• by Wayne Friedman , August 9, 2006

Sometimes, less is more. DirecTV subscriber growth has slowed in the second quarter. At the same time, the satellite operator has almost tripled its net income--mostly because of an accounting change.

DirecTV's revenue rose to $3.52 billion from $3.19 billion a year ago--a 12 percent gain--due to new subscriber growth. DirecTV also reported a net profit of $459 million compared with $162 million a year earlier. The company saw subscriber gains of just 125,000 new customers in the second quarter--almost half that of the 225,000 it added during the same period a year ago. DirecTV now has 15.5 million subscribers.

But average revenue per user in the U.S. was up 5.9 percent to $71.59 from a year earlier. There's more good news in this arena. DirecTV's churn--those subscribers who drop the service--is just 1.59 percent per month, which is lower than the 1.69 percent during the previous period in 2005.

Yet most of DirecTV's big net income growth came from an accounting change of its set-top boxes. It had expensed the full cost of those boxes immediately. Now, it will be depreciating boxes over three years.

The financial results sent its stock price down 15 cents, or 0.9 percent, at $17.16 in early trading on the New York Stock Exchange.

DirecTV has been the subject of renewed merger speculation from smaller satellite operator rival EchoStar Communications Corp. Shares in DirecTV have grown by more than 4 percent since mid-July, while shares in EchoStar have risen by nearly 9 percent in the same period.