Direct TV beams steep Sept. price hikes
Sat distribber gets to pocket all the coin
"We're constantly adding more channels of programming, and we're rolling out more interactive services," says a spokesman for DirecTV, the largest direct-broadcast-satellite distributor in the U.S., in defending the price escalation.
The price of a PPV movie will climb from $2.99 to $3.99 on Sept. 1, and the beauty of that leap for DirecTV is that it won't have to funnel any of that extra dollar to the major studios that supply the pictures.
The reason DirecTV will be able to pocket all of the rate gain, sources say, is that its deal with the movie companies calls for them to get $1.97 for each PPV movie buy no matter what DirecTV charges.
That's why almost all of the cable systems in the U.S. charge subscribers $3.95 for a movie buy because the typical PPV deals call for 50% of the customer's dollar -- namely $1.97 out of each $3.95 -- to flow to the studios. DirecTV has lost money by charging only $2.99 for a PPV movie, but the bargain price has served as a loss leader to entice customers to buy satellite dishes.
But times have changed. DirecTV has no qualms about raising PPV movie prices, the spokesman says, not only because cable systems charge $3.95 but because it's the first increase in PPV since DirecTV opened for business in June 1994.
Two-tier pricing
DirecTV's DBS competitor Echostar created two-tier pricing for PPV last year, keeping the tab at $2.99 for subscribers who want to watch the movie in one showing, without Dolby digital sound or letterboxing. For $3.99, the Echostar customers get not only the Dolby enhancement and the letterbox picture but all-day convenience -- they can call the movie up at any time from early morning to late night.
Regular subscribers to DirecTV will see their monthly bills leap by $2 on Sept. 1 for each of the 12 programming packages, from the lowest-priced $19.99 a month for 37 basic-cable channels (dubbed Select Choice) to the most expensive $80.99 for Total Choice Platinum, encompassing just about every basic and pay network carried by DirecTV, except the separately priced out-of-market sports packages like the "NFL Sunday Ticket."
These increases will help to offset programming costs, which DirecTV says have climbed by more than 35% since 1997. Expenditures have also gone up, the company says, for "the addition of a second broadcast center, the launch of a fifth high-power satellite and the opening of six new customer call centers."
