DirecTV tightens programming belt to keep costs down; will dump some channels in 2011, 2012

IPTV providers might want to keep an eye on DirecTV, which says it's likely to trim its channel lineup as it looks to keep programming costs--and, thus, subscription fees--under control. The satellite TV provider on Thursday said it's looking at dropping less-popular channels, opting to pass on renewing some carriage deals with channels that aren't "necessary or worth their costs."

Derek Chang, EVP of content strategy and development for DirecTV, told an audience at its investor's day in New York that providers "don't have a bottomless pool of money" for content, and that less-viewed channels could be on the chopping block.

"In our battle to manage our economics, we will look to repackage channels where we have over-distributed, or frankly just to remove certain channels from our platform if they are not relevant," Chang said. "Is there a place for channels that only serve a small fraction of our audience? Should we have to pay retrans fees and continue to carry channels which were once considered to be part of the equation when we didn't pay retrans fees? As the marketplace changes, these questions become more important for our entire industry."

Costs for sports programming, he said, were growing at double-digit rates as content owners began to gain more power over their products. That may also lead to some budget trimming via channel shaving.

"My sense is that we and all other distributors will continue to take a sharper look at the channels we carry and determine which ones are necessary, which ones may be not necessary or may just cost too much for what they are," he said.

CEO Mike White also touched on the sports-programming hurdle, saying their rising costs could mean that local, or regional sorts channels would be dropped or offered a la carte by 2012. Not carrying some major regional sports channels, he said, didn't seem to impact Dish Network, which dropped nearly two dozen Fox regional sports networks for a month, nor did Cablevision see major defections during its carriage fight with Fox, despite subscribers missing some NFL games and parts of the Major League Baseball divisional series.

For more:
- see this Multichannel News article
- see this Hollywood Reporter article

Related articles:
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