In the world today, we are given communication and technology at the rate of our demand. We communicate using direct and indirect forms of media that can be delivered to millions of consumers at once such as with cable and satellite television. Although it is one of the most widely accessed technologies of our time, we must understand that television is a media industry of its own. When providing a nation with television programming, it is important to acknowledge the most prominently effective business infrastructures that have impacted the world today. In terms of distribution, we are going to focus on DirecTV, now owned by AT&T as of June 2015 (CNN.com, 2014).
DirecTV was acquired by AT&T in 2015
Background
DirecTV is a satellite company that distributes and exhibits television content. DirecTV has a headquarters location in El Segundo, California, but also include corporate offices in New York, New York, and in Denver, Colorado, while also having satellite uplink facilities in Castle Rock, Colorado, and Marina del Rey, California, with a Latin American broadcast center in Long Beach, California. In addition to the locations that are owned by DirecTV, it also has more than 801 home service locations across the country, which provides home installations of DirecTV receivers. It has approximately 27,200 employees in the United States. DirecTV was founded in 1990 as an asset of Hughes Electronics. During the inaugural years, DirecTV was created to compete with Sky, a European high-power digital television service provided by News Corporation. The name “DirecTV” derives from the term direct broadcast satellite television (DirecTV.com, 2016). The company is currently under the direction of John T. Stankey, whom is also the President of AT&T Entertainment and Internet Service, after AT&T’s acquisition of DirecTV on May 18, 2014 (Law360.com, 2015). Previous acquisitions made by DirecTV before its acquirement by AT&T include the purchase of ReplayTV from D&M Holdings in December of 2007, and the purchase of wireless home security firm LifeShield in June of 2013 (BizJournals.com, 2013).
John T. Stankey, President of AT&T Inc.
Assets
DirecTV’s assets include channels and programming featured exclusively on their service, which include channels like the Audience Network, Root Sports Northwest, Root Sports Southwest, and the 3D television channel n3D. DirecTV also provides exclusive programming, mainly for sports events and packages that include the NFL Sunday Ticket, and bonus coverage of the Men’s Major Golf Tournaments and Grand Slam Tennis Tournaments (TheVerge.com, 2014). DirecTV carries sponsorship deals with airlines such as Delta Airlines, JetBlue, American Airlines, and United Airlines. Original programming is featured on the Audience Network, holding intellectual property to shows such as Rogue, The Dan Patrick Show, the now-defunct Supreme Court of Comedy, Guitar Center Sessions, and The Artie Lange Show. Other programming segments included acquired series from other networks such as Friday Night Lights from Universal Media Studios, and Passions from NBC Studios. International programming from the Audience Network includes the comedy series Trailer Park Boys and Less Than Kind, both from Canada.
Alternative Rock group The Smashing Pumpkins performing live in 2012 for Guitar Center Sessions, exclusively featured on DirecTV
Business Model
DirecTV’s business model includes a service that distributes and exhibits cable and satellite channels as a service provider. The service is delivered to consumers of cable and satellite television, which has accumulated to 26 Million subscribers as of 2015. Although there is a high amount of customers buying DirecTV’s service, the company could not escape competition, as any other healthy business. DirecTV has seen direct competition from other satellite broadcast services such as Dish Network and Time Warner Cable. Still, DirecTV remains as one of the strongest providers of satellite television, helping to distribute programming from all six conglomerates of Viacom, Comcast, The Walt Disney Company, Twenty-First Century Fox, Inc., Time Warner, and CBS Corporation, featuring an expansive catalog of channels and programming featured on all media companies (DigitalTrends.com, 2012).
Revenue Model
The company pays annually for licenses from one of the media conglomerates, like Viacom, to carry channels onto the service provider. Viacom would license their 26 channels to DirecTV for around $1 Billion for the annual term, allowing for DirecTV to broadcast their channels to their customers. Paying customers would pay a monthly fee as a form of subscription at a standard price of $19.99 per month for a standard 145-channel package that includes channels from other media companies. In total, $519,740,000 is made per year from the subscription fees, if we assume that every customer under the subscription is paying only for the standard package. Other forms of revenue streams for DirecTV come from advertising and stock shares (Reuters.com, 2015).
DirecTV’s Revenue from 2006 to 2014
In conclusion, this entire article highlights what DirecTV represents as a satellite television service provider. It is important to understand how, why, and where the properties of broadcast companies distribute their content, in order to grasp the basic concept of the business side of this service. DirecTV and its properties demonstrate the essentials of the business by providing a successful and dominating example as the United States’ top provider of television programming.
References
CNET Staff. (2002, January 2). Hughes buys satellite firm for $1.3 billion. Retrieved February 5, 2016, from http://www.cnet.com/news/hughes-buys-satellite-firm-for-1-3-billion/
Couts, A. (2012, July 11). DirecTV vs. Viacom: Why subscribers should support DirecTV. Retrieved February 5, 2016, from http://www.digitaltrends.com/home-theater/directv-vs-viacom-why-subscribers-should-support-directv/
DirecTV Editing Staff. (2016). About Us : Company Profile. Retrieved February 5, 2016, from http://www.directv.com/DTVAPP/content/about_us/company_profile
Key, P. (2013, June 5). DirecTV buys LifeShield, which Michael Hagan joined in 2009 – Philadelphia Business Journal. Retrieved February 5, 2016, from http://www.bizjournals.com/philadelphia/news/2013/06/05/directv-buys-firm-backed-by-michael.html
Nayak, M. (2015, July 24). With DirecTV, mobile video services and ad revenue to come, AT&T executive says. Retrieved February 10, 2016, from http://www.reuters.com/article/us-at-t-videoservice-idUSKCN0PY29X20150724
Popper, B. (2014, May 19). Here’s why AT&T is trying to buy DirecTV. Retrieved February 5, 2016, from http://www.theverge.com/2014/5/19/5730534/why-is-att-trying-to-buy-directv
Sege, A. (2015, November 4). FCC Says $48B AT&T-DirecTV Merger Good For Competition – Law360. Retrieved February 5, 2016, from http://www.law360.com/articles/723149/fcc-says-48b-at-t-directv-merger-good-for-competition
Stelter, B. (2014, May 19). AT&T announces deal to acquire DirecTV. Retrieved February 5, 2016, from http://money.cnn.com/2014/05/18/news/companies/att-directv/index.html?hpt=hp_t2