DirecTV: Ads Don't Deliver Goods, But Up Revs

DirecTV CEO Chase Carey offered more evidence this week that the satellite operator produced one of the more extraordinary ad campaigns of 2007--an effort with a message that reverberated, although the company failed to deliver on the implied promise.

Through much of the year, DirecTV spent millions using celebrities and maneuvers--such as a blimp over the World Series--to hammer home a message that it would offer 100 national HD channels by Jan. 1.

As of yesterday, it was at 90.

Yet, surveys today would likely show the "century-mark branding" looks to have given consumers the perception that DirecTV reached its goal, and more importantly, is the trailblazer in high-definition programming. And at an investor conference, Carey offered some evidence that perception is leading to revenues, saying the company is signing up higher-paying HD subscribers at a rate more than double a year ago.

Carey praised the ad campaign, but didn't address the failure to deliver the 100-network lineup Wednesday--an issue that would seem to leave DirecTV open to criticism.

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"The marketing group for DirecTV did a very good job at sort of having a message that resonated with the marketplace," Carey said. "The 100 channels was relatable, was understandable--and, I think, grabbed people. It excited people, and our results are showing that--the reception we're getting, and the energy we're getting around it, the quality of subs we're attracting with it."

Much of the immediate future for DirecTV--which does in fact offer far more HD channels than the competition--hinges on how many current customers it can get to upgrade to pricier HD lineups and new ones it can persuade to sign up to receive niche channels, such as the Big Ten Network and Biography Channel. At the heart of the push is widespread consumer reaction that once they view something in HD, they find it difficult to revert to the traditional standard-def broadcasts.

"Everything we see really says HD is becoming a top-of-the-list priority for a large percentage of the customers out there," Carey said this week. (Nielsen says 11% of U.S. homes get HD channels; others say that is low.)

In fairness to DirecTV, although it began the year promising the 100 channels by the end of 2007--at one point even hinting it would soon be at 150--by mid-year, it invoked fine print, using phrases such as "on schedule" to reach 100 and "up to 100."

Still, Carey did not deviate from the impressive figure in August, saying that "we'll get to the 100 channels that we talked about." But by November--as the DirecTV HD suite was fully in motion and the company was running a blizzard of spots promoting it--he hedged by adopting a "close to" 100 refrain.

DirecTV says it will reach 100 soon and attributes the failure to do so by Jan. 1 to networks not launching HD versions on schedule.

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