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.
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.
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.