DirecTV Group Inc. reported Nov. 8 that its third quarter revenues increased 13 percent to $3.7 billion in the 2006 third quarter, while net income more than tripled to $370 million, the company announced. In the same period in 2005, it posted a profit of $95 million on revenues of $3.2 billion.

DirecTV attributed the revenue gains to strong growth in average revenue per subscriber and a larger subscriber base at DirecTV U.S. as well as the inclusion of Sky Brasil’s financial results following a merger completed in August.

The net income jump primarily was due to improvements in operating profit from the effect of $325 million of equipment that DirecTV U.S. capitalized during the third quarter under its lease program implemented March 1, an increase in gross profit generated from higher revenues, and reduced subscriber acquisition costs resulting from the decline in lower quality gross-subscriber additions. DirecTV Latin America also booked a gain of $61 million associated with the DirecTV Brasil and Sky Brasil merger. The gains were partially offset by higher income tax expense associated with the higher pre-tax income.

"Third-quarter results provide an accurate snapshot of the benefits gained from our principal goal to grow DirecTV profitably with a particular focus on higher quality subscriber growth," Chase Carey, president and CEO of DirecTV Group Inc., said in a statement. "As we’ve seen in recent quarters, much of the improved financial results can be attributed to our strategy of targeting higher quality subscribers."

Gross subscriber additions at DirecTV U.S. slipped from 1.1 million in the 2005 third quarter to 1 million in the most recent quarter "due to the implementation of revised credit policies and dealer incentives designed to improve the quality of new subscriber additions," the company said. The focus on what DirecTV U.S. dubs "higher quality subscribers" has cut the company’s monthly churn rate from 1.89 percent to 1.8 percent, and the company added 165,000 net new subscribers in the 2006 third quarter, bringing its total subscriber base to 15.7 million as of Sept. 30. At the end of September 2005, DirecTV U.S. had 14.9 million subscribers.

The focus on customers who are more likely to retain their service as well as spend more money helped DirecTV U.S. post average revenue per use of $72.74 in the 2006 third quarter, up 6 percent from a rate of $68.65 in the 2005 third quarter. Subscriber acquisition costs for DirecTV as a whole were $632 in the 2006 third quarter, up slightly from $626 in the same period a year ago.

Echostar Communications Corp. posted a profit of $140 million on revenues of $2.5 billion in the 2006 third quarter, the company announced.

In 2005’s third quarter, the satellite-TV provider recorded a profit of $209 million on revenues of $2.1 billion. The company posted a non-cash gain of $73 million in the quarter to recognize the tax benefits of previously reported tax losses.

Echostar’s Dish Network gained about 295,000 net new subscribers during the 2006 third quarter to close the period with 12.8 million subscribers. Churn was 1.76 percent in the quarter, down from 1.86 percent in the 2005 third quarter.

Average revenue per subscriber was $62.86 in the 2006 third quarter, up nearly $5 per subscriber from the 2005 third quarter. Subscriber acquisition fell from $697 a year ago to $688 in the 2006 third quarter due to reduced hardware costs and fewer receivers per installation due to the use of more dual receivers.

"There hasn’t been much change to the subscribers that we’re getting," Charlie Ergen, Echostar’s chairman and CEO, said during a Nov. 7 telephone conference with analyst. "It’s been fairly consistent. I think that’s backed up by fairly consistent churn ratios for us in the last four or five years. Perhaps on the high end with HDTV and more advanced services we do perhaps get more than our fair share versus cable system, but I haven’t seen perhaps as much impact from the triple-play that we read about every day yet. Obviously that’s a factor and obviously it’s something we’ve got to keep our eye on, certainly a competitive force in the marketplace."