Washington, D.C. (November 7, 2008) --
DIRECTV said yesterday that its third quarter subscriber growth fell 35 percent compared to a year ago.
In releasing its third quarter financial results, the satcaster said it added 156,000 subscribers compared to 240,000 in last year's third quarter. DIRECTV CEO Chase Carey blamed the drop-off in the discontinuation of a marketing partnership with telco AT&T. (See Swanni's commentary below.)
AT&T last year only began offering Dish Network in areas in which it does not provide its own U-Verse TV service. Previously, it offered either satellite TV service in service bundles. However, AT&T recently decided to switch back to DIRECTV as its sole third-party provider starting early next year.
"Quite simply, it’s taken us longer than we expected to mitigate the end of our AT&T bundling relationship in that area," DIRECTV CEO Chase Carey said during a conference call yesterday with Wall Street analysts. "Excluding the (AT&T) region, our net-sub growth was actually up a touch year on year."
In other issues, DIRECTV said eight million of its 17 million subscribers now get either High-Definition and/or DVR service. The company claimed it added nearly twice as many HD and DVR subscribers in the third quarter than Comcast did.
Comcast said last month that 7.3 million of its customers subscribed to High-Definition and/or Digital Video Recording packages at the end of the third quarter. (Unlike some cable and satellite providers, Comcast and DIRECTV does not break down how many subscribers have High-Definition TV and how many have Digital Video Recorders. They include both in the same category.)
Patrick Doyle, DIRECTV's executive vice president for finance, said HD/DVR subscribers pay an average of $100 per month in fees.
DIRECTV CEO Chase Carey acknowledged that satellite rival Dish Network and some cable operators have improved their high-def lineups. However, he maintained that DIRECTV, which says it now offers more than 130 HD channels, is still the high-def leader.
"I'd say the cable guys and DISH have (beefed) up their HD," Carey said. "Although I think sometimes what they market and say they are doing is way ahead of what they are really doing. But in terms of impact on us, we feel great about our position in HD. I think one of the great things about establishing a position of leadership that really associates your brand with that leadership position is that those are strengths you can drive for a while, particularly if you keep finding ways to energize that position. I've said before and continue to believe, I think our position in HD leadership is one that can benefit us not for months or quarters but for years."
Carey also acknowledged that the U.S. economic slump will be a challenge in the months ahead.
"We are in a tough economy, and a competitive environment, and that is putting more pressure in a few areas like churn out and retention spending," Carey said. "Overall, I would say the impact is marginal. The strength of our business is really continuing to enable us to reach our key targets."
Commentary:
I don't doubt that DIRECTV's temporary break-up with AT&T contributed to the third quarter subscriber loss. But there is a bigger reason for why DIRECTV lost subscribers in this year's third quarter:
HDTV.
In last year's third quarter, DIRECTV ran a multi-million dollar marketing blitz alerting Americans that it was adding dozens of new High-Definition channels -- more than any other TV provider. Consequently, thousands of new people -- excited high-def owners -- signed up for the satellite service.
However, DIRECTV's national HD expansion has slowed to a crawl this year with the satcaster adding just a handful of new high-def channels in recent months. Consequently, DIRECTV's HD buzz has worn off, which led to fewer new subscribers signing up during this year's third quarter (and likely during this year's fourth quarter.)
When DIRECTV starts adding national high-def channels again, it will see the company's subscription numbers going up again, too.
Comment on this article!
In releasing its third quarter financial results, the satcaster said it added 156,000 subscribers compared to 240,000 in last year's third quarter. DIRECTV CEO Chase Carey blamed the drop-off in the discontinuation of a marketing partnership with telco AT&T. (See Swanni's commentary below.)
AT&T last year only began offering Dish Network in areas in which it does not provide its own U-Verse TV service. Previously, it offered either satellite TV service in service bundles. However, AT&T recently decided to switch back to DIRECTV as its sole third-party provider starting early next year.
"Quite simply, it’s taken us longer than we expected to mitigate the end of our AT&T bundling relationship in that area," DIRECTV CEO Chase Carey said during a conference call yesterday with Wall Street analysts. "Excluding the (AT&T) region, our net-sub growth was actually up a touch year on year."
In other issues, DIRECTV said eight million of its 17 million subscribers now get either High-Definition and/or DVR service. The company claimed it added nearly twice as many HD and DVR subscribers in the third quarter than Comcast did.
Comcast said last month that 7.3 million of its customers subscribed to High-Definition and/or Digital Video Recording packages at the end of the third quarter. (Unlike some cable and satellite providers, Comcast and DIRECTV does not break down how many subscribers have High-Definition TV and how many have Digital Video Recorders. They include both in the same category.)
Patrick Doyle, DIRECTV's executive vice president for finance, said HD/DVR subscribers pay an average of $100 per month in fees.
DIRECTV CEO Chase Carey acknowledged that satellite rival Dish Network and some cable operators have improved their high-def lineups. However, he maintained that DIRECTV, which says it now offers more than 130 HD channels, is still the high-def leader.
"I'd say the cable guys and DISH have (beefed) up their HD," Carey said. "Although I think sometimes what they market and say they are doing is way ahead of what they are really doing. But in terms of impact on us, we feel great about our position in HD. I think one of the great things about establishing a position of leadership that really associates your brand with that leadership position is that those are strengths you can drive for a while, particularly if you keep finding ways to energize that position. I've said before and continue to believe, I think our position in HD leadership is one that can benefit us not for months or quarters but for years."
Carey also acknowledged that the U.S. economic slump will be a challenge in the months ahead.
"We are in a tough economy, and a competitive environment, and that is putting more pressure in a few areas like churn out and retention spending," Carey said. "Overall, I would say the impact is marginal. The strength of our business is really continuing to enable us to reach our key targets."
Commentary:
I don't doubt that DIRECTV's temporary break-up with AT&T contributed to the third quarter subscriber loss. But there is a bigger reason for why DIRECTV lost subscribers in this year's third quarter:
HDTV.
In last year's third quarter, DIRECTV ran a multi-million dollar marketing blitz alerting Americans that it was adding dozens of new High-Definition channels -- more than any other TV provider. Consequently, thousands of new people -- excited high-def owners -- signed up for the satellite service.
However, DIRECTV's national HD expansion has slowed to a crawl this year with the satcaster adding just a handful of new high-def channels in recent months. Consequently, DIRECTV's HD buzz has worn off, which led to fewer new subscribers signing up during this year's third quarter (and likely during this year's fourth quarter.)
When DIRECTV starts adding national high-def channels again, it will see the company's subscription numbers going up again, too.
Comment on this article!
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