculated the value of two satellites it had planned to launch next year as part of its Spaceway Internet service.

DirecTV is fighting a heated war with rival Dish Network, which is operated by EchoStar Communications Corp., and cable operators.

The company has announced plans to launch several new satellites in the next few years to increase its channel and interactive television offerings as well as to offer local channels in high definition.

DirecTV shares fell 51 cents to $16.51 on the New York Stock Exchange.