×

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

Satcaster cites programming costs rising in high single digits for expected rate hikes

Get ready to spend more for DirecTV service: The biggest satcaster in the U.S. will be forced to hike prices again next year as programming costs continue to climb, according to president and CEO Michael White.

White, speaking at Goldman Sachs’ Communacopia conference Wednesday in New York, said DirecTV will “be careful” about how high the increases will be for TV packages.

DirecTV raised pricing this past February, which increased customer bills an average of 4.5%. White said 2014 rate hikes will not be as much but “while it might be not as much, it is still going to be meaningful.”

SEE ALSO: Cord-Cutting to Blame? DirecTV Loses 84,000 Subscribers

White blamed the ongoing rise in TV programming costs, which DirecTV projects will increase in the “high single digits” this year. Retransmission-consent costs are a particular pain point, he said: DirecTV’s payments to TV broadcasters have increased 50% this year and 600% since 2010.

“I would say clearly I’ve seen an impact from consumers on churn in terms of their feelings about the bill,” he said.

In the most recent quarter, DirecTV’s total monthly churn was 1.53%, unchanged from the second quarter of 2012. But the company lost a net 84,000 subscribers in the quarter ended June 30, only the second time in DirecTV’s history that its subscriber base shrank.

DirecTV is “two-thirds of the way across the river in terms of a reset on content costs” with big media companies, but several deals have yet to be worked out this year.

Sports continues to be another major driver of overall TV cost increases. White commented on DirecTV’s standoff with Pac-12 Networks, saying the collegiate conference would not allow the satcaster to carry channels only in certain markets.

“I can’t tax all my customers for something that 98% or 99% of them are not going to watch. There’s a point at which you have to stand up for the 99% who are already angry about their bills,” he said about the Pac-12.

“What I can’t live with is content costs that go up 50% forever,” White continued. “Median consumer income is not growing, folks. That’s what the challenge comes back to.”

As for DirecTV’s $4 billion deal with the NFL for the Sunday Ticket package, White said he is hopeful the satcaster can renew the pact when it comes due next year.

“It’s one of the few exclusive properties left in the media space,” he said. I’m still optimistic we will still be able to do that. But it’s too soon to speculate.” Sunday Ticket is a loss leader, he said, that has helped DirecTV increase gross subscriber adds in the third quarter.

The NFL has said it is approaching other parties about the Sunday Ticket rights; those include Google, which reportedly met with league officials about a possible distribution deal.

SEE ALSO: Cord-Cutting No Longer an ‘Urban Myth’: Pay TV Operators Drop 316,000 Subs in Past Year

Meanwhile, after DirecTV’s failed bid for Hulu, the satcaster is looking at some “targeted ideas” for launching an over-the-top video service, White said, reiterating comments he made last month. It won’t be a broad subscription VOD service like Netflix or Hulu Plus, however.

Commenting on a potential merger of DirecTV and Dish, White said U.S. regulators would be likely to reject such a tie-up. A consolidation of the two satcasters would provide billions in cost savings, and would give a combined company much more leverage in negotiating programming deals.

“There’s no question for all businesses in every industry that it is a much more challenging regulatory environment than it would have been five or 10 years ago,” he said.

Popular on Variety

More Biz

  • Mass Appeal and Universal Launch Hip-Hop

    Nas, Mass Appeal and Universal Music Launch Hip-Hop Label in India, Sign Divine

    Mass Appeal and Universal Music Group today announced the launch of Mass Appeal India – a new label dedicated to amplifying India’s burgeoning hip-hop culture on a global scale. The new label’s operations will be based Universal Music India’s headquarters in Mumbai and will function as a multi-channel partnership between the two companies. According to the announcement, Mass Appeal India will sign and [...]

  • Harvey Weinstein, center, arrives to court

    Weinstein's Attorneys Seek to Move Trial to Long Island or Albany

    Harvey Weinstein’s attorneys want his rape trial moved to Long Island or Albany, citing the “circus-like atmosphere” surrounding the courthouse in Manhattan. Weinstein is set to go on trial on Sept. 9 on five charges of rape and sexual assault. The disgraced producer faces a potential life term if convicted. In a motion to the [...]

  • AtmosphereThe Current State of Play in

    New York’s PlayStation Theater to Close (EXCLUSIVE)

    New York’s PlayStation Theater, a 2,100-capacity venue located in Times Square and operated by Bowery Presents, will close at the end of 2019, a source close to the situation tells Variety. The venue will close with a New Year’s series of shows from the Disco Biscuits. The theater, which is located two stories beneath the [...]

  • Courtesy of Earwolf

    How Lauren Lapkus Tossed the Script and Created a Podcasting Hit

    Lauren Lapkus has tossed the script on what makes most podcasts a hit. At a time when many of the most downloaded shows are true crime investigations or celebrity interviews, she’s doing something entirely different on each episode of “With Special Guest Lauren Lapkus.” Each hour-long installment is a free-wheeling, completely improvised ride. One show [...]

  • WWE NXT

    WWE's 'NXT' Moves to USA Network as Wrestling Competition Heats Up

    WWE has struck a deal to move its “NXT” franchise focusing on rising stars to USA Network starting next month. “NXT” will shift to USA from the WWE Network subscription streaming service as of Sept. 18. The deal comes as USA is about to lose WWE’s “SmackDown” showcase to Fox starting in October. USA is [...]

  • Shazam

    Apple Music Launches 'Shazam Discovery' Chart, Focused on New Artists

    Apple Music today launched the “Shazam Discovery Top 50,” a weekly, global ranking of 50 artists that it describes as “on the move and trending” — in other words, new and emerging artists. While the company wouldn’t say much specifically about how the chart is tabulated, it uses “Shazam’s proprietary algorithms [to offer] a unique predictive view [...]

More From Our Brands

Access exclusive content