DirecTV, the largest broadcast satellite service provider in the United States, has announced that it is losing subscribers at the end of the second quarter, primarily as a result of tightening credit policies.
However, industry analysts have noted that consumer interest in paid satellite TV services has steadily decreased recently, reaching a plateau at the end of the second quarter. In a statement released on Thursday, DirecTV revealed that it lost 52.000 subscribers in the April-to-June period, compared to last year when it gained 26.000 subscribers during the same time-span.
Although second-quarter net income failed to rise to the management's expectations, the company's revenues were rescued by its rapid expansion into Latin America. Share prices stopped at $1.09 per share, compared to the anticipated $1.14 per share, while revenues rose by 9%. .
Over the last couple of years, a negative trend has emerged during the second quarter. It is considered the least favorable season, as this is when students cancel subscriptions in anticipation of the summer holidays, but also when individuals who move to summer residences usually cancel paid-TV subscriptions for their winter homes.
As a result, excepting Comcast who has performed surprisingly well during the second quarter, a number of other satellite service providers have also reported second quarter losses. Time Warner Cable Inc. lost 169.000 subscribers, marking the worst second quarter evolution in the company's history.
Fortunately, the majority of cable companies have found ways to balance the losses, either through increased subscriber gains during the third and fourth quarters, or through growth in other venues.
Consumer surveys show that the primary reason why people cancel TV-subscriptions is rising costs, but also that more and more young adults share a residence with their families, likely on account of the economic recession. There is, however, evidence to show that households are starting to opt for streaming media services, such as Netflix or Hulu, instead of paid-TV subscriptions.
DirecTV CEO Mike White concluded that the profit of US operations has been growing increasingly fast over the last two years, which to him is "an early indication of successfully executing on our long-term strategy of striking a more optimal balance between growth and profitability."