DirecTV Group (DTV.O) posted a higher quarterly profit on Thursday as it won U.S. video subscribers away from rival cable companies with a giveaway of its exclusive National Football League games package.
But the leading U.S. satellite TV provider missed analysts' average profit forecasts due to expenses related to its rapid rate of customer additions and rising programing costs including the multibillion-dollar NFL contract.
Third-quarter profit rose to $516 million, or 70 cents a share, from $479 million or 55 cents a share a year earlier. Analysts had forecast 73 cents a share according to Thomson Reuters I/B/E/S.
Revenue rose 14 percent to $6.84 billion.
DirecTV shares were up about 6 percent on Thursday morning.
During the quarter, DirecTV added more than 327,000 customers in the United States which it said was its highest figure in seven years for net additions in the third quarter.
DirecTV heavily promoted its NFL Sunday Ticket $300 package of out-of-market football games, offering it for free for a year as an incentive for new subscribers who switched from a rival service.
The satellite company agreed to pay around $4 billion for the four-year exclusive rights to NFL live games.
Their promotion worked, this is twice as many additions as last year and thrice as much as the Street had been expecting, said Brean, Murray, Carret & Co analyst Todd Mitchell.
In the United States, the company increased average revenue per user (ARPU) to $92.21 due to price increases on programing packages and leased set-top boxes. It also managed to lower its average monthly rate of customer losses -- also known as churn rate -- down to 1.62 percent.
DirecTV U.S. ended the quarter with 19.8 million customers, closing in on the largest U.S. video provider Comcast Corp (CMCSA.O), which has been losing customers and which had 22.4 million video subscribers at the end of the quarter. DirecTV's smaller satellite rival, Dish Network Corp (DISH.O), has also been losing subscribers in comparison.
DirecTV is buying market share, this speaks to weak results for Dish when they report, added Mitchell.
DirecTV also had strong subscriber growth in Latin America where it added more than 574,000 customers
DirecTV shares were up 5.8 percent at $47.48 on Thursday morning on the Nasdaq.