Why DirecTV Will Take a Pass on Mobile

DirecTV and Dish Network, the two largest U.S. satellite-television companies, spent two decades building their businesses and chasing subscribers with essentially the same strategy: promising more channels, better service, and lower prices than cable. While Dish has embarked on a daring diversification strategy into mobile services with a $25.5 billion bid to take over Sprint Nextel, industry leader DirecTV plans to stick to what it knows, according to Chief Executive Officer Michael White. “Wireless, for us, doesn’t make sense,” White says. “We have an amazing product. It’s in-home theater.”

DirecTV has more than 20 million subscribers, second only to Comcast among U.S. pay-TV companies, and White says that leverage means better terms from TV networks. The flip side: DirecTV has been vulnerable to the climb in network programming fees, which have jumped more than 10 percent in the past year. In February, White responded by increasing monthly subscription rates 4.5 percent, to an average of $71 a month, for its most popular package ($125 for the top-end one) and tacking on a regional sports fee of $3 a month in 20 percent of the U.S. households it serves. Customers balked. DirecTV received more consumer blowback about pricing in February and March than the company had seen in years, says White, who doesn’t regret the moves. “Other than the bill, consumers have to realize this is the golden age of video programming,” he says.