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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.

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'

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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