DirecTV Has Cord-Cutter Anxiety, but NFL Superfans Aren't Going Anywhere

Photograph by Patrick T. Fallon/Bloomberg

The NFL has been a consistent lure for DirecTV, the only source of the league’s all-access Sunday Ticket package. But a funny thing happened in the past quarter, just as hard-core football fans should have been hearing the siren call of the coming NFL season: DirecTV lost 28,000 subscribers. Has the promise of an all-you-can-eat NFL buffet stopped drawing satellite customers?
Executives attributed most of that decline to a conscious decision “to focus on higher-quality subscribers” who will stick around after DirecTV’s promotional sign-up period ends. Those subscribers generate the most long-term profit. That means DirecTV was less willing to extend price breaks to the borderline cases chasing lower prices from the cable-TV competition. Plus, tens of thousands of households each quarter are now canceling pay-TV services all together, unwilling or unable to accept the consistent price increases as providers pass along escalating programming costs.
It doesn’t appear that DirecTV’s rising defections can be blamed on a lagging appetite for the NFL. The Sunday Ticket contract—worth a reported $12 billion to the league over eight years—remains enormously beneficial for DirecTV, which expects revenue from the 2014 football season to rise 13 percent. This season, in fact, saw a 5 percent increase in subscribers who renewed the package. The company also has about 40,000 non-DirecTV customers who have bought online access to stream Sunday games.
The problem for DirecTV and the rest of the pay-TV industry is cord cutting. DirecTV Chief Executive Michael White was philosophical on the subject during this week’s earnings call, grappling with the question of how much further pay TV operators can press consumers’ monthly budgets. At DirecTV, which has 20.2 million customers, the average revenue per user, an industry metric, has advanced nearly $5 over the past year, to $107.27 per month—a $22 monthly jump from five years ago. Here’s how White framed the issue:

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