DirecTV raising prices but lowering cost of Starz and Showtime

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(DirecTV)

AT&T early next year will raise monthly rates for DirecTV and U-verse but it will lower the cost of premium add-ons including Starz and Showtime.

Beginning January 17, 2021, DirecTV packages will see their monthly rates rise anywhere from $1 to $9. The company also said that the Federal Cost Recovery Fee, which it charges to recoup regulatory expenses, will now be a monthly charge of $0.19 instead of annual.

However, DirecTV is lowering the cost of premium add-ons Starz, Showtime and Cinemax by $3 per month each. The monthly cost of HBO Max and DirecTV’s sports pack add-on are staying the same.

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The company said that since it’s lowering the monthly cost of many premiums, it will no longer offer premium and sports pack programming bundle discounts.

RELATED: AT&T may sell DirecTV, U-verse and AT&T TV Now

Earlier this year, AT&T raised the first-year monthly rates by $10 for new customers on DirecTV’s Select, Choice and Ultimate packages. After the first year of a 24-month service agreement, prices jump to $85/month for Select, $115/month for Choice and $142/month for Ultimate.

AT&T is also raising monthly rates for U-verse packages by anywhere from $5 to $9. In the case of both DirecTV and U-verse, the company attributed to price increases to rising programming costs.

AT&T slowed down its premium TV subscriber losses in the third quarter but still led the industry. The company reported a net loss of 590,000 premium TV subscribers (from DirecTV and U-verse) but MoffettNathanson put the figure at 747,000 after AT&T had to adjust for overshooting its estimates on how many subscribers would disconnect because of non-payment during the first half of the year.

The company could soon offload both DirecTV and U-verse to free up its focus on HBO Max and AT&T TV. According to CNBC’s Alex Sherman, AT&T is speaking with private equity firms including Apollo Management – which has been circling DirecTV – about a deal to sell a minority stake in the businesses. The report suggests that AT&T would keep its U-verse infrastructure including plants and fiber but the buyer would take over the pay TV distribution operations. The deal could potentially be for 30% to 49% of the combined pay TV distribution businesses.