DirecTV Disappoints

The fourth-quarter subscription growth number was also down sequentially from the third-quarter number for net additions. (DirecTV reported 484,000 net owned-and-operated subscriber additions in the third quarter, or 456,000 if one includes subscriber losses in territories then covered by distribution arrangements with the National Rural Telecommunications Cooperative.)

The sequential decline is a "rare occurrence," writes Watts, noting that the fourth quarter is usually the best quarter of the year for DirecTV. The number, he writes, "suggest(s) DTV may be facing stiffer competition from cable." (SG Cowen doesn't publish ratings or price targets.)

Looking ahead, Carey forecast 2005 net subscriber additions to be in the range of 1.25 million to 1.5 million, down from 1.7 million last year. 2006 additions will perhaps be lower than 2005's, Carey said, but would be above 1 million.

Subscriber acquisition cost, said Carey, will probably be "a touch higher" in 2004 than in 2004.

Targeting the same opportunity as companies such as SBC (SBC Quote) and Comcast (CMCSA Quote), executives on the call discussed DirecTV's aspirations to roll out a new satellite receiver that would be the centerpiece a home entertainment network, eventually integrating both wireless transmission capabilities and broadband data networking.

A flexible, next-generation box, Carey suggested, will be a vehicle for lowering operating expenses.