September 19, 2012

DirecTV isn't seeing the same frenzy over its free NFL Sun Ticket offer that it did last fall, and it's OK with that. "Internally, we didn't expect it to be as strong as last year. There was a lot of pent-up demand," DirecTV CFO Pat Doyle said during a Bank of America investor conference Thurs. This year, less people are eligible as DirecTV strives for less "low-value, high risk" customers, plus qualifying packages are about $5 more a month. As for those subs who did get in on the promo last year, Doyle said there hasn't been any unusual churn activity.

On the plus side, early indications are that the strategy of converting last year's free Sun Ticket subs to paying customers is working. "The jury is still out, but as of today, we're pleased with what we're seeing," Doyle said. Asked if he's worried the NFL is diluting the value of Sun Ticket by making more content available across cable (a la RedZone), Doyle said it has been a steady progression that has included the introduction of Thurs night games on NFL Net (and now even more Thurs night games on NFL Net). "Certainly, it will be a topic of conversation when our contract comes up for renewal. We've tried to enhance it by doing streaming and getting Sun Ticket to more devices," Doyle said. "The good news is NFL seems to be as popular as ever. The games that we do have, there is a high demand for them. The brand of the NFL is doing very well."

Sports, in general, continues to carry big price tags, with Doyle making it clear DirecTV won't be paying for everything. "Our view would be that a lot of the sports content should go into a sports tier or be PPV, but the content owners are resisting that. Ultimately it will be because you really are taxing the non-sports watcher at home," he said. DirecTV made headlines in July for a programming spat, but this one wasn't over sports. The DBS provider lost Viacom stations for 9 days in their carriage spat (which did impact churn). "Unfortunately, you'll probably see more of that to the extent the content owners aren't realistic on the ability to absorb cost increases," Doyle said. "We have to get to a place where the content owners do care about the customer."

Other highlights: DirecTV doesn't believe it needs a broadband offering, and it's still interested in a merger with DISH. But that would depend on the govt's willingness to approve such a deal. Perhaps Nov's election could have an impact. "We think ultimately that it is a combo that would be good for consumers and should get done."

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