Q. If AT&T sells DIRECTV, could I break my two-year contract so I could cancel service and not pay any cancellation fees? It seems that if another company owns them, my agreement would no longer apply because I didn’t sign the agreement with that company, right? — Bernie, Gaithersburg, Maryland.
Bernie, CNBC, The New York Post and The Wall Street Journal have all reported that AT&T is taking bids for DIRECTV, either offering a majority or minority stake in the satcaster. That doesn’t mean a sale will transpire, but it appears that AT&T is actively looking to jettison the nation’s largest satellite TV service in some form.
However, whether AT&T sold a majority or minority stake, I’m sorry to report that you wouldn’t be able to break your current two-year agreement with DIRECTV, no matter how many months it may have left.
Before I explain, a little background on the two-year agreement that many pay TV providers often require, including DIRECTV.
DIRECTV, like other companies, both in and outside the TV business, use two-year agreements to keep customers from service-hopping. Without them, subscribers might switch to Dish or their local cable provider every time something bad happens, such as a channel blackout during a programmer fee fight or an increase in one’s bill.
To encourage consumers to sign the two-year deal, DIRECTV provides free NFL Sunday Ticket, free premium channels such as HBO Max, and lower first-year prices. Many subscribers agree to the two-year deals because the offers seem irresistible.
But the two-year commitment forces you to stay with DIRECTV if the company does something you don’t like. That is, unless you want to pay the cancellation fee, which is $20 a month for every month left in the two-year agreement.
This is why I strongly advocate that consumers refrain from signing two-year deal.
Now if AT&T sold DIRECTV to another company, the two-year contracts would carry over as part of the deal. The new company wouldn’t agree to buy DIRECTV if this wasn’t the case. No company would agree to pay fair value for a company whose two-year subscribers could suddenly cancel the minute ownership changed hands.
In fact, all subscriber and company contracts would continue. For instance, the new company couldn’t take away your free year of HBO Max because it didn’t own the company when you signed up. It must fulfill the current agreement.
And the NFL couldn’t cancel its deal with DIRECTV for the NFL Sunday Ticket unless it was in the original contract that it could if ownership changed. (And we have no indication that’s the case.)
Bernie, hope that makes sense. Happy viewing, and stay safe!
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— Phillip Swann