DIRECTV 2012 Annual Report Download - page 65

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DIRECTV
Subscribers. In 2012, net subscriber additions decreased due to lower gross Subscriber acquisition costs decreased primarily due to lower gross subscriber
subscriber additions primarily resulting from an increased focus on attaining additions. SAC per subscriber, which includes the cost of capitalized set top
higher-quality subscribers and stricter credit policies, as well as lower gross additions receivers, increased primarily due to an increase in subscriber demand for advanced
from our telco sales channel. Average monthly churn decreased in 2012 primarily products and higher marketing costs per subscriber added.
due to a greater number of subscribers on contract commitments and auto-bill pay. Upgrade and retention costs increased in 2012 due to our increased focus on
upgrading and retaining high-quality subscribers.
Revenues. Our revenues increased as a result of higher ARPU and the larger
subscriber base. The increase in ARPU resulted primarily from price increases on General and administrative expenses increased in 2012 primarily due to a
programming packages and set-top receiver lease fees, as well as higher advanced benefit from a property tax adjustment recorded in 2011, as well as equipment
receiver service fees and higher commercial revenues, partially offset by increased impairment charges recorded in 2012, primarily related to equipment financing
promotional offers to new and existing subscribers. provided to a dealer that has entered into bankruptcy proceedings, as well as higher
rent and labor expenses in 2012.
Operating profit before depreciation and amortization. Operating profit before
depreciation and amortization was higher in 2012 as compared to 2011 as higher Operating profit. Operating profit and operating profit margin increased in
revenues and lower subscriber acquisition costs were partially offset by higher 2012 as compared to 2011. The increase in operating profit was primarily due to
broadcasting programming costs, increased general and administrative costs and the increase in operating profit before depreciation and amortization expense and
higher upgrade and retention costs. lower depreciation and amortization expense in 2012 resulting from the change in
HD set-top receiver estimated depreciable life from three to four years, as well as
Operating profit before depreciation and amortization margin increased in
the completion of the amortization of a contract rights intangible asset. The
2012 as compared to 2011 as the revenue growth, lower subscriber acquisition costs
increase in operating profit margin was primarily due to the decrease in
and efficiencies in subscriber service costs were partially offset by higher relative
depreciation and amortization expense.
growth in broadcast programming and other costs.
Broadcast programming and other costs increased primarily due to annual
program supplier rate increases and the larger number of subscribers.
45