Why is DirecTV's growth slowing?
As long as customer service remains solid, the company should be able to achieve the revenue growth it wants.
The No. 1 satellite pay-TV service provider in the U.S. claims it's seeing a higher customer turnover rate due to a dispute with News Corp's (NWS) Fox as well as better performance by its peer Dish Network (DISH). See our complete analysis for DirecTV.
Subscriber gains remain solid
DirecTV gained 125,000 net U.S. subscribers in the fourth quarter -- healthy growth given the saturation in pay-TV market and a sluggish housing market. Still, those additions pale in comparison to the 327,000 net subscriber gain in the third quarter and the 289,000 in the last quarter of 2010. The quarter-over-quarter decline in net additions was about 61% and year-over-year decline was about 57%.
We believe that heightened competition is to blame. Dish Network has been trying to recover from a slump in growth, with the help of Blockbuster, and Comcast (CMCSA) subscriber losses slowed a great deal in the fourth quarter.
Going forward, competition will only get stronger and subscriber growth will become more difficult for DirecTV.
What to expect in 2012
The company expects U.S. revenue growth will primarily come from a bump in per-user revenue rather than in the number of subscribers. Higher revenue per user will result from price increases from higher programming fees as well as greater usage of pay-per-view and premium movie channels.
As long as DirecTV's customer service remains solid, the company should be able to achieve the required per-user revenue growth. But being a stand-alone provider of pay-TV services is growing increasingly risky, and DirecTV may need to make a push into broadband. We are in process of updating our pricing model for DirecTV in light of these recent results.
Our price estimate for DirecTV stands at $53.26, implying a premium of more than 15% to the market price.
They should treat there current customers better and give them deals instead of giving all the deals to the new customers, new customers get those deals and are more incline to switch to other cable providers after the contract is up because of a deal they are offering. Long term customers means more profit.
considering the amount of tinkering that they do with channels, it would be little doubt that
many are tired of the foolishness.
one realizes dish does the same thing in selling a package and then beginning to peel off
stations to try and "encourage" upgrading to a more expensive package; but it is still an
irritant. the response from customer service= tough.
can only hope ftc finally starts thinking about consumers and allows a choice of what the
buyer wants instead of a plethora of crappy channels to get a few good ones.
Poor treatment of long time subscribers,No incentives for staying just more increases in price. Customer service is a Joke, nothing free it all cost, How many years do you still pay rent on eQuiptment you payed for 100 times over. Price is just too much. About to lose another long timer, Hope you stay in business, look at what happen to BlockBuster.
I used to have DirecTV, but cancelled it a couple of years ago. It wasn't Direct that put me off so much as the pay channels themselves. I was paying $60/mo (the cheap package) for shows that had huge channel bugs in the corner and promo snipes playing across my show while I was trying to watch it, never mind commercial breaks every 3-5 mins, and it was pissing me off. I thought, I'm paying for this? I can get my shows on Hulu or Netflix for much less without all the rubbish on the screen.
And like other users, I did lose signal during weather.
I've had them for years and quite a few moves. Was always happy with them until recently when they started jacking up their prices and moving some of the channels I watch to other higher priced packages!
I live out in the country, so I have a choice of DirecTV, Dish, or nothing. I'm going to have to price Dish, but I doubt if overall they are any better on prices. Excluding "promos".
My wife and I have been with Direct TV for about 10 years and have never had a complaint one. I have had to get a new receiver on two occasions and had no problem at all they even set it up so that the old receiver can be returned in the box the new one shipped in. Thankfully, our experience with their customer service has been A+. When we go on vacation they are great to work with concerning putting the system to sleep while we are gone. I guess we have been lucky concerning how negative some of the comments are. I would recommend Direct to anyone considering our experience with them.
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