DirecTV to Raise Rates an Average 4%
By Linda Moss -- Multichannel News, 1/29/2006 7:00:00 PM
Like its rival direct-broadcast satellite provider, DirecTV Inc. is raising its prices this year, rolling out an average 4% rate increase, effective March 1.
DirecTV, the nation’s largest DBS provider, has notified retailers of the increase, which will be as much as 8.7% for its lowest-priced tier, according to a report last week from Sanford C. Bernstein & Co. analyst Craig Moffett.
The other big satellite player, EchoStar Communications Corp., has already said it is raising rates an average of 4% this year.
“Escalating programming fees continue to be the primary culprit for price increases,” DirecTV spokesman Robert Mercer said. “These fees have significantly outpaced the average increase of a DirecTV customer’s bill, which will be slightly greater than 4%.”
Moffett found it surprising that “prices under DirecTV’s plan will increase more for new subscribers than they will for existing ones.” That strategy “appears to be a clear indication that, at this point, churn management is a higher priority than is new-subscriber growth.”
For new subscribers, DirecTV’s introductory “Total Choice” package will rise $3 per month, or 7.1%, to $44.99 from $41.99, according to Moffett.
The “Total Choice Plus” package will rise by $4, or 8.7%, to $49.99 from $45.99 for newcomers.
But the satellite service’s existing customers will face only a $3 price increase across all packages, or an average increase of 4.5%, Moffett said.
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