DirecTV, the largest U.S. satellite- television provider, fell the most in more than 10 months after slower gains in Latin American hurt third-quarter profit.
DirecTV shares fell 2.6 percent to $49.35 at 11:34 a.m. in New York. The stock, up 18 percent this year through Monday, dropped as low as $48.51 earlier in Tuesday’s session, the biggest intraday decline since December.
DirecTV added 543,000 net subscribers in Latin America, fewer than the 585,000 estimate from nine analysts surveyed by Bloomberg. The disappointing results may indicate a deterioration in the region’s economies, especially Venezuela, said Chris Marangi, a portfolio manager at Gamco Investors Inc. whose funds own 7.4 million DirecTV shares.
“Results were underwhelming,” Marci Ryvicker, an analyst at Wells Fargo & Co. in New York, said in an e-mail. “DTV’s growth engine, Latin America, came in below expectations on almost all fronts.”
Net income attributable to DirecTV rose to $565 million, or 90 cents a share, from $516 million, or 70 cents, a year earlier, the El Segundo, California-based company said. Analysts had estimated 92 cents on average, according to data compiled by Bloomberg. Sales rose 8.4 percent to $7.4 billion, in line with the average analyst estimate.
Latin American customer additions fell from 645,000 in the quarter ended in June. Last year, DirecTV reported 574,000 new Latin American users in the third quarter, an increase from the prior three-month period.
DirecTV added 67,000 net U.S. customers, less than the 99,000 average analyst estimate. The company has tried to entice subscribers with National Football League Sunday Ticket promotions, which give new customers access to all Sunday football games for free for a year. DirecTV also lowered the price for Sunday Ticket for current customers.
Dish Network Corp., the second-largest U.S. satellite-TV provider, also reported its results today. The company lost 19,000 net subscribers in the quarter, a smaller decline than the average analyst estimate of 36,000. Its shares, up 22 percent this year, gained 1.7 percent to $35.41 today.
Dish reported a surprise net loss of $158.5 million, compared with a profit of $319.1 million a year earlier. Analysts had predicted a profit of $251 million, the average estimate compiled by Bloomberg.
Dish recorded litigation-related expenses of $730 million in the period, the cost of settling with AMC Networks Inc. and Cablevision Systems Corp. over Voom, the suite of high-definition television channels that Dish terminated more than four years ago. AMC and Cablevision sought $2.4 billion in damages before settling. The settlement was announced Oct. 21, in the fourth quarter, even though the charges were assigned to third-quarter earnings.
Sales fell 2.2 percent to $3.52 billion, trailing the $3.56 billion average analyst estimate.
Dish is awaiting Federal Communications Commission approval to use its airwaves to transmit mobile video and data. The Englewood, Colorado-based company has said it’s searching for a partner that already has a wireless network, letting it avoid spending billions on building a new one.
A merger between DirecTV and Dish also is a possibility, said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. A deal would become more likely to be cleared by regulators if Dish is given approval to enter the wireless business, letting it compete in a broader swath of the industry, Moffett said.
Dish and DirecTV attempted to combine in 2002. The deal was blocked by regulators after it was deemed anti-competitive.
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