DirecTV Sets Rate Hikes for 2014, Raising Risk of Cord-Cutting in New Year

No. 1 satcaster to increase programming fees an average of 3.7% effective Feb. 6, 2014

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Daniel Hertzberg for Variety

DirecTV, which has raised rates every year for the past decade, disclosed that it will increase pricing an average of 3.7% in February — and the latest hikes could be the last straw that pushes some satellite TV customers to cancel service.

The satcaster defended the hikes by claiming programming fees it pays to TV networks will rise at an even faster pace next year.  Other pay-TV providers also continue to blame rapidly rising fees from broadcast nets, local stations and cablers for higher monthly bills, including Dish Network, which said it will increase pricing for most subs by $5 in February 2014.

DirecTV said the 2014 rate hikes, which go into effect Feb. 6, are among the lowest in the pay-TV biz. “In 2014, the programming fees we pay to the owners of these television channels will increase about 8%, but DirecTV is adjusting the average prices our customers pay by less than half of that amount,” the company said in an emailed statement.

SEE ALSO: DirecTV CEO: We’ll Have to Raise TV Prices Again in 2014

So-called cord-cutting — the phenomenon of consumers abandoning traditional cable and satellite TV — was a small but tangible trend in 2013. DirecTV lost 84,000 U.S. subscribers in the second quarter of 2013, only its second-ever quarterly decline. The operator rebounded in Q3 with a net gain of 139,000 (thanks in part to the monthlong CBS and Showtime blackout on Time Warner Cable).

The new pricing for DirecTV programming packages is as follows: The Entertainment tier will increase from $54.99 to $56.99 for existing customers and will be $57.99 for new customers; Choice will increase from $64.99 to $66.99; Xtra will increase from $70.99 to $73.99; Ultimate will increase from $77.99 to $81.99; and Premier will increase from $124.99 to $129.99.

SEE ALSO: Pay-TV Prices Are at the Breaking Point — And They’re Only Going to Get Worse

DirecTV, the second-biggest pay-TV provider after Comcast, had 20.16 million U.S. subscribers as of the end of September.