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Rising Program Costs Lead to Further Challenges for DirecTV

In an increasingly difficult market, satellite television provider DirecTV is finding that it is being challenged by the ever growing costs of programming.

But who isn’t, right?

The subject of a dispute between Cablevision and ABC came up recently at the Credit Suisse Global Media & Communications Convergence Conference which was held in Palm Beach, Florida. When questioned about the dispute senior VP of Financial Planning Jon Rubin stated that because of higher fees being expected by programming providers the company was having to take a long hard look at dropping some of those channels and/or changing channel lineups.

While the dispute did carry over until just after the beginning of the Oscars on Sunday, Cablevision viewers finally were able to receive the broadcast. The trouble comes in when the costs of programming rise and these are not passed on to consumers in turn. Most consumers feel that they pay too much for the programming they receive. Raising prices at this point could turn DirecTV customers against providers in a heartbeat.

With profit margins taking a dive and an economy that is leading consumers to worry more about essentials and less about entertainment, it is no wonder as to why investors remain somewhat apprehensive about the future of the company’s stocks. When questioned on the potential for growth in 2010, Rubin seemed to be quite optimistic even with the tough competition the company is currently facing.

Another subject that came up during the conference concerned the future prospects for 3D programming going mainstream. According to Rubin, the 3D programming planned for release this year, which includes select movies and possibly some sports as well, may not pick up a great deal of popularity during its initial release. He did feel, however, that it would eventually become mainstream and certainly fit right into DirecTV’s business model.

Topics: DirecTV, General | Comments Off on Rising Program Costs Lead to Further Challenges for DirecTV

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