DIRECTV 2005 Annual Report Download - page 64

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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
2004 2003 $ %
(Dollars in Millions, Except Per Subscriber
Amounts)
Revenues ....................................... $9,763.9 $7,695.6 $2,068.3 26.9%
Operating Costs and Expenses, exclusive of depreciation and
amortization expense shown separately below:
Broadcast programming and other costs of sale ........ 4,010.5 3,229.8 780.7 24.2%
Subscriber service expenses ....................... 740.2 623.5 116.7 18.7%
Subscriber acquisition costs:
Third party customer acquisitions ............... 1,960.8 1,388.4 572.4 41.2%
Direct customer acquisitions ................... 684.1 395.1 289.0 73.1%
Upgrade and retention costs ...................... 993.2 404.4 588.8 145.6%
Broadcast operations expenses .................... 129.7 133.4 (3.7) (2.8)%
General and administrative expenses ................ 662.3 565.2 97.1 17.2%
Depreciation and amortization expense ................. 561.2 497.0 64.2 12.9%
Total Operating Costs and Expenses ............. 9,742.0 7,236.8 2,505.2 34.6%
Operating Profit .................................. $ 21.9 $ 458.8 $ (436.9) (95.2)%
Other Data:
Operating Profit Before Depreciation & Amortization ...... $ 583.1 $ 955.8 $ (372.7) (39.0)%
Total number of subscribers (000’s) .................... 13,940 12,212 1,728 14.2%
ARPU ......................................... $ 66.95 $ 63.92 $ 3.03 4.7%
Average monthly subscriber churn% ................... 1.59% 1.55% — 2.6%
Average subscriber acquisition costs — per subscriber (SAC) . . $ 643 $ 593 $ 50 8.4%
Subscribers. DIRECTV U.S. had approximately 13.9 million subscribers at December 31, 2004,
which included approximately 1.4 million subscribers in the former NRTC and Pegasus territories that
DIRECTV U.S. purchased in the second half of 2004. At December 31, 2003, DIRECTV U.S. had
approximately 12.2 million subscribers, which included 10.7 million owned and operated subscribers and
1.5 million subscribers in the former NRTC and Pegasus territories. In 2004, excluding the subscribers
from the former NRTC and Pegasus territories, DIRECTV U.S. added 4.0 million gross new owned
and operated subscribers, an increase of 34% over the prior year, due to a higher number of
subscribers acquired in local channel markets, more attractive consumer promotions, and an improved
and more diverse distribution network. After accounting for churn, DIRECTV U.S. added 1.8 million
net new owned and operated subscribers, or 1.7 million total subscribers including the former NRTC
members and affiliates and Pegasus during 2004.
DIRECTV U.S.’ average monthly subscriber churn increased to 1.59% for the year ended
December 31, 2004 compared to average monthly subscriber churn of 1.55% for the year ended
December 31, 2003 primarily due to a more competitive marketplace and higher involuntary churn
mostly related to the substantial increase in gross subscriber acquisitions over the past year.
Revenues. The $2,068.3 million increase in revenues to $9,763.9 million resulted from DIRECTV
U.S.’ new subscribers added in 2004, including those subscribers added as part of the NRTC and
Pegasus transactions, and higher ARPU on the larger subscriber base. The 4.7% increase in ARPU to
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