DirecTV Group Hit All Time High

DirecTV Group

The $37.3 billion provider of digital television entertainment, DirecTV Group, hit an all time high near 75 Thursday morning as their stock rose nearly 3 percent. The company, whose big stake is in the growth of sports programming, has exclusive broadcasting rights to every NFL game in a program called NFL Sunday Ticket, as well as its own regional sports programming networks in Denver, Seattle, and Pittsburgh under the brand name Root Sports.

Though their growth is down nearly 10 percent among U.S. subscribers from the year-earlier quarter adding just 93,000, CEO Mike White was reassuring in the company’s earnings release, promising that their long-term outlook remains strong in Latin America. He makes this statement against numbers that are down 65 percent in Latin America to 231,000 added subscribers, and missing analyst estimates for an additional 359,000.

DirecTV Group faces a number of challenges in 2014 in both the U.S. and Latin American markets despite hitting an all time high. White claims the company is currently in a good position in their market and can continue to strengthen competitiveness in the U.S. According to analysts however, competition within the satellite market could be the least of their worries. DTV relies heavily on promotion, equipment fees, and price increases, and their focus so far has been a high cost strategy. In the digital entertainment market U.S. consumers are showing a strong shift to more on-demand television and low-cost Internet entertainment that would be hard for DTV to compete with, given their current strategies.

In the Latin American market DirecTV faces a different set of challenges, some direct and some unseen. Macroeconomic conditions, economic weakness, foreign currency variances, and higher programming and production costs make it difficult to predict if the market will continue to grow steadily. Additionally, DirecTV can not rely on their exclusive NFL programming to push sales in Latin America, where only a small percentage of viewers watch American Football.

The net income attributable to DTV fell to $810 million, or $1.53 per share at the fourth quarter end on December 31 from where it was a year earlier at $942 million, or $1.55 per share. DirecTV Group also owns 60 percent interest in a cable television network for game-related programming and Internet interactive game playing called the Game Show Network.

As digital viewership shifts and satellite proves to be one of the more expensive options, will DTV be able to stay relevant? Their exclusivity with NFL Sunday Ticket games is hard to beat, but is it enough to increase subscriptions?

Speculations about the future of the company revolve around Dish Network and the possibility of a merger. This comes after the recent announcement from Comcast of an all-stock agreement to purchase the popular entertainment company Time Warner Cable. The merger with Dish Network has been proposed before however, and according to IBD, would be a difficult agreement to arrange due to a number of regulatory hurdles. Even now that the company has reached their all time high, the outlook for DirecTV Group in 2014 is still questionable.

By Mimi Mudd

Investor Place
News Daily

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