DirecTV Group has outlined a five-year plan to more than double its revenue and subscribers in Latin America to 16 million. As we recently reported, U.S and Spain based companies are placing substantial bets on the Latin American Media and Advertising Markets. DirecTV belongs to the most ambitious of this group. DirecTV's plan, outlined during it's Latin American Investor Day last week, includes doubling revenue in the region to more than $10 billion by 2017. Operating profit before depreciation and amortization is also expected to increase to USD 3 billion, from around USD 1.7 billion at present. "I think it's pretty clear that Latin America will be a disproportionate share of our revenue and profit growth for years to come. And in 2012 alone, I think you can fairly safely assume it's going to be north of — well north of 40% of both our revenue and profit growth", Mike White, Chairman and CEO of DirecTV said during the Latin America investor day.
The company owns 100 percent of DirecTV Pan Americana, an operation with 4.1 million subscribers covering the West Coast of South America and including such countries as Columbia, Argentina, Venezuela, Chile and Ecuador. It’s a 93 percent stakeholder in SKY Brasil, which touts 3.8 million subscribers. And it owns 41 percent of SKY Mexico, which has another 4 million subscribers.
The region is becoming the pay-tv provider's main source of growth as its US markets attract fewer new customers. In Latin America, the company added 590,000 subscribers in the last quarter, which beat analysts' forecasts of 528,0000, according to StreetAccount data. The company said demand in Brazil was strong, as well as in Argentina and Venezuela.
According to Bruce Churchill, president of DirecTV's Latin American operations, the operator added more than 550,000 subscribers in the region in the first quarter of 2012. Latin American revenue grew nearly 100% from its $2.9 billion in 2009. In 2011, Directv reached $5.1 billion Latin American revenues.
DirecTV's expansion in Latin America is being driven by strong economic growth in countries including Brazil and Colombia, where the prohibitive expense of laying rural cable pipe often makes satellite service more attractive than cable.
DirecTV also benefits from lower programming costs and the absence of so-called retransmission fees to local broadcasters in the region — two expenses that hurt the profit margins of TV distributors in the U.S. Only 38% of households in countries like Argentina, Colombia and Chile and 22% of Brazilian households had pay-TV access at the end of 2011, compared to the vast majority of U.S. households, according to DirecTV.