DirecTV Raps In Demand on Fees

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DirecTV Inc. last week filed a program-access complaint with the Federal Communications Commission against In Demand, accusing the content purveyor of charging the satellite provider more for its high-definition channels than it does cable operators.

The complaint claimed that In Demand — owned by Time Warner Inc., Comcast Corp. and Cox Communications Inc. — is forcing the satellite company to pay a fee for all 14.5 million of its digital subscribers as part of the rate card for INHD and INHD2.

SUB DISPARITY

The company offers the same deal to cable operators, but because less than one-half of most cable systems' subscribers are digital, DirecTV said it pays three or four times what MSOs pay for the exact same service. DirecTV does not carry the services.

DirecTV is asking the FCC to require In Demand to offer INHD at per-HD-subscriber rates, terms and conditions comparable to those it offers to cable operators.

According to the complaint, under current rates, DirecTV would have to pay In Demand 11 cents for each of its 14.45 million subscribers, or $1.59 million per month. The DBS carrier added that this means its monthly fee for subscribers who are HD subscribers would be $3.

Conversely, DirecTV's complaint placed Comcast's In Demand monthly fee at $973,500, based upon 11 cents for each of 8.85 million digital subscribers. The nation's largest MSO, according to the complaint, pays In Demand 67 cents for each of its HD subscribers.

As for Time Warner Cable, DirecTV's document pegged its monthly fee to In Demand for the HD services at $539,000, calculated on an 11-cent basis for 4.9 million digital subscribers. The complaint put Time Warner Cable's per-HD-subscriber monthly fee at 94 cents.

As such, DirecTV's complaint claimed that In Demand's rate card for INHD and INHD2 would cost it least three times and as much as 4.5 times the per-HD-subscriber fee paid by Comcast and Time Warner.

Other HD services, such as ESPN HD and Home Box Office HD, charge only for those subscribers who receive the service, and not for potential subscribers, according to the complaint.

“It is a deliberate strategy by In Demand to favor its cable owners over its satellite competitors and achieve its goal of keeping INHD only on cable, as its advertising tagline suggests,” DirecTV executive vice president of business and legal affairs Dan Fawcett said in a prepared statement.

He added that if left unchecked, In Demand's pricing structure could become a model for “every cable-affiliated high-definition programmer seeking to deny DBS operators like DirecTV access to valuable high-definition content.”

'DISCUSSIONS' HELD

An In Demand spokesman would only say that the company “has had numerous discussions with DirecTV about carriage of our high-definition networks, INHD and INHD2, and we believe the allegations in the company's complaint are completely without merit.”

He continued: “We have always been, and remain, willing to negotiate carriage with any distributor. Our pricing policies are in full compliance with FCC rules and regulations, and we're confident that the FCC will find in our favor.”

The complaint does not cover In Demand's NASCAR In Car multi-camera pay-per-view package, which is currently only distributed via cable operators. DirecTV talked with In Demand about carrying the package but ultimately decided not to offer it.

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