News
DIRECTV: You Will Pay More For Sports
By Swanni
Washington, D.C. (February 15,
2013) --
DIRECTV said yesterday that this spring it will extend its monthly
sports surcharge to current customers in markets which have
multiple regional sports channels.
DIRECTV last September
added a $3 monthly sports fee to the bills of new customers in
roughly 20 percent of U.S. markets. The fee was imposed in
markets where there is more than one regional sports channel,
such as Denver, Chicago, New York and Los Angeles,
The satcaster added the fee to four packages including its
Choice and Choice Plus plans. If a new subscriber doesn't want
to pay the $3 fee, he or she would have to subscribe to a less
expensive programming package that doesn't include regional
sports networks.
And yesterday, company CEO Mike White said the fee will be
extended to current customers in those multiple RSN channel
markets as well. He said the surcharge is necessary to offset
the rising costs of acquiring sports programming.
"I believe the whole sports business model is broken and that
the only alternative that we have if we're going to carry
sports channels in these few markets that are completely out of
control and unaffordable for the average consumer is with some
kind of a surcharge," White told Wall Street analysts in a
conference call following the company's release of its 2012
fourth quarter financial report.
Verizon has followed DIRECTV's lead, adding a $2.42 surcharge
for sports in select markets with all markets getting it by
April.
White added: "(The surcharge) doesn't come close to covering the
total cost to sports in those geographies."
White elaborated on the company's new strategy in carrying
sports channels, noting that it has not agreed to carry certain
ones such as the Pac 12 Network and CSN Houston "unless we're
allowed to carry it a la carte so that the average consumer can
pay and choose on their own."
At one time, DIRECTV was considered the industry's sport leader,
ready and willing to carry almost any new sports channel that
was available. But the rising costs of carrying sports channels
has forced the company to rethink its plans.
"It's
a judgment we make for each
individual negotiation on a sports league is how many of our
subs are watching on a regular basis? And how much are they
willing to pay? And then you make a judgment based on projected
churn, other sports networks as to whether we'll carry it or not,"
White said.
In other DIRECTV news yesterday, the company said:
* It plans to expand its DIRECTV Everywhere program in 2013 and
"continue to improve our user interface across all devices, with
a special emphasis on search, discovery and social networking."
(Learn more about 'TV Everywhere'
here.)
*
Pay-Per-View purchases through
DIRECTV Cinema rose 25 percent in 2012, compared to 2011. The
company said it was the second straight year in which buy rates
for DIRECTV Cinema, the satcaster's Broadband-enabled Video on
Demand service, rose 20 percent.
* White said his company has a "heritage" of offering the best
sound and picture, but said 4K TV is "probably a couple of years
out." (4K, or Ultra HD, purports to offer a resolution four
times greater than current 1080p sets. However, set prices are
not expected to reach an affordable level for some time.)
"Keep in mind, you've got a massive legacy infrastructure in the
U.S. so it (4K) is going to take awhile," White added.
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