DirecTV Posts Profit as Sales Rise

DirecTV Group Inc., the nation’s largest satellite TV provider, returned to a fourth-quarter profit as modest subscriber growth helped lift revenue.

The company, based in El Segundo, also said that it continued efforts to offer high-speed Internet service to customers, including the possibility of working with rival satellite provider EchoStar Communications Inc. on a wireless broadband offering.

DirecTV, which is controlled by Rupert Murdoch’s News Corp., reported net income of $121.2 million, or 9 cents a share, for the quarter ended Dec. 31, contrasted with a year-earlier loss of $288.5 million, or 21 cents a share. Revenue increased 7% to $3.6 billion from $3.36 billion.

Analysts expected DirecTV to post a profit of 3 cents a share on revenue of $3.59 billion, according to Thomson Financial.

For the full year, DirecTV reported net income of $335.9 million, or 24 cents a share, contrasted with a loss of $1.95 billion, or $1.41, for 2004. Annual revenue grew 16% to $13.16 billion.

Chief Executive Chase Carey acknowledged that subscriber growth had slowed in the fourth quarter as a result of the company’s decision to adopt tougher credit standards to reduce customer turnover, or “churn.”

“If it requires us sacrificing short-term growth or sacrificing long-term growth to make sure we’re adding profitable subscribers, that’s a trade-off we’ll make,” Carey said during a conference call with analysts. “We knowingly made some of those trade-offs in the fourth quarter.”

DirecTV added 200,000 net subscribers in the quarter. In 2005, the company’s subscribers grew 9% to 15.13 million.

DirecTV, like its chief rival Dish Network, is competing fiercely with cable TV companies that offer bundled broadband Internet and telephone service to their customers.

Carey said DirecTV was continuing to weigh options, including more aggressively offering DSL Internet service in partnership with local phone companies.

Casey did not confirm reports that DirecTV would soon join EchoStar to build a nationwide wireless Internet network for satellite TV subscribers but said he was open to the possibility.

“Clearly if EchoStar was part of something, there are positives in terms of strengthening the distribution side of it. But obviously, if you get more parties, there are issues as well,” Carey said. “We’re certainly open to pursuing things that create value for us, but there are always complexities you have to work through.”

Carey said that if a wireless option was chosen, it could exist alongside DSL deals. He also said it would take two or three years to expand a wireless network nationwide, but the company would hope to have major cities covered sooner.

Shares of DirecTV rose 49 cents to $14.06.