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updated: 11/5/2013 11:11 AM

DirecTV tops profit, sales estimates as it gains subscribers

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Bloomberg News

DirecTV, the biggest U.S. satellite- television provider, posted third-quarter profit and sales that beat analysts' estimates, helped by customer gains and subscriber rate increases.

Net income climbed 24 percent to $699 million, or $1.28 a share, from $565 million, or 90 cents, a year earlier, the El Segundo, California-based company said today in a statement. Analysts had predicted earnings of about $1 a share on average, according to data compiled by Bloomberg. Sales rose 6.3 percent to $7.88 billion, topping the $7.84 billion estimate.

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Higher average revenue per user in the U.S. helped fuel sales last quarter, DirecTV said. The ARPU figure climbed 6 percent to $102.37 in the period, and the company lowered its rate of churn -- the percentage of customers who leave the service. Customers are paying more for premium TV packages, enhanced warranties and pay-per-view shows.

"It shows they have a very solid position at the high end of the market, with a better product and a better subscriber base," said Todd Mitchell, an analyst at Brean Capital LLC in New York. "That insulates them a little bit from the churn you get in promotional subscriptions."

While the 139,000 gain in U.S. subscribers last quarter was the most since 2011, DirecTV showed signs of slowing in Latin America -- a region seen as the company's biggest growth opportunity. The 260,000 subscribers added in Latin America fell short of estimates as competition mounts, Adam Ilkowitz, an analyst at Nomura Equity Research, said in a note to clients.

DirecTV shares slid 1.2 percent to $63.62 at 10:15 a.m. in New York. The stock had gained 28 percent this year through yesterday.

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