News Feature
Why DIRECTV Doesn't Add Basic Cable HD
By Swanni

Washington, D.C. (July 29, 2011) -- As expected, DIRECTV this week added four premium movie channels in High-Definition. However, once again, the satcaster failed to add from a boatload of available basic HD channels such as National Geographic Wild, AMC, BBC America, E!, Turner Classic Movies and IFC HD.

Over the last two years, I have predicted that DIRECTV would add few, if any, basic cable channels in the coming years. But despite my many writings on the subject, I continue to receive e-mails from readers demanding to know why the satcaster is so reluctant to add some of their favorite channels in HD.

A popular refrain from readers: If they can add HBO and Cinemax in high-def, why can't they find room for AMC, which carries such popular series as Mad Men, Breaking Bad and The Killing?

So I thought it would be useful to reprint two of my stories over the last two years that explain why DIRECTV has decided to ignore the lineup of basic cable when adding HD. The first story, entitled, "DIRECTV's HD Plans Are Getting Clearer, was written January 10, 2010. The second story, entitled, "Why DIRECTV Won't Add AMC, BBC In HD, was published May 5, 2011:

So here's story one from January 10, 2010:

News Analysis
DIRECTV's HD Plans Are Getting Clearer
By Swanni

Washington, D.C. (January 10, 2010) -- Do you think that DIRECTV carries enough HD networks?

There's increasing evidence that the satcaster does -- and it doesn't plan to do anything about it.

How can I say that, considering that DIRECTV just launched a new satellite to expand its HD capacity? Well, let's look at the facts:

DIRECTV, which has proclaimed itself the HD leader, has actually added just a handful of high-def networks during the last 18 months. Consequently, the satcaster's HD lineup is missing a slew of popular new HD networks such as MSNBC, AMC, WGN America, E!, The Travel Channel, Turner Classic Movies, Epix, IFC and multiplex offerings from HBO, Starz, Cinemax and Showtime.

DIRECTV's satellite space is a bit tight now, but it could have added some of those channels if it really wanted to. After all, many of them can now be found in the lineups of the nation's top cable operators and Dish Network. (Dish now has more HD channels than DIRECTV, but no one would argue that it has more satellite space than DIRECTV.)

But What About That New Satellite?
DIRECTV, which now has more than 100 HD channels, last month launched that new satellite that promises the capacity to offer 200 HD channels.

That should give hope to DIRECTV's HD viewers that more HD networks are coming, right? Well, listen to a recent statement from DIRECTV CFO Patrick Doyle, as reported this week by Multichannel News:

“HD has been really good to us for the last few years,” Doyle said, according to the publication. “We think there is a little bit less in the tank there, but we also are continuously looking at how we can be different than our competitors.”

Multichannel News writes that Doyle "agreed that (DIRECTV's HD) offering may be reaching the saturation point."

So, you ask, why would DIRECTV launch a new 'HD satellite' if its HD offering is reaching the saturation point?

Well, the satcaster just revealed that it will add three new 3-D channels this June. While it's unclear how much bandwidth a 3-D channel will use compared to a regular HD channel, it seems likely that DIRECTV will have to devote considerable satellite space to the 3-D venture.

And DIRECTV has said that it plans to expand its PPV HD and HD On Demand lineups. Unlike HD networks, which DIRECTV has to pay to carry, the PPV movies generate revenue. The more HD PPV channels you offer, the more revenue you create.

Bottom Line
In past columns, I have questioned whether DIRECTV will offer 200 HD channels when the new satellite is operational in the second quarter of the year. I have also suggested that the satcaster will not add more than about 15 new HD networks this year.

But now I am wondering if DIRECTV will add even fewer than that, perhaps as few as five HD networks this year. With that approach, they can save money by paying the networks less in carriage fees. Instead, it can use the majority of the HD capacity on the new satellite for 3-D and PPV.

As a DIRECTV subscriber, I hope that's wrong. But, folks, it's not looking good.

And now story two from May 5, 2011

News Analysis
Why DIRECTV Won't Add AMC, BBC In HD
By Swanni

Washington, D.C. (May 5, 2011) -- DIRECTV yesterday angered many HD subscribers when it added Shorts HD to the satcaster's $4.99 a month 'HD Extra Pack' package. The obscure channel, which features short live action and animated movies, was hardly in great demand among HD owners.

 In fact, it's likely that few high-def viewers had even heard of Shorts HD before yesterday; several subscriber emails to TVPredictions.com referred to it as 'Sports HD.'

So, then, why did DIRECTV add the niche channel when it could have instead added more popular alternatives such as AMC HD, BBC America HD, E! Entertainment HD, Turner Classic Movies HD, National Geographic Wild HD and a host of other basic cable channels still only available in SD on DIRECTV.

The answer is simple: Money.


Will Mad Men ever be in HD on DIRECTV?
DIRECTV, which was once the industry's undisputed HD leader, has become quite stingy in adding new HD channels over the last two years. The satcaster has concluded that the cost to acquire the HD rights to the aforementioned basic cable channels would far exceed any benefit it might receive in subscriber gains or subscriber retention.

So long as subscribers don't drop the service over the lack of basic cable HD, DIRECTV really doesn't care if they are happy or unhappy. If they keep paying the bills, that's all DIRECTV cares about it.

And DIRECTV has a point. Recent financial reports have shown that DIRECTV's subscriber totals have risen while some rivals have reported that subscriber numbers have fallen. In order words, there's little evidence that a significant number of people are  dropping DIRECTV because it hasn't added AMC HD, BBC America HD, E! Entertainment HD, etc. etc.

But there is evidence that DIRECTV's premium programming packages -- the HD Extra Pack and its HBO and Cinemax subscriptions -- have lost subscribers, or at least, failed to gain many in the past year or so. Consequently, DIRECTV has decided to use its satellite space to add more premium HD channels, such as the Sony Movie Channel and Shorts HD in the Extra Pack, and more HBO and Cinemax HD channels in the coming weeks.

The company hopes that the additional premium HD channels will boost subscriptions to the premium programming packages which generate a greater profit for DIRECTV. Plus, as a bonus, the cost to acquire a channel like Shorts HD is much less than the cost to acquire, let's say, AMC HD.

So, bottom line: If you want more basic cable HD from DIRECTV, you need to threaten to drop the service. Or, better yet, you need to just drop it. That's the only message that DIRECTV will take seriously in this economic environment.

Until people start leaving over basic cable HD, DIRECTV has little vested interest in adding more basic cable HD channels.

Yes, it's that simple.

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