Q. I want to cancel DIRECTV because I lost my ABC station a month ago and it doesn’t look like it’s coming back. But the problem is that I signed up for a two-year agreement six months ago. Is there anyway to get out of it? I want to cancel!! — Penny, Richmond, Virginia.
Penny, sorry but you’re stuck unless you want to pay a price. DIRECTV has a termination penalty in their two-year agreements that require you to pay $20 a month for every month you do not fulfill. So let’s say you canceled today, you would be obligated for 18 months times 20, which comes to a $360 penalty.
The termination penalty looms large now for Penny and many other DIRECTV and Dish subscribers who are missing their favorite channels due to carriage disputes with their owners. (DIRECTV has been without more than 120 Nexstar-owned local stations since July 3 while Dish lost 22 Fox regional sports channels on July 26 because of a separate fee fight.)
They would like to cancel and switch providers to watch their local and sports channels again. But they can’t because of the termination fees.
DIRECTV, like other companies, both in and outside the TV business, use two-year agreements to keep customers from service-hopping. Without them, DIRECTV’s subscribers might switch to another provider every time something bad happens, such as a channel blackout during a programmer fee fight or an increase to one’s bill.
Of course, not every DIRECTV or Dish subscriber has a two-year agreement. The satcasters (and other pay TV providers) only require you to accept one if you are getting a promotional offer, such as a cheaper monthly bill or free installation of an advanced HD DVR that might offer 4K programming. But many subscribers agree to the two-year deals because the offers sometimes seem irresistible. (DIRECTV actually provides a free year of the NFL Sunday Ticket if you agree to a two-year deal, a near $300 value.)
But Penny’s dilemma is fresh evidence that signing up for a two-year agreement is a big mistake, even if the return is particularly juicy. As a consumer, you want to preserve your leverage in every situation. But the two-year agreement gives all your leverage to the pay TV company.
So the next time you’re considering accepting a two-year offer, remember Penny.
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— Phillip Swann