The DirecTV Group Inc. reported a net loss for 2004 of $1.9 billion, an increase compared to the net loss of $362 million in 2003, despite a record year in terms of gross subscriber additions to its direct-to-home satellite television service to 4.2 million, as well as net additions for the year of more than 1.7 million. The company also reported an increase in revenues from $9.37 billion in 2003 to $11.36 billion in 2004.

The company attributed the increase in net loss to losses associated with the expected sale of Hughes Network Systems and the ongoing shutdown of DirecTV Latin America‘s operations, as well as an after-tax loss of $724 million related to the sale of PanAmSat Corp. and a $311 million non-cash after-tax charge related to a change in accounting for subscriber acquisition, upgrade and retention costs at DirecTV U.S. The losses were offset by a higher income tax benefit primarily associated with the Spaceway impairment charge, a pre-tax gain of $387 million related to the sale of about 19 million shares in XM Satellite Radio and a $91 million after-tax gain associated with the Hughes Software Systems sale.

“Even with this strong growth, we recognize that we need to improve our operational performance and margins,” DirecTV President and CEO Chase Carey said in a prepared statement. “Throughout last year, we took steps to strengthen DirecTV and focus on our core direct-to-home television business. With these accomplishments, we have a solid foundation for future growth and success.”

Vijay Jayant, analyst with Lehman Brothers, said in a Jan. 27 equity research report that the compnay’s U.S. fourth quarter 2004 results were weak, pointing specifically to fourth quarter results indicating a higher than expected churn (1.6 percent compared to Lehman’s predicted 1.52 percent) and lower net subscriber additions (444,000 in the fourth quarter compared to a projected 500,000).

“The explosive gross subscriber additions over the last one year with lax credit controls is coming back to the haunt the story with higher than expected churn,” Jayant said in the report. “While the company had described bringing new discipline to subscriber growth, it likely will take a few more quarters before churn can be reduced to more normalized levels.”