DIRECTV added 1.1 million (gross) and 263,000 (net) subscribers in Q3, demonstrating continued consumer demand for its satellite TV service. The subscriber additions were slightly lower than the same period a year ago primarily due to more stringent credit policies implemented during Q2 2005. Average monthly churn in the quarter increased to 1.89% principally due to higher involuntary churn from customers with lower credit scores attained in 2004 and early 2005, and a more competitive marketplace. After accounting for this churn, DIRECTV U.S. added 263,000 net subscribers in the quarter. Over the past twelve months, the cumulative number of DIRECTV subscribers increased 11% to 14.93 million.
In the third quarter of 2005, The DIRECTV Group’s revenues of $3.23 billion increased 13% compared to the third quarter of 2004 primarily due to strong DIRECTV U.S. subscriber growth, higher average monthly revenue per subscriber (ARPU), and the consolidation of the full economics of the former National Rural Telecommunications Cooperative (NRTC) and Pegasus Satellite Television (Pegasus) subscribers acquired in the third quarter of 2004. These changes were partially offset by the absence of revenues at Hughes Network Systems (HNS) due to the sale of several HNS business units in 2004 and the sale of a 50% interest in the remaining HNS business in 2005.
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