DirecTV Profit Falls On Price Cuts

Promotional price cuts designed to lure new satellite-television customers led to a 46% drop in DirecTV's(DTV Quote) first-quarter profits.

The company said it earned $201 million, or 20 cents a share in the quarter, well below analysts' EPS estimates of 33 cents. A year ago, DirecTV's earnings were $371 million, or 32 cents a share.

The company also blamed its decline in operating profit on having to service the interest on higher debt balances.

Revenue rose 7% to $4.9 billion in the first quarter, just below analysts' top-line targets of about $4.96 billion.

In a bright spot, new subscriptions climbed 67% compared with the year-earlier period, the company said -- the stiffest pace in four years. "We're also pleased that the overall credit quality of these new subscribers remains at our high standards," the company's chief executive, Chase Carey, added in a statement.

On Monday, DirecTV, the nation's biggest satellite television provider, announced plans to join with Liberty Entertainment(LMDIA Quote), the cable programming business majority owned by Liberty Media(LINTA Quote), as it spins off into an independent company.

In morning trading Thursday, shares of DirecTV were changing hands at $23.93, down 40 cents. Liberty Media stock, meanwhile, had fallen 6%, and Liberty Entertainment had declined 1.5%.