DirecTV’s Turn for Rate Hike
By Linda Moss -- Multichannel News, 1/18/2007 1:50:00 PM
Following in the footsteps of its direct-broadcast satellite rival, DirecTV is raising its rates this year and renaming its program packages, the nation’s largest satellite provider confirmed Thursday.
DirecTV, with more than 15 million subscribers, will raise its prices on average just under 4% this year, director of public relations Robert Mercer said. The rates and increases on its packages for new and current customers will be different.
In a report Thursday, Citigroup analyst Jason Bazinet wrote that DirecTV’s new price for its basic package, Total Choice, will be $49.99 per month, up $5 from the prior $44.99. That tier will be renamed Choice.
DirecTV’s Total Choice Plus offering, formerly $49.99, is now $5 more, at $54.99, and it is being renamed Choice Xtra, he wrote.
But Mercer said those rates and name changes will only apply to packages for new subscribers. DirecTV’s existing Total Choice subscribers will see their package only rise $3 per month, to $47.99, and existing Total Choice Plus customers will be paying $2 more, or $51.99.
Both new and old subscribers will see their Total Choice Premiere renamed Premiere.
News of DirecTV’s rate hike follows EchoStar Communications’ announcement late last year that its Dish Network will raise rates an average of 3%-4% this year and rebrand its program packages.
“DirecTV’s pricing action is larger than EchoStar’s in both absolute and percentage terms, and it is more heavily focused on the highly subscribed, lower-service tiers,” Sanford C. Bernstein analyst Craig Moffett wrote in a report Thursday.
“While EchoStar is holding the line at the low end -- and, thereby, emphasizing its value advantage to price-sensitive consumers -- DirecTV is aggressively raising prices at the low end and keeping high-end rates flat, emphasizing their positioning as the premium provider of video, in our view,” Moffett wrote. “The move, which is consistent with their 2007 emphasis on HDTV, can be expected to further differentiate the two services at their respective ‘high-end/low-end’ poles.”
The price increases for new DirecTV subscribers kick in Feb. 6, and for current customers, the increases are effective March 1, according to Mercer.
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