Stock to Sell #3: DTV
DirecTV (NYSE:DTV) is expecting to face rapidly increasing programming costs, in large measure because the company has had to fork over ever-increasing amounts of cash to keep exclusive National Football League content for its NFL Sunday Ticket package.
Not surprisingly, DirecTV has said that customer growth should slow as a result of higher costs, and management recently signaled a shift in focus toward “customer retention” rather than heavy promotions to draw in new subscribers. Equipment subsidies and marketing costs now top $800 for each customer acquired, and it takes about 18 months for DirecTV to get that money back.
In addition, more content is available online, so more people are turning to the Internet for programming. That hurts DTV more than competing cable companies that offer high-speed Internet access along with phone and television service.