DirecTV’s main selling point has long been its high-definition channels and a ton of NFL games. But now it’s offering something new: its own programming on its own channel.
In the past month, DirectTV Group Inc. has stocked its in-house channel, the 101 Network, with critically acclaimed shows that were canceled by the networks for low ratings. In doing so, the company has positioned its 101 Network as a sort of “HBO lite” premium content, commercial free.
And in the next couple months, the El Segundo-based satellite television provider will unveil six made-for-TV action movies starring mixed martial arts athletes. DirecTV owns the North American rights to the films and helped finance them the first time the company has experimented with film making.
Yet, even the network acknowledges it will likely never turn into another HBO, with the high-power production capacity to produce a critically acclaimed hit such as the “The Sopranos.” But it could fill a middle ground between premium cable and basic cable channels, such as TBS.
“I would love for people to perceive the 101 Network as a true value almost like getting a poor man’s premium channel,” said Eric Shanks, DirecTV’s executive vice president of entertainment who oversees 101 Network.
Of course, business goals define the venture.
The idea is to use the 101 Network to help DirecTV retain existing customers and eventually draw new ones. Forming a commercial-free premium channel represents a new strategy that so far hasn’t been mimicked by other television providers, including Dish Network Corp., DirecTV’s main satellite competitor, as well as cable companies such as Time Warner Cable Inc.
DirecTV’s investment in the 101 Network comes during a period of strong growth for the company. It added about 300,000 subscribers in the fourth quarter, and some analysts expect it to do even better when it releases first quarter numbers. Investors have taken notice, driving up DirecTV’s shares to almost $24 after dipping below $18 in October.
The recent growth can’t be directly linked to 101 Network because the channel is still nascent. But if the channel establishes a reputation, it could become a draw. And 101 gives DirecTV another way to distinguish itself during a time when many consumers are trying to trim expenses.
“The channel is something that’s really on the periphery now, but if you get some good people in there you can create some quality content,” said Matthew Harrigan, senior vice president at Wunderlich Securities in Denver, who follows TV satellite companies.
Channel change
The 101 Network started life two and a half years ago as a pop music channel aimed mostly at teenagers. Executives hoped enough buzz would develop around the channel that teens in households without DirecTV would nag their parents to sign up for the service. But the teenage market proved too tough to crack and executives pulled the plug a year ago.
That led Shanks and his team back to the drawing board, where they decided to recalibrate 101 to appeal to DirecTV’s core demographic: family men roughly 35 years old who already subscribe to DirecTV for National Football League games but might want entertainment programming in addition to sports.
In retrospect it was an obvious move, Shanks said. “It was one of those moments where you slap your head and say, ‘Duh!'”
Initially, DirecTV populated 101 mostly with comedy shows, but it made its first high-profile pickup last year when it agreed to co-finance the high school football drama “Friday Night Lights,” which NBC announced it was canceling. In return for shouldering some of the show’s costs, DirecTV got rights to show the new season of “Lights” before NBC. That deal was recently renewed for two more seasons.
DirecTV also picked up “Wonderland,” a series from “Friday Night Lights” creator Peter Berg that ABC axed after airing only two episodes. It also made a deal to rerun episodes of Showtime’s “Sleeper Cell.”
Last month, DirecTV scooped up three series CBS’ “Smith,” and ABC’s “The Nine” and “Eyes” that had developed cult followings but never drew the audience numbers that networks demand to keep shows on the air. The three programs were canceled before all episodes were broadcast. Now, the shows including the unaired episodes will run on 101 Network.
The channel also will soon feature a DirecTV-produced sports talk show with radio host Dan Patrick.
In addition, 101 soon plans to debut its movies featuring mixed martial arts stars. They will run on DirecTV’s pay-per-view channel, and then later on 101 Network. DirecTV also may try to license the movies to a cable channel. The company wants to see if it can break even on the movies before it weighs financing more.
Shanks said there are no plans to charge viewers for access to the 101. But Jayant S. Dasari, a television research analyst with Parks Associates in Dallas, said the 101 Network may eventually have to look at subscriptions, especially if its shows become more expensive to license and produce.
“At some point, they really have to move beyond customer retention and look at increasing revenue,” Dasari said.
