HUGHES HAS A PLAN B
HIGHLIGHT:
Prez sez DirecTV wil survive if merger fails
BODY:
NEW YORK — Hughes Electronics prexy and chief exec Jack A. Shaw took pains Tuesday to reassure investors that the company isn’t pinning all its hopes on a merger with satcasting rival EchoStar.
“If the deal doesn’t clear, we’re convinced that Hughes will be a very strong company on its own, with many strategic options,” he said in a conference call announcing the company’s 2001 earnings. “Our businesses will thrive under any scenario.”
Still, the exec reiterated his commitment to the proposed $ 30 billion Hughes-EchoStar deal, currently under close scrutiny at the Dept. of Justice and the FCC. Shaw said the regulatory process was going as the companies expected, despite “many people making self-serving comments against the merger.”
Several western lawmakers have voiced their opposition to the deal, citing concerns over rural customers that have no alternative to satellite. EchoStar topper Charlie Ergen, meanwhile, has accused Disney of tying its support of the pact to rate increases for the conglom’s ABC Family channel (a charge Disney has denied).
Shaw pointed out that several other groups have come out in support, among them the National Farm Bureau and conservative think tank Citizens for a Sound
Economy.
Hughes, which owns the DirecTV satellite service, slipped into the red for the fourth quarter and full year of 2001, but posted double-digit revenue gains, as the satcaster pulled out all the stops to increase its subscriber base.
The company also said it took a $ 29 million charge in the fourth quarter relating to the devaluation of Argentina’s peso, which eroded the dollar value of Hughes’ revenues in that country.
General Motors-owned Hughes on Tuesday reported a net loss of $ 622 million, compared with income of $ 813 million in 2000, but the latter number included a $ 1.1 billion one-time gain from the sale of the company’s satellite-manufacturing unit.
Revenues for the No. 1 U.S. satcaster were up more than 13% to $ 8.3 billion following a yearlong effort to bump up the DirecTV subscriber rolls. Hughes ended the year with roughly 10.7 million subs, having netted 400,000 new customers in the fourth quarter alone.
Because of the discrepancy between the top and bottom lines, Hughes’ Shaw said the company would go “back to basics” in 2002, focusing on trimming both expenses and the churn rate among existing satellite customers.
The company stuck to its earlier financial guidance for the coming year, expecting revenues of $ 9 billion-$ 9.2 billion and cash flow of $ 750 million-$ 850 million. Hughes said it expected cash flow for the DirecTV operation alone to more than double to $ 525 million-$ 575 million. The projections don’t account for more potential problems with Argentina’s ailing financial markets.
Hughes stock closed up Tuesday 10 to $ 16.90.
