AT&T raises DirecTV prices again amid customer losses and possible sale
AT&T has announced another round of price hikes for DirecTV satellite and U-verse TV services, with monthly prices set to rise up to $9 starting January 17, 2021.
“Due to increased programming costs, we’re adjusting the price of our video packages,” AT&T said in a notice on its website. “Periodically, TV network owners increase the fees they charge DirecTV for the right to broadcast their movies, shows, and sporting events.” Of course, AT&T itself determines some of these programming prices because it owns Time Warner.
A $5 monthly increase is coming to DirecTV’s 160-channel “Entertainment” package, which currently has a standard rate of $97 a month. A $7 monthly increase is coming to the 185-channel Choice package, currently at $115 a month. A $9 increase is coming to both the 250-channel Ultimate package (currently $142) and the 330-channel Premier package (currently $197).
New customers can get those packages for $64.99 to $134.99 under promotional pricing that expires after 12 months. “If you currently have a DirecTV TV promotion, you’ll keep that discount until it expires,” AT&T said. “Once your promo period ends, you’ll pay the new price for your package.”
There are also $1 and $3 increases for DirecTV’s Basic and Preferred Choice packages for international customers, $6 increases for certain Spanish-language packages, and $8 increases for “Xtra” packages. Only the Minimum service, Family, and ChineseDirect Plus plans are not getting increases.
AT&T is raising U-verse TV prices by $5 to $9 a month depending on the package, while keeping the price of the most basic U-verse package the same. U-verse provides TV over AT&T’s wired network. As with DirecTV, customers on U-verse promotional pricing won’t see the increase until the promotional period ends.
New fee, and some price cuts
DirecTV is also adding a “Federal Cost Recovery Fee of $0.19 per month,” similar to a fee that used to be charged once per year. Despite the name, the fee is not mandated by the government. AT&T said the fee covers “expenses that DirecTV pays to the Federal Communications Commission.”
While this fee is starting small, AT&T has a history of sneakily raising overall prices by adding new fees and then steadily raising them through the years. The Federal Cost Recovery Fee will be charged in addition to a number of other fees that AT&T excludes from listed prices so that it can advertise lower prices than it actually charges.
On the plus side, AT&T’s announcement did not include any increases for the Regional Sports Network and Broadcast TV fees, which were both raised a year ago. We asked AT&T if it plans another increase for these fees and will update this article if we get a response.
Believe it or not, AT&T says it is decreasing the price of some premium channels. That includes $3 decreases for Starz, Cinemax, and Showtime. There are also decreases of up to $3 for certain add-on bundles that include sports channels. But even with premium channels, there are some price increases, including a $2.96 boost to an add-on bundle that includes HBO Max, Starz, Showtime, Cinemax, and a sports-channel pack. Again, the full list of price changes can be found at this link.
Epic customer losses, pending sale
TV bills can vary wildly depending on the base package, add-on channels, and promotional pricing. AT&T charges an average of $130.55 per customer each month on DirecTV and its other premium TV services.
AT&T’s customer base has declined dramatically due to price increases, reduced use of promotional deals, and competition from cheaper streaming services. AT&T currently has 17.1 million Premium TV customers, down from over 25 million in early 2017. That category includes DirecTV satellite, U-verse, and the newer AT&T TV online service, which mimics cable TV with hidden fees, contracts, and big second-year price hikes.
AT&T has been seeking a buyer for DirecTV, and the offers reportedly value the satellite subsidiary at less than $16 billion—about a third of the $49 billion AT&T paid for the company in 2015. One possible deal would have AT&T retain majority ownership while another company takes over pay-TV operations for both DirecTV and U-verse. As CNBC reported this month, AT&T is in talks with private-equity firms “to sell a significant minority stake… in its pay-TV businesses in a complicated transaction that would shift legacy assets off the wireless carrier’s balance sheet.”
“Under the terms of the proposed deal, AT&T would retain majority economic ownership of the businesses and would maintain ownership of U-verse infrastructure, including plants and fiber,” CNBC wrote, citing unnamed sources. “The buyer would control the pay-TV distribution operations and consolidate the business on its books.”