Q. I’ve been reading the comments here from DIRECTV and Dish subscribers that they are mad at the blackouts of local channels. My question is why on earth don’t they just cancel their service and get a new one, or just cut the cord? Come on, people, there are a lot of options out there including streaming. — Pete, Pasadena, California.
Pete, DIRECTV this week lost 60 Tegna-owned local channels in a fee fight while Dish lost 164 local channels owned by Nexstar in a separate carriage battle. Dish now has 236 channels blacked out due to eight different rate clashes.
The blackouts have certainly triggered an outpouring of angry comments here, and on social media sites, from DIRECTV and Dish customers. They can not believe that all companies involved seem to have little consideration for their interests.
Considering that there are other viewing options now, such as Netflix, and live streaming services like YouTube TV and Hulu Live, it’s reasonable to ponder why more people don’t just drop DIRECTV and Dish.
But there are two reasons why the latest blackouts will likely not lead to widespread defections from either service.
1. The two-year contract
We don’t know exactly how many Dish and DIRECTV subscribers have signed up for two-year commitments as part of their subscriptions. But it’s a requirement for new customers, and many long-time subscribers have agreed to renew their subs for two years in exchange for certain incentives such as free equipment upgrades.
While I have long argued that the two-year agreement is a bad deal for consumers, many people can’t resist because both Dish and DIRECTV offer tantalizing perks as part of the deal. Dish’s two-year agreement for new customers includes a price guarantee for two years while DIRECTV’s commitment includes free Sunday Ticket and HBO Max for one year as well as lower prices in year one.
The problem with the agreement, however, comes when something bad happens during the two years such as a blackout of a favorite channel, or a bad customer experience. The subscriber under the two-year agreement may want to drop service, but that would trigger a $20-a-month ‘early termination’ penalty for the remaining months left in the contract.
That’s a serious handcuff. For example, if you dropped service after one year, you would have to pay $240 in penalties.
DIRECTV and Dish know that the two-year commitment gives them leverage over their customers, which often leads to them being taken for granted. You can almost hear the executives saying, ‘They’re not going to drop us; they can’t because they would have to pay the penalty.’
If it were not for the two-year agreement, you can only imagine how many subscriber defections there would be for Dish and DIRECTV.
2. Many satellite subscribers can’t watch streaming, or even cable TV.
A significant number of DIRECTV and Dish subscribers can’t switch to streaming because there are no reliable Internet services in their area. (In many places, there’s not even a cable TV option.) The FCC this year estimated that 21 million rural Americans still lack access to high-speed Internet, although some believe the number is higher.
The limited TV options in rural areas is one reason why some industry analysts believe a rumored DIRECTV-Dish merger would have difficulty winning federal approval. The elimination of one satellite service would further narrow the viewing choices for rural residents.
“The Only reason we don’t drop DIRECTV is because we Do Not have Internet Service that will work for good reasonable service,” Loretta Hankins wrote in the TV Answer Man reader forum. “If you don’t live in the city, country people are at a huge disadvantage! We would love to cancel Directv but it is what we can get in our area.”
Some rural subs who have posted messages here acknowledged they could move to areas where Internet is available. But they are content with forgoing some modern conveniences for the peace that a rural area can bring.
“We are off grid – there are zero services/utilities,” wrote JR Hill. “We have Dish for TV (dropped DTV two+ years ago). We have HughesNet for internet so there is no streaming here due to speed and data quotas. Overall we enjoy the quality of life much more than the gadgets.”
For these folks, satellite TV is the only reliable way to watch multi-channel television and, in areas which are a long distance from local station towers, any television at all. Even antennas won’t work for some.
So while DIRECTV and Dish subscribers will express their anger, which is quite justified and understandable under the circumstances, it’s not likely that many of them will actually cancel.
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— Phillip Swann