• by Wayne Friedman , February 9, 2006

Looking to become more competitive with cable operators, satellite TV distributor DirecTV Group Inc. said it was in discussions with rival EchoStar Communications Corp. to create a U.S. wireless high-speed network.

Separately, DirecTV said its financial results showed a positive step for its fourth quarter 2005--registering a profit of $121.2 million versus a loss of $288.5 million in the fourth quarter 2004. DirecTV also announced a $3 billion share buyback plan. Revenue rose 7 percent to $3.6 billion, from $3.36 billion.

DirecTV made other changes yesterday--shifting its $200 million annual media buying account to Deutsch from OMD.

Satellite TV operators have not kept pace with rival cable operators who sell, in addition to video products, Internet and telephone services. A national broadband network would place satellite operators in a better competitive position against cable operators and telephone companies.

DirecTV CEO Chase Carey reportedly said the company, controlled by Rupert Murdoch's News Corp., was also in discussions with other companies for a wireless network. DirecTV plans to make a decision by the end of this year, he said. DirecTV shares rose 40 cents, or 3 percent, to $13.97. EchoStar shares were 44 cents, or 1.6 percent higher, rising to $27.81.

Earlier this year, Murdoch told investors that DirecTV was expected to spend about $1 billion to invest in wireless Internet access. Although DirecTV added 200,000 subscribers during the quarter, analysts had expected the company to grow a bit more quickly. The good news came for DirecTV's low churn rate--the pace at which DirecTV loses and retains subscribers. DirecTV said churn declined to 1.7 percent in the fourth quarter, from 1.9 percent.