Media

DirecTV to raise prices by 4.5% due to higher programming costs

Satellite television provider DirecTV said its subscription prices would rise in the following year, according to a message it released today via a customer support page.

The increased pricing is necessary to compensate for the substantially higher fees on DirecTV’s lineup of channels. DirecTV explained to customers that its paying media companies 8 percent more in 2013 for the same channels, but it promises to only increase the average customer’s monthly bill by about 4.5 percent.

“Almost all programmers who provide channels to the DIRECTV platform are increasing their rates at a level we’ve never seen before,” DirecTV said in the message. “On occasion, some negotiations of new and existing channel contracts have become public recently so you can see we are doing all we can to make sure you do not suffer unfair price increases as a result of unreasonable demands in these disputes.”

If you’re looking for a recent example of the public channel contract negotiations, look no further than the giant spat DirecTV had with Viacom earlier this year. Viacom — which own channels like MTV, Comedy Central, BET, Spike, and several others — demanded a much higher fee when its previous contract with DirecTV expired. Eventually, the two forged a new deal to the tune of DirecTV paying $600 million (over several years) more than its previous contract, but not before Viacom yanked its lineup of channels from the service.

Most media companies refuse to sign contracts for each individual channel they produce, forcing TV providers like DirecTV to buy an entire package. When rates go up, it means either those providers will pay more or their customers will.

Via WSJ