- The Washington Times - Tuesday, April 17, 2007

DirecTV might not carry a channel devoted to every sport, but it often seems that way.

While other cable and satellite operators have occasionally cried foul over the cost of carrying sports channels, DirecTV has spent hundreds of millions of dollars on sports programming — much of it exclusive — and is shelling out millions more on production enhancements. Its devotion to sports has earned it a loyal customer base, but it has also drawn recent criticism from competitors and lawmakers who contend its agreements with sports leagues are hurtful to consumers.

Since 1994, DirecTV has been the sole provider of “NFL Sunday Ticket,” a package that offers all out-of-market NFL games. It also has an exclusive deal to show all out-of-market games from the NCAA men’s basketball tournament and this year struck a similar agreement with NASCAR to produce five new channels devoted to specific drivers during each Nextel Cup race. These exclusive packages are offered for a fee on top of a subscriber’s normal monthly charge.

“It’s gotta have programming,” said Jim South, an Arlington resident and consultant for Accenture, who subscribes to “Sunday Ticket” and an additional “Superfan” service that offers extra content in high-definition. “Anytime someone I know moves into a new place, I recommend they look at DirecTV.”

DirecTV is the only cable or satellite provider in the United States to offer Setanta Sports, a soccer channel that offers many English Premiere League games, and will be one of the few providers to offer the new Big Ten Network this fall. The company yesterday said it would begin carrying the Tennis Channel to all subscribers, making it one of the few providers that hasn’t placed the network on a separate sports tier.

“I think we’ve made a conscious decision to be a leader in the content area, and sport content is one area that we’ve been historically interested in,” said Derek Chang, DirecTV’s executive vice president for strategy and development. “It’s one of the things people have an emotional attachment to. As an overall strategy, sports is big for us. We’re in the business of serving our customers, so as a result, there’s a better argument for having sports.”

DirecTV has more than 15 million subscribers, making it the most popular satellite or cable service in the country. And many subscribers, like South, said they would have difficulty switching to another provider, even if it made better fiscal sense.

“We’re a sports family, and it’s hard to work around that,” said Pat Mahoney, a town councilman from Chesapeake Beach, Md., who subscribes to “Sunday Ticket” and Major League Baseball’s out-of-market “Extra Innings” package.

It’s that popularity that has allowed DirecTV to justify spending $700 million annually for the exclusive rights of “Sunday Ticket” through 2010 and invest tens of millions of dollars annually for its NASCAR package.

DirecTV appeared last month to be on the verge of similar deal to carry “Extra Innings,” but fans and lawmakers — led by Sen. John Kerry, Massachusetts Democrat — complained that an exclusive deal would be harmful to fans that previously had received the package through cable. Baseball earlier this month reached a deal with both DirecTV and InDemand, a consortium of major cable providers.

“Millions of baseball fans who no longer live near their favorite teams [would be] harmed by their inability to watch their teams’ local broadcasts except via Extra Innings, and harmed particularly by being forced to do so via DirecTV,” said Stephen Ross, director of the Penn State Institute for Sports Law, Policy and Research, in recent testimony before members of the U.S. Senate.

But DirecTV officials have defended the company’s ability to have exclusive deals, pointing to other companies, such as Comcast, that have refused to allow certain sports channels from being carried via satellite.

Industry analysts said DirecTV is wise to use sports content to distinguish itself from competitors. Competing providers including Comcast, Cox and Time Warner now offer high-speed Internet and phone services, and often “bundle” these products in a way that encourages customers to sign up for more than one. DirecTV offers bundled services, but has usually been forced to partner with other providers to offer them.

But how is it that DirecTV seems eager to pay for sports programming while other providers are more cautious? The key, industry analysts said, is that the company uses sports to grow its number of subscribers, many of whom will pay a premium for the service. And because DirecTV is available nationally, it can attract subscribers more quickly than cable companies that operate in specific regions.

“Sports has often been used to effectively subsidize something else,” said John Mansell, an independent cable and satellite analyst in Great Falls, Va. “These are your highest-paying, and therefore most profitable, customers.”

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