DirecTV

AT&T and DirecTV Reach Partnership Agreement

Bernie — Fri, 26 Sep 2008 18:21:56 -0400

AT&T and DirecTV announced an agreement where AT&T will resell DirecTV services as a part of their “AT&T Advanced TV” video portfolio. The agreement will begin after January 31, 2009, when AT&T’s current agreement with DISH Networks expires. It’s a big, although expected, blow to DISH Networks, who had great success with leveraging their AT&T partnership for subscriber growth. Observers from afar could conclude that AT&T stopped aggressively marketing their DISH bundle in favor of U-verse long ago, which certainly contributed to DISH’s slowing subscriber growth, culminating with an actual decline in subscriber counts in 2Q08.

"Our focus is on providing customers with a better TV experience than cable," said Jeff Weber, AT&T vice president-Video and Entertainment in a company statement. "AT&T | DIRECTV complements our premier AT&T U-verse TV service and gives customers another great choice for state-of-the-art, 100 percent digital programming." DirecTV now has a virtual coup with “bell company” telco partnerships, including agreements with Verizon, Qwest, and AT&T. DISH has current resale agreements with large independents, including EMBARQ, Windstream, and CenturyTel. Now the real question – how long before AT&T buys DirecTV?

Triple Play Scared Murdoch Off

Bernie — Thu, 18 Sep 2008 10:30:06 -0400

DirecTV to Liberty Media. "I was frightened of the triple play in cable and then a superior service coming from the telephone companies,” Murdoch told a Goldman Sachs investor conference on Wednesday. He also suggested that although he may have some regrets over that thinking, since DirecTV seems to be holding up quite well against those triple play competitors, he still believes his assessment will be right over the long term.

The current assessment is right – DirecTV is indeed holding its own against the triple play competitive threat. They have executed a well defined strategy of focusing on content and feature enhancements, including HD, sports, and interactive apps, that position DirecTV as a premium video offering. Premium enough for millions of subscribers to forgo the perceived value of triple play bundles, and make DirecTV their video option of choice. It’s a great lesson in focusing on your core strength and leveraging it to your advantage. As Murdoch suggests, there is no guarantee this current success will translate into long term prosperity for DirecTV. There is no shortage of challenges for them to sustain this success. Beyond the triple play challenge, forthcoming convergence applications provided by IPTV, tru2way, and wireless integration will be tough for DirecTV to compete with.

DirecTV and TiVo Expand Into HD DVR

Bernie — Wed, 03 Sep 2008 09:39:52 -0400

DirecTV announced that their relationship with TiVo has expanded and they will jointly develop and launch a TiVo powered HD DVR. According to the release, the new HD DVR “…will support the latest TiVo and DIRECTV features and services, including TiVo's Universal Swivel Search and TiVo KidZone. TiVo will develop the new HD DVR for an expected launch in the second half of 2009.” The deal is non-exclusive, and DirecTV will still develop and market its own set top boxes. DirecTV and TiVo began marketing traditional DVRs to the DirecTV customer base back in 2000. The relationship went through a rough patch when DirecTV was controlled by Rupert Murdoch’s News Corp. But since Liberty Media took a controlling interest in DirecTV, the relationship is on better terms.

HD DVRs are increasingly seen as effective competitive weapons. DirecTV competitors, especially on the telcoTV side with AT&T U-verse, have been leveraging HD DVR to their advantage. DirecTV hopes this development will add some muscle to their existing HD DVR options, since TiVo is seen as a pioneer and leading developer of DVR technology. The move could also help DirecTV continue its lead over DISH. DISH is in real DVR trouble because of a legal dispute with TiVo. So far it’s losing that legal battle, and may suffer serious DVR setbacks if the losing trend continues.

DirecTV Continues Video Leadership

Bernie — Tue, 05 Aug 2008 22:44:54 -0400

Need to know which competitive bar to reach for with video service – look to DirecTV. Their PGA Championship golf tournament coverage is the type of differentiating program package that allows them to compete quite effectively, despite the lack of a triple play bundle. I’ll admit, the sports enthusiast in me is somewhat in awe, nevertheless, the PGA Championship package being offered by DirecTV is just the type of feature that will retain and attract video customers, and probably at the expense of their competitors. Consider the lineup, which includes extensive HD coverage:

Four distinct channels, including: 1) Live CBS/TNT network coverage of the tournament itself ; 2) Featured Group channel which follows a single group's progress around the course, with announcers providing insight on the live play; 3) Featured Holes channel will focus solely on two of the challenging par 3 holes on the Oakland Hills South Course; 4) Players In Depth channel featuring interviews, highlights, press conferences, graphics and up-to-the-minute stats

On demand interactive features including: 1) Top 5 Leaders: Displays the top 5 current scores against par; 2) Leaderboard: Provides information on all golfers in the field; 3) Scorecard: Hole-by-hole stats for each player in the field. The current round and any previous rounds are included; 4) PGA Championship Trivia: A new 10-question quiz on the history of the PGA Championship appears each day; 5) Past Champions: A list of the winners and runners-up from previous PGA Championships

It’s a great demonstration of how one competitor can leverage core competencies, in this case video and sports, to effectively compete against all comers. Time will tell if IPTV and cable providers can “catch up” with DirecTV. They very well may. But for the time being, DirecTV is showing leadership and vision and taking full advantage of its capabilities. Give credit where credit is due.

AT&T Fires DISH: Let the Sweepstakes Begin

Bernie — Tue, 01 Jul 2008 22:56:12 -0400

AT&T notified DISH Networks that it will sever their existing resale arrangement at the end of this year. AT&T has been reselling DISH’s video services since 2003 and expanded the relationship further after their Bellsouth acquisition. It’s widely believed that through this move, AT&T is forcing DISH’s hand into a bidding war with DirecTV for a long term resale arrangement with them. AT&T will need a DBS resale partner, just like every major telco in the U.S. currently has. Despite all the hype surrounding U-Verse, AT&T will need a DBS partner to field a competitive triple play bundle for years to come. Even after the current billions of dollars that are committed to U-Verse have been spent, it will still only reach a large minority of AT&T customers. The mid to long term strategy for AT&T and other telcos is to use DBS to fill the gaps. Of course, AT&T may have something else up its sleeve as well – a possible acquisition of DirecTV. Is this DISH development a pre-emptive merger move, with DirecTV being the acquisition prize?

DirecTV Launches VOD Nationwide

Bernie — Mon, 30 Jun 2008 23:42:19 -0400

DirecTV announced the availability of its video-on-demand service on a nationwide basis. DirecTV’s VOD solution utilizes content delivery over broadband networks, as well as “pushes” content to compatible DVRs via satellite. Customers are required to have a DirecTV Plus HD DVR or R22 DVR receiver, as well as subscribe to broadband. DirecTV says the service offers more than 4,000 standard-definition and HD titles. The service has been in limited trials before the nationwide launch.

DirecTV: TelcoTV Gains are Unsustainable

Bernie — Thu, 29 May 2008 22:52:11 -0400

Chase Carey, CEO of DirecTV, says that they've felt the competitive impact (certainly not as much as DISH Networks) from telcos and their video offerings. But he's not too worried, because those gains, by his estimation, are unsustainable. Carey asserts that the discounts and promotions offered by telcos to grab video market share can't be continued, and that consumers are getting savvier about triple play bundles and the promotional pricing tied to them. There's certainly some truth to that, but its funny hearing it from a DBS industry that historically had very high (maybe the highest) subscriber acquisition costs when they were in the thick of taking market share from the cable industry. Maybe it's too early to tell, but it appears that strategy worked for them, since they now collectively have roughly one third of the video subscription market. Why then, can't telcoTV players follow suit? Carey offered his comments at a Lehman Brothers Wireless and Wireline Conference in New York City on Thursday. Carey said he's quite comfortable with DirecTV's position relative to its competitors. He says DirecTV is faring quite well and their successful HD market lead is paying dividends.

Telcos: More Net New Video Subscribers Than DBS

Bernie — Tue, 27 May 2008 22:52:12 -0400

An important milestone was reached for the first time last quarter. Telcos like AT&T and Verizon collectively added more video subscribers than DBS providers. AT&T and Verizon collectively added 411K new video subs, while DirecTV and DISH added only 310K. DBS has historically been the leader in new net video subscriber additions for the past few years, mostly at the expense of cable companies. Expect that trend to change. TelcoTV providers will probably take that quarterly “growth crown” for the next few years, as they ramp up their triple and quad play offerings. In fact, as Investors Business Daily accurately points out, telcos haven’t even begun rolling out in the largest cities yet. As they do, their growth rates should accelerate. Verizon’s recent news about offering FiOS in New York City, should it actually materialize, will be a good indicator on the growth impact caused by extending their reach into larger cities.

Interestingly enough, DBS providers are taking a double hit from the telco’s video progress. A good portion of the new telco video adds are coming at the expense of DBS, as evidenced by DISH’s poor first quarter for net new adds. In addition, telcos are slowing down there DBS resale efforts (AT&T – DISH and Verizon – DirecTV), as they ramp up their own video efforts. Those telco resale arrangements have been a good source of growth for DBS providers. As their telco partners get distracted with their own video launches, DirecTV and DISH will have to work much harder to replace those lost resale additions. Part of DirecTV’s strategy is to try to attract higher value subscribers with advanced feature portfolios and more robust HD content packages, hoping their higher ARPU will help replace revenues lost by smaller gains in net new subscriber additions.

DISH Networks Feeling Competitive Heat

Bernie — Mon, 12 May 2008 22:25:56 -0400

DISH Networks reported disappointing results for the first quarter 2008 in a SEC filing. DISH indicated competition from cable and telecom carriers are main factors in their 89% decline in subscriber growth, which netted only 35K net subscribers. In the 10-Q filing DISH says, “We believe that this declining subscriber growth has been driven in part by competitive factors including the expansion of fiber-based pay TV providers, the effectiveness of certain competitors’ promotional offers, the number of markets in which competitors offer local HD channels, and their aggressive marketing of these differences.” This report offers a strikingly different result from DirecTV’s recent results which reported 275K net new subscribers, a 17% increase. DISH will officially report their quarterly results on Tuesday.

DISH appears to be falling victim to both telco and cable triple play success, and to DirecTV’s continued HD superiority. DirecTV is maximizing its HD lead over all competitors, and in DISH’s case, their advantage appears to be widening. Add telco and cable’s triple play competitive advantage, and DISH looks like it is in for a rough few quarters. They’ll have a difficult time reversing the trend, because their historical value play of low cost is vulnerable to the savings perception of the triple play bundle. Adding insult to injury, they have no trump card like DirecTV does with HD and high end sports programming. They even face a HD setback, whose timing couldn’t be worse, caused by a recent satellite launch mishap. It all adds up to an ugly situation from a DISH investor point of view. Their competitors are salivating at the prospects of luring DISH’s 13.8 million subscribers.

AT&T Ditches DirecTV for DISH Networks

Bernie — Thu, 03 Apr 2008 11:15:55 -0400

AT&T has announced they are expanding their DISH Networks resale relationship to their former Bellsouth territory. Bellsouth had a resale arrangement with DirecTV, and AT&T let it expire after their acquisition of Bellsouth. AT&T has slightly over 2 million DBS subscribers from both their DirecTV and DISH resale arrangements. AT&T has also said they will reevaluate their entire DBS resale strategy in 2009.