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Monday, Oct 2, 2023

Satellite TV Service Expected to Retain High Viewership

DirecTV Group Inc.’s expansion plans are running into some static, but analysts said that won’t have much of an impact on its revenue.

In fact, the El Segundo-based subscription satellite TV company should continue to rake in the cash through 2009 as consumers focus on cheap movie-viewing during the recession, said Matthew Harrigan, senior vice president with Wunderlich Securities in Denver.

“Anything that has even a smidgen of advertising exposure is hell on Earth right now, but these subscription businesses are doing pretty well,” Harrigan said. “Satellite TV is not viewed as a discretionary item anymore, it’s almost a staple.”

DirecTV’s income has been rising through 2008. In its most recent quarterly earnings report, the company said it had $363 million in net income compared with $319 million in the same period last year. This quarter, Harrigan said he expected DirecTV to show 10 percent growth in revenue and add more than 200,000 subscribers.

But while analysts remain bullish on DirecTV, the company is clearly bracing for fallout from the weakening economy.

Last week, Jonathan Rubin, its senior vice president of financial planning and investor relations, told a communications conference in New York that the company would freeze hiring in 2009 and postpone most of its capital projects.

But April Horace, an equity research analyst with Janco Partners Inc. in Denver, said DirecTV’s willingness to add services and strategy of targeting consumers with good credit histories should pay off as the economy continues to sour.

“DirecTV seems to have devised a very good formula at targeting those quality subscribers,” Horace said. “I don’t know what their secret sauce is, but they’ve got it.”

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