Compared with the same quarter last year, revenue increased by 16%, profit doubled, subscriber churn fell to 1.57%, and average monthly revenue per subscriber rose to $80.70. In the earnings release, the company reiterated its dedication to HDTV. CEO Chase Carey confirmed "the launch of up to 100 national HD channels in the second half of this year," and he also stated that DirecTV expects to "offer significantly more HD channels than most of our competitors." This is a smart move, not to mention a key to survival in a cutthroat marketplace.
DirecTV already has an edge with sports fans because of NFL Sunday Ticket, NBA League Pass, and other exclusive sports content. However, to continue growing, DirecTV needs to offer another compelling service that cable cannot provide. HDTV is that offering.
Cable companies have less bandwidth than satellite providers do, and therefore, cable companies cannot broadcast as many HD channels. Thus far, cable companies haven't been hindered because there is so little HD programming in existence -- some 20-odd channels. But the world of HD programming is rapidly expanding. Just recently, CNN, TBS, and Cartoon Network announced plans to launch HD versions of themselves. News Corp.'s
DirecTV is making the right moves to capitalize on growth in HD. The company is launching two new satellites this year, and it has signed carriage agreements for almost 70 channels. This could prove to be a significant competitive advantage, which should translate to an improvement in net subscriber additions, average revenue per unit, and churn starting in early 2008.
Of course, cable companies are fighting back. They are reducing churn and aggressively adding digital television subscribers by offering attractive triple-play bundles. For instance, Comcast
Comcast, Time Warner
But at least in the near term, DirecTV is carving out a nice niche for itself in a tough market.
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