Can DirecTV Keep Adding U.S. Subscribers?



's recently released Q1 2011 earnings showed such continued strength in subscriber additions that we have raised our price estimate for the company to $50.16. We take a quick look below at whether the U.S. subscriber addition momentum will continue. DirecTV competes with such other pay-TV service providers as Dish Network, Comcast , Time Warner Cable, AT&T and Verizon.

Subscriber Additions Solid in Q1 of 2011

DirecTV added 184,000 net subscribers in the U.S. in Q1 2011, showing an increase of 84% over its Q1 2010 figures and making it the third consecutive quarter of year-on-year improvement in that area.DirecTV's subscriber growth is substantially higher than Dish Network's, which had net subscriber additions of about 58,000. Time Warner Cable, meanwhile, had video subscriber losses of 65,000.

Interestingly, DirecTV's growth is not far behind AT&T's U-Verse subscriber additions of 218,000 in Q1 of 2011.

Competitive Forces Will Weigh in Future

We believe nevertheless that subscriber additions will not continue at this rate. While Dish has not aggressively pursued new subscribers, competition from AT&T and Verizon remains intense, and cable operators also are starting to improve.

We recently discussed discussed Time Warner Cable's efforts to stem video subscriber losses. DirecTV has acknowledged the resulting competitive risks of such initiatives. "We are seeing more aggressive cash-back offers, triple-play bundle promotions without contractual commitments, and lower entry-price points," the company noted.

Our $50.16 price estimate for DirecTV stock implies a slight premium to the market price.

See our complete analysis for DirecTV here.

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