DirecTV, competitors planning to raise rates

By Michael McCarthy
USA Today

NEW YORK — So much for predictions that Rupert Murdoch and News Corp. would start a cable/satellite TV industry price war after taking over DirecTV, the top U.S. satellite service at 12 million subscribers.

The service plans to boost average rates by more than 3 percent starting March 1 — an increase "tied to the increasing escalation of programming costs," says Steve Cox, executive vice president of sales, distribution and customer acquisition.

The new prices will range from $36.99 a month for basic service with 125 channels to $90.99 for the "premier" package with 210 channels and free TiVo service. The increase is the fourth in 10 years, but the last, 3.3 percent, came in March of last year.

Pay-TV networks such as ESPN are pushing up prices, Cox says.

ESPN spokeswoman Katina Arnold responds: "We're worth what we're paid."

Trying to undercut DirecTV on price, No. 2 satellite operator EchoStar is raising rates an average of 1.7 percent on its most popular packages this year, according to spokesman Steve Caulk.

But DirecTV won't be the leader in pay-TV rate increases in 2004.

Comcast, the nation's largest cable operator with 21 million subscribers, will boost average cable rates by 5.4 percent, spokesman Tim Fitzpatrick says. Time Warner Cable will raise average rates by 4.9 percent, spokesman Mark Harrad says. Cox Communications' rates are going up by an average 3 percent to 4 percent, spokeswoman Laura Oberhelman says. Cablevision is upping rates by an average of 3.2 percent.

"The cable industry is raising prices. That gives (Murdoch) some room," says Larry Gerbrandt, senior analyst at Kagan World Media.