DirecTV CEO: Sunday Ticket A 'Loss Leader'
As DirecTV offers another promotion for its Sunday Ticket offering, the company’s top executive said Tuesday the NFL package is a customer attraction and retention device, not a profit center.
“Given that the costs of the product are increasing, our view is use it as a loss leader, and we'll go from there,” said CEO Michael White on an earnings call.
DirecTV is in the middle of an exclusive deal with the NFL, where it pays what reportedly amounts to $1 billion a year in rights fees through the 2014 season. Any new deal would surely include a massive increase and cable operators are likely to try to peel the package from DirecTV, which has had it since 1994 and used it as a key brand differentiator.
CEO White suggested that DirecTV would look to re-up with the NFL, but with fewer games on Sunday afternoons when Sunday Ticket is available, the value to the company may be diminished.
“With any programming that we're looking at, as things are available through more channels, games moved to Thursday night … I think we'd love to keep it exclusive and very, very narrow,” he said.
Last fall, DirecTV offered Sunday Ticket free to new customers, who signed a two-year contract. (A similar free offering will come this summer.) In April, it began offering current customers Sunday Ticket for $199.95, more than 40% below the 2012 price.
Those who took advantage of the free offer last fall will remain as DirecTV customers, but the satellite operator faces the challenge of getting them to pay for DirecTV on top of that.