Lots of company watchers were surprised to see AT&T agree to pay $49.5B for DirecTV figuring that Dish Network — which has been amassing wireless spectrum — would be a more logical target for the telco. But it turns out that Dish chairman Charlie Ergen’s much-discussed but still nascent plan to create a wireless broadband service made his company less attractive. If AT&T tried to buy a potential competitor it “would be likely to raise additional regulatory questions and scrutiny, especially at a time when we have a couple of FCC spectrum auctions scheduled,” CFO John Stephens said this morning at the J.P. Morgan Global Technology, Media and Telecom Conference. He was careful to note that DirecTV was a first choice, not a runner-up, as he talked up its “premier” network, distribution system, content, and “premier people.”
Related: Consumers Group, Public Interest Org Respond To AT&T-DirecTV Deal
Stephens reiterated a lot of the selling points AT&T and DirecTV raised this week for the deal including their ability to offer content across multiple screens. Programmers will want to do business with AT&T because its reach in broadband, wireless, and – with DirecTV’s 20M subs – satellite video will make it “a national force.” DirecTV’s NFL Sunday Ticket also is important; AT&T can walk away from the deal if the satellite company doesn’t renew its licensing … Read More »
Fans of the shock jock won’t like the conclusions that Macquarie Equities Research’s Amy Young reaches in a new report on this provocative question. While Howard Stern was a big draw for SiriusXM in 2004 when he agreed to join the satellite radio service, “the sub base is now at 25M and there’s less necessity to strike a deal when his contract comes up for renewal at the end of 2015,” the analyst writes. She bases that conclusion on a survey of 800 SiriusXM customers. It found that 12% listen to Stern, and 30% of this group tune in less than twice a week. More to the point, just 5% of all subs “would consider leaving Sirius XM if he were no longer available.” In addition, 96% say that they aren’t willing to pay extra to have him in the lineup. That indicates that Stern “could have less leverage in the next contract negotiations.” Young says that he took a 20% pay cut in 2010 with a contract that paid $80M a year, and estimates that it could drop another 13% to $70M a year in 2015. “What this tells us: for new entrants or ‘niche’ players, obtaining high-profile anchor content is a key differentiator and important in building a critical mass,” she says. “As the business evolves, it becomes less vital.” That lesson could also affect DirecTV as it negotiates to extend its deal for … Read More »
Even though net income fell, it exceeded forecasts enough to send the share price up more than 6% in pre-market trading. The No. 1 satellite company says Q1 earnings came in at $698M, -5.8% vs the period last year, on revenues of $7.58B, +7.6%. Revenues topped the consensus expectation of $7.53B. And earnings at $1.20 a share were well ahead of predictions for $1.08. Excluding a $166M pre-tax charge from a revaluation of the operations in Venezuela, where the currency was devalued in February, earnings would have hit $1.43. The U.S. business more than held its own, even though subscription growth slowed: DirecTV ended the quarter with 10.2M subs, +0.7% vs a year ago, as the company says it is tightening credit policies to focus on “higher quality subscribers.” Domestic revenues rose 5.3% to $5.79B while operating profits were +7.4% to $1.12B. The company says that price increases and an uptick in movie buys outweighed an increase in promotional offers and the absence of one NFL Sunday Ticket game vs last year. Read More »
DirecTV is dropping the price for its exclusive NFL Sunday Ticket package this year to $199.95 for existing customers, about a 40% reduction over last year’s cost, the company announced today. That’s the lowest price for the service in almost 10 years. Bloomberg said 2 million-3 million of the satellite service’s 19.9 million U.S. subscribers signed up last year for the NFL suite — which among other bells and whistles offers up every game on the schedule in HD. Spurred by a promotion giving new subs Sunday Ticket for free, it helped DirectTV add 327,000 new customers in the third quarter, the largest gain since 2009. The company is hoping for another bump with the price cut. Among the new offerings is the NFL Sunday Ticket Max package, for which subs can have mobile access for $100 more. That service includes the popular Red Zone Channel, which tracks all games and alerts viewers when teams are close to scoring.
Shares are up in pre-market trading as the satellite company performed well in Q4, with a lot of help from Latin America. DirecTV had net income of $718M in the year-end quarter, up 16.2% vs the period in 2010, on revenues of $7.5B, up 12,7%. The revenue figure slightly beat the $7.4B that the Street anticipated. Earnings at $1.02 a share were well ahead of the 92 cents forecast. At the main business, the U.S. satellite service, revenues were up 9% to $6B as rate increases and higher sales of NFL Sunday Ticket subscriptions outweighed the growing number of discounts DirecTV offered to new customers. The company ended the year with 19.9M domestic subscribers, up 3% vs the end of 2010. The net addition of 125,000 customers in the quarter represents a sharp retreat from the period last year when DirecTV added 289,000 U.S. subscribers. Read More »
UPDATE, 11:30 AM: DirecTV shares are up 6.3% after it reported better-than-expected sub growth in 3Q — and a three year extension of its deal with AT&T to sell co-branded TV, broadband, and wired and wireless phone services in 22 states. The agreement, which now runs through March 2015, covers areas where AT&T does not offer its U-verse video service. There’s “no material change” in the terms, DirecTV CEO Mike White told analysts in a conference call. He added that it’s “too soon to say” whether DirecTV will offer more bundles with Verizon broadband services. ”The question will be how customer friendly the (Internet usage) caps are.” White says he talks to everybody about packaging broadband service with DirecTV — and that could include Dish Network if it uses the wireless spectrum it’s amassing to sell a wireless Internet service. DirecTV is “thinking Read More »
Comcast has declared victory and ended its furious courtroom attack on DirecTV for advertising “no extra charge” NFL Sunday Ticket games. The cable giant says today on its corporate blog that “DirecTV has discontinued or modified its false and misleading advertising to consumers regarding its NFL Sunday Ticket package as a result of our legal action. As such, we have elected to withdraw our complaint on this matter.” No mention of the fact that last week a U.S. District Court judge in Chicago denied the cable giant’s request for a temporary restraining order against DirecTV. Comcast’s complaint filed early this month alleged that DirecTV billed the NFL service as “free” — without clarifying many conditions on the offer. The cable company asked the court to force DirecTV to retract the ads, pay Comcast “all profits wrongfully derived” as well as triple the cost of damages, and pay a punitive fine to a consumer protection agency or advocacy group. DirecTV denied that the ads were inaccurate and said that it would gladly “go head-to-head with Comcast any day on whose service is superior” and wanted to compete “in the marketplace rather than the courtroom.”
Sony, in partnership with DirecTV, said today that the satellite TV provider’s popular NFL Sunday Ticket service will be available for live streaming on PlayStation 3 consoles. The package allows viewers to watch out-of-market games and comes free with a DirecTV subscription. The fee for existing subscribers to add Sunday Ticket on their console will be an additional $50 at the start of the season. But PlayStation 3 users who want the NFL package but don’t have DirecTV will have to shell out $339.95. The package will feature up to 14 games a week in high-def and include DirecTV’s Red Zone Channel, which provides scoring highlights from around the NFL.
“We know that PlayStation fans are huge sports enthusiasts, so adding NFL Sunday Ticket is the perfect complement to the PS3’s rapidly growing lineup of sports entertainment,” Philip Rosenberg, SVP business development, said on the PlayStation blog. Major League Baseball and the NHL are currently available on the consoles. For now, the deal is exclusive. “We just want to work with a single partner this time around to give everyone a great experience,” DirecTV director of public relations Robert Mercer told Shacknews.
Comcast failed today to block DirecTV from advertising that it offers NFL Sunday Ticket at “no extra charge.” A U.S. District Court judge in Chicago denied the cable giant’s request for a temporary restraining order. Comcast asked for one charging that DirecTV’s campaign is based on “an outright lie. As none of the ads disclose, the offer is not for free NFL Sunday Ticket service — the offer requires a two-year contract with hefty termination fees for early cancellation, with the NFL Sunday Ticket service automatically renewing in the second year at full price. DirecTV has gone to great lengths to conceal this fact from consumers.” DirecTV countered that the ads are accurate and straightforward. “We’re pleased the judge recognized Comcast’s veiled attempt to limit our ability to compete in the marketplace and denied the TRO,” says Jon Gieselman, DirecTV’s SVP Marketing and Direct Sales. “We’re happy to go head-to-head with Comcast any day on whose service is superior, so we look forward to competing in the marketplace rather than the courtroom.”