DirecTV Group Inc. earned $336 million in 2005 as revenues improved 16 percent to 13.2 billion, the company reported Feb. 8. In 2004, DirecTV lost $1.9 billion on revenues $11.3 billion.

The improvement in 2005 net income was due to the higher operating profit and two non-cash after-tax charges that hurt 2004 results: $724 million related to the sale of Panamsat and $311 million resulting from a change in the DirecTV U.S. method of accounting for subscriber acquisition, upgrade and retention costs. These changes were partially offset by higher 2005 income tax expense related to the pre-tax earnings and a first quarter 2004 pre-tax gain of $387 million for the sale of approximately 19 million shares of XM Satellite Radio.

DirecTV credited the revenue improvement to strong growth in U.S. subscriber growth and average revenue per user, as well as the consolidation of the full economics of the former National Rural Telecommunications Cooperative and Pegasus subscribers purchased by DirecTV U.S. in mid 2004.

These gains were partially offset by lower revenues from Hughes Network Systems businesses, which were sold in two separate transactions, one in April and one in January, to Skyterra Communications Inc.

Operating profit of $633 million in 2005 represented a rebound from a loss in 2004, when DirecTV posted an operating loss due to a $1.5 billion Spaceway impairment charge. Operating profit also benefited from increased DirecTV U.S. revenues combined with higher operating margins resulting primarily from the stabilizing of costs in key areas such as subscriber acquisition and upgrade and retention marketing.

DirecTV U.S. reported 1.2 million new net subscribers in 2005 and 4.2 million gross subscriber additions. Gross subscriber additions were slightly lower than a year ago primarily due to more stringent credit policies implemented during the second quarter of 2005.

Average monthly churn increased to 1.7 percent for the year principally due to higher involuntary churn from customers with lower credit scores attained in 2004 and early 2005 and a more competitive marketplace.

DirecTV U.S. reported revenues of $12.2 billion in 2005, up 25 percent from 2004 due to strong subscriber and average revenue per user growth, which improved 4 percent to $69.61 from 2004 due to programming package price increases and higher mirroring fees from an increase in the average number of set-top receivers per customer.

Operating profit increased to $802 million due to the revenue increase combined with higher operating margins primarily resulting from the stabilizing of costs in key areas such as subscriber acquisition and upgrade and retention marketing.

This improvement was partially offset by charges of $24 million related to Hurricanes Katrina, Wilma and Rita.

DirecTV Latin America added 149,000 net subscribers in 2005 as revenues improved 10 percent to $742 million.

The gains were driven primarily by a larger subscriber base in Argentina, Venezuela and Puerto Rico, higher average revenue per user due to select price increases in the region and by the appreciation of the Brazilian real, as well as the consolidation of Sky Chile and Sky Colombia. These improvements were partially offset by lower revenues due to the shutdown of operations in Mexico.

The cut in operating loss from $76 million in 2004 to $21 million in 2005 was due to a $70 million gain recorded for the sale of DirecTV Latin America’s subscribers in Mexico, as well as $45 million in 2004 charges primarily for asset write-downs, severance and other shut-down-related costs in Mexico.

This improvement was partially offset by charges in 2005 totaling $25 million associated with the change from a lease model to a sales model in Puerto Rico and transaction- related costs in Colombia.

DirecTV’s board of directors also authorized a $3 billion share repurchase program. The company expects these buy back shares from time to time in the open market or in private transactions, subject to market conditions.

DirecTV’s share price, which has not seen the $15 mark since mid-September, received a small bump from positive earnings news and the share buyback program. The stock jumped from a price of $13.57 Feb. 7 to close at $14.06 Feb. 8 and $14.24 Feb. 9.