DirecTV Estimates Raised on Lower Program Costs

Credit Suisse’s Bryan Kraft Monday raised his estimates on DirecTV (DTV), noting that the company at its investor day last Thursday indicated that programming costs per subscriber would rise only 5% this year, versus his previous estimate of 8.7%. To reflect that change, he upped his EBITDA estimate for the year to $5.25 million from $5.02 billion; free cash flow goes to $1.58 a share from $1.44; EPS increases to $1.41 from $1.29.

He also says that with the completion of the sale of News Corp.’s (NWS) stake in the company to Liberty Media (LCAPA), there is “the potential for a small premium tender offer or merger” between DirecTV and Liberty Entertainment, a new tracking stock to hold the Liberty stake in DirecTV that starts trading tomorrow.

DTV Monday is up 44 cents, or 1.8%, at $25.50.