DirecTV to Uncouple Premium Tiers

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In an effort to remain competitive and reduce potential retail consumer confusion, DirecTV Inc. said it would update its programming packages, effective Feb. 1.

The direct-broadcast satellite company intends to share details of the plan on Tuesday, Jan. 8, at a press conference during the Consumer Electronics Show in Las Vegas.

Dubbed "Project Simple," the new strategy shifts premium sports and movie channels away from bundles that include basic-cable networks and into tiers of one to five pay services.

Any of the premium services — Home Box Office, Showtime, Starz, Encore, Cinemax or a sports package — can be purchased individually for $12 a month. Adding a second premium service brings the package to $22 a month and further discounts are taken off each additional premium service.

Consumer research showed that premium tiers were deemed simpler and afforded subscribers more flexibility, said DirecTV executive vice president of marketing and advertising Larry Chapman.

In some ways, the old premium and basic programming bundles could be seen as a throwback to DirecTV's early days, when Digital Satellite System hardware customers needed to subscribe to U.S. Satellite Broadcasting for access to most premium services, such as HBO, Cinemax and Showtime. At that time, DirecTV bundled Starz Encore Group LLC's thematic channels into a movie package. The regional sports channels plus a few others, such as Speedvision and The Golf Channel, were included in a sports package.

The new lineup gives DirecTV a "Switzerland approach" to premium services that permits consumers to decide which services best suit them, Chapman said.

DirecTV's core programming package, DirecTV Total Choice, remains unchanged.

A new package, Total Choice Plus, adds digital-cable channels now found in DirecTV's Family Pack, plus Discovery Wings, Discovery Home & Leisure and several new music channels. Current Family Pack subscribers will be automatically upgraded to the new package if its price is less than what they currently pay.

Those who would save through an old Family Pack subscription will be grandfathered.

For $39.99, subscribers in 41 markets can choose Total Choice Plus with Locals, which bundles in a beefed-up package of local broadcast stations for $2 less than the cost buying the two packages separately. Chapman called the package and price a "cable killer."

DirecTV plans to market the local broadcast package aggressively on a market-by-market basis in areas where the DBS provider offers local channels.

And while its primary competitor is cable, DirecTV won't shy away from pointing out its advantages versus DBS rival EchoStar Communications Corp., Chapman noted. That's despite EchoStar's announced plans to merge with DirecTV parent Hughes Electronics Corp.

In most markets, DirecTV subscribers require less cumbersome satellite dishes to pull in all the local channels offered than EchoStar's Dish Network customers do.

DirecTV will also rename its all-inclusive DirecTV Total Choice Platinum package "Total Choice Premiere." It will retail for $85.99 with local channels and $81.99 in markets where DirecTV doesn't deliver local channels.

The company will detail the packaging changes on its revamped Web site (www.directv.com). Customers can also upgrade to the new packages online.

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