DirecTV Group Inc., the nation's largest satellite TV operator with over 17 million customers, said Thursday its third-quarter earnings rose 14 percent, fueled by growth in subscribers, higher prices and lower capital expenses.
"We are in a tough economy and a competitive environment," Chief Executive Chase Carey said in a conference call with analysts.
But business has been good so far and, "overall, the impact is marginal," he said.
The El Segundo, Calif.-based company reported net income of $363 million, or 33 cents per share, up from $319 million, or 27 cents per share, in the year-ago period.
The result came in 2 cents short of the average estimate from analysts polled by Thomson Reuters.
Revenue rose 15 percent to $4.98 billion from $4.33 billion, boosted by a 49 percent increase in Latin America to $658 million.
DirecTV's free cash flow rose more than fourfold to $332 million, but there were signs the company's growth is slowing. It added 156,000 net new U.S. customers in the quarter, down from 240,000 in the same quarter a year ago. In Latin America, where DirecTV has stakes in local operators, net new customer additions fell to 79,000 from 161,000.
DirecTV added fewer U.S. customers partly because a distribution agreement with phone company AT&T Inc. ended in April. The deal will be renewed starting in February.
Sanford Bernstein analyst Craig Moffett said DirecTV's subscriber growth was weaker than expected and its cancellation rate was higher than projected.
"Growth — at least revenue growth — is clearly slowing," he said in a research note.
Shares of DirecTV rose 17 cents, or 0.8 percent, to $20.96 in afternoon trading.
In the U.S., higher satellite TV rates and increases in service fees for digital video recorders and high-definition channels boosted revenue by 11 percent. U.S. customers on average paid $83.59 per month for DirecTV service, up 6 percent from a year ago.
In Latin America, where the company owns 74 percent of Sky Brazil, 41 percent of Sky Mexico and all of PanAmericana, operating profit more than tripled to $142 million.