DIRECTV 2004 Annual Report Download - page 52

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THE DIRECTV GROUP, INC.
DIRECTV U.S. Segment
The following table provides operating results and a summary of key subscriber data for the DIRECTV U.S. segment:
Change
2003
2002
$
%
(Dollars in Millions, Except Per Subscriber
Amounts)
Revenues
$
7,695.6
$
6,444.6
$
1,251.0
19.4
%
Operating Costs and Expenses, exclusive of depreciation and amortization expense shown separately
below:
Broadcast programming and other costs of sale
3,229.8
2,682.3
547.5
20.4
%
Subscriber service expenses
623.5
611.4
12.1
2.0
%
Subscriber acquisition costs:
Third party customer acquisitions
1,388.4
1,343.6
44.8
3.3
%
Direct customer acquisitions
395.1
179.2
215.9
120.5
%
Upgrade and retention costs
404.4
270.9
133.5
49.3
%
Broadcast operations expenses
133.4
128.0
5.4
4.2
%
General and administrative expenses
565.2
630.9
(65.7
)
(10.4
)%
Depreciation and amortization expense
497.0
405.6
91.4
22.5
%
Total Operating Costs and Expenses
7,236.8
6,251.9
984.9
15.8
%
Operating Profit
$
458.8
$
192.7
$
266.1
138.1
%
Other Data:
Operating Profit Before Depreciation & Amortization
$
955.8
$
598.3
$
357.5
59.8
%
Total number of subscribers (000’s)
12,212
11,176
1,036
9.3
%
ARPU
$
63.92
$
59.77
$
4.15
6.9
%
Average monthly subscriber churn %
1.55
%
1.63
%
—
(4.9
)%
Average subscriber acquisition costs—per subscriber (SAC)
$
593
$
542
$
51
9.4
%
Subscribers. DIRECTV U.S. had approximately 12.2 million subscribers at December 31, 2003, which included
approximately 1.5 million subscribers in the former NRTC and Pegasus territories. At December 31, 2002, DIRECTV U.S. had
approximately 11.2 million subscribers, which represented 9.5 million owned and operated subscribers and 1.7 million
subscribers in the former NRTC and Pegasus territories. In 2003, excluding the subscribers from the former NRTC and Pegasus
territories, DIRECTV U.S. added 3.0 million gross new owned and operated subscribers, an increase of 7.0% over the prior
year, due to a higher number of subscribers acquired in local channel markets and more attractive consumer promotions. After
accounting for churn, DIRECTV U.S. added 1.2 million net new owned and operated subscribers, or 1.0 million total
subscribers including the results of the former NRTC members and affiliates and Pegasus.
DIRECTV U.S.’ improvement in average monthly churn from 1.63% in 2002 to 1.55% in 2003 was primarily due to its
continued strong customer service, the increased number of markets with local channels resulting in a higher number of
subscribers purchasing local channel programming, as well as an increase in the number of DIRECTV subscribers with multiple
set-top receivers and DVRs.
Revenues. The $1,251.0 million increase in revenues to $7,695.6 million resulted from DIRECTV U.S.’ new subscribers
added in 2003 and higher ARPU on the larger subscriber base. The 6.9% increase in ARPU to $63.92 resulted primarily from a
March 2003 monthly price increase on certain programming packages, higher mirroring fees from an increase in the average
number of set-top receivers per subscriber, a higher percentage of
43