Articles for DirecTV

DirecTV Latin America Worth Almost as Much as DISH

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Tuesday, January 31st, 2012 by Trefis Team

DirecTV (NASDAQ:DTV) and Dish Network (NASDAQ:DISH) have been longstanding rivals in the satellite TV market. While the former has flourished, the latter has struggled to hold on to its subscriber base in recent years as telcos such as AT&T (NYSE:T) and Verizon (NYSE:VZ) have expanded their fiber-optic pay-TV services rapidly. Although Dish has started to make some critical investments to make itself more valuable, its current valuation and our estimates for the two companies present an interesting relative view of DirecTV’s success compared to Dish. The two very similar companies have seen a noticeable divergence in terms of their subscriber bases and overall performance, and the magnitude of difference in their growth is astounding.

Our price estimate for DirecTV stands at $53, a premium of about 20% to the market price.

See our complete analysis for DirecTV

Obviously our estimate of DirecTV’s value is substantially higher than our valuation for Dish, given the massive difference in subscriber count. However what is somewhat surprising is the fact that our estimate of DirecTV’s Latin American business is approaching that of Dish’s overall pay-TV business. We estimate that DirecTV’s Latin American pay-TV business is worth a little more than $10 billion. This value would be even higher if we included the company’s equity investment in Sky Mexico, which it does not consolidate in its Latin American results. On the other hand, we estimate that Dish Network’s pay-TV business in the U.S. (which excludes Blockbuster and equipment sales) is worth a little more than $12.5 billion. What does this tell us?

A segment in which DirecTV had just over 3 million subscribers four years ago is now rivaling Dish Network’s established business in the U.S. in terms of overall value. DirecTV has successfully demonstrated that the Latin American market offers vast potential. Although its subscriber base is lower than that of Dish, growth has been rapid and there is still potential for more. On the other hand, Dish Network’s subscriber growth has decelerated. Dish will need to unveil some ambitious growth plans (which is certainly a possibility given its large spectrum position) in order to make this a legitimate rivalry once again.

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Entertainment Stocks: Selling Dreams to the Have-Nots

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Friday, January 27th, 2012 by Trefis Team

The other day I had a serious discussion with some friends about the future of unskilled workers. The income inequality in our society is partly caused by skill inequality. Some skills and jobs are more scalable and therefore naturally command a salary premium. For example, an NFL player can collect a huge paycheck because even if each of the millions of TV viewers is chipping in only one penny per game, that adds up to a large sum. By contrast, even the best plumber in the world can fix only so many houses in a day. His service is not scalable, so his income is going to be limited.

DirecTV’s Resilience and Growth Underpin $53 Stock Value

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Tuesday, January 17th, 2012 by Trefis Team

While the largest satellite pay-TV service provider in the U.S., DirecTV (NASDAQ:DTV), had a good last year in terms of business growth, the stock hasn’t quite kept up. Currently the stock is trading at around $44, which implies that our current price estimate of $53.26 stands at a premium of over 20% to the market price. We stay positive as DirecTV has demonstrated its superiority over its rival Dish Network (NASDAQ:DISH) and cable companies such as Time Warner Cable (NYSE:TWC) in the U.S. pay-TV market, and continues to expand in Latin America. Although certain risks exists, we think that the stock is trading cheaply.

DirecTV Faces More Competition as Brazil Opens Pay-TV Market

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Thursday, December 22nd, 2011 by Trefis Team

In September 2011, Brazil’s government passed a law that is expected to expand pay-TV services in the country. According to the new law, local telephone companies and foreign players will be able to offer pay TV services along with mobile, fixed line and broadband. This was not the case till now and phone companies had to bundle their service with existing pay-TV providers. What this essentially means is that the new law will spur the growth of pay-TV competition in Brazil, a significant market in Latin America for DirecTV (NASDAQ:DTV). While DirecTV has done better than its counterparts such as Dish Network (NASDAQ:DISH) and Comcast (NASDAQ:CMCSA) in the U.S., it has smartly tapped into the big potential that the Latin American market offers. However, with this new bill, the company’s fast paced expansion may be at threat, at least in terms of profits.

NFL Demands Fee Increase, DirecTV’s Subscribers Could Feel The Pain

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Friday, December 9th, 2011 by Trefis Team

The NFL (National Football League) will be negotiating an agreement with its broadcast partners including News Corp’s (NASDAQ:NWS) Fox, Comcast’s (NASDAQ:CMCSA) NBC and CBS (NYSE:CBS) to raise its fee by 60% and collect a total of about $3.2 billion annually from these broadcasters. Something similar could happen to DirecTV (NASDAQ:DTV) which offers NFL Sunday Ticket to its subscribers, a sports package that broadcasts National Football League (NFL) regular season games that are not available on local affiliates. The company risks a slowdown in subscriber base expansion. To understand the extent of this impact we have to understand what proportion of subscribers it affects.

DirecTV Updates: CEO Braces for 2012 Slowdown, Still Worth $53.25

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Monday, December 5th, 2011 by Trefis Team

In the past couple of weeks, DirecTV’s (NASDAQ:DTV) stock has limped along primarily because of cautious outlook provided by the company. The company has mentioned that it plans to reduce its expenses in 2012 by cutting down on operational costs such as overhead expenses, programming costs and hiring. DirecTV is taking a conservative approach to guidance and doing the right thing by warning beforehand that it may see a slowdown in growth due to Europe debt crisis and U.S. Presidential elections. The company has largely been doing better than its counterparts such as Dish Network (NASDAQ:DISH) and Time Warner Cable (NYSE:TWC) in recent months and has produced some attractive return on invested capital historically above peers.

DirecTV Growth Potential Remains in Latin America

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Tuesday, November 15th, 2011 by Trefis Team

DirecTV’s (NASDAQ:DTV) Q3 2011 results were marked by record subscriber additions along with a slight increase in costs that impacted margins. In the longer term, we believe that DirecTV is positioned to thrive by acquiring a high quality subscriber base and expanding rapidly in Latin America. The gap between DirecTV and its rival Dish Network (NASDAQ:DISH) widened this quarter when the latter continued to lose subscribers. DirecTV seems to be gaining market share and getting closer to the expansion pace of telcos like AT&T (NYSE:T) and Verizon (NYSE:VZ). Because of these growth opportunities, our $53 price estimate for DirecTV implies a premium of more than 15% to the market price.

See our full analysis for DirecTV

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DirecTV to Offer TiVo DVRs Soon

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Tuesday, August 30th, 2011 by Trefis Team

DirecTV (NASDAQ:DTV) plans to bring digital video recorders (DVRs) built by TiVo soon to its customers, according to a Slash Gear report. TiVo is not only famous for its DVR technology but it’s also known for its patent case against Dish Network (NASDAQ:DISH) that was settled earlier this year. It also looks like this move will bring DirecTV’s DVR offering on par with Dish’s and could help grow this business, which we estimate could account for roughly 10% of DirecTV’s value.

If Not Hulu, What’s DirecTV’s Next Move?

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Wednesday, August 17th, 2011 by Trefis Team

DirecTV (NASDAQ:DTV) is reportedly looking at the possibility of acquiring Hulu though it has not yet decided whether it is in company’s interest to do so. This brings up an important issue of whether DirecTV can continue to thrive as is. Its competitor Dish Network (NASDAQ:DISH) has made several strategic acquisitions, and even though Dish is currently losing subscribers, its efforts regarding its long-term positioning are notable given the changing industry dynamics. Other players like Time Warner Cable (NYSE:TWC), Comcast (NASDAQ:CMCSA), AT&T (NYSE:T) and Verizon (NYSE:VZ) already have multiple businesses to hedge risk. So what is DirecTV’s next move?

DirecTV Sambas to $51 on Latin American Growth

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Wednesday, August 10th, 2011 by Trefis Team

In its recently reported Q2 earnings, DirecTV (NASDAQ:DTV) continued to demonstrate strong growth in Latin America that contributed to DirecTV adding around 300,000 net subscribers and hitting 30 million total subscribers. Latin America has tremendous growth potential for pay-TV services where penetration is much lower than in the U.S. and where many of DirectTV’s competitors do not have a pay-TV presence in the region. DirecTV’s competitors include telecom companies such as AT&T (NYSE:T) and Verizon (NYSE:VZ) as well as satellite player Dish Network (NASDAQ:DISH) and cable operators like Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC). While the outlook in Latin America remains robust, the risk of another U.S. slowdown could hamper DirecTV’s growth in the region.

Our price estimate for DirecTV stands at $51.50 implies a premium of about 20% to the market price.