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Guest Message by DevFuse

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how the leasing benefit DirecTV?


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18 replies to this topic

#1 OFFLINE   kathymoore

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Posted 05 March 2006 - 06:59 PM

how the leasing benefit DirecTV?

thanks!

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#2 OFFLINE   Wolffpack

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Posted 05 March 2006 - 08:00 PM

DTV has been getting alot of flack from the investment community regarding it's "churn". That is customers that added new service for a bit then ether cancelled or were turned off due to not paying their bills.

For awhile DTV has handing out equipment like candy. Folks would subscribe and cancel/get shut off and then sell their equipment on eBay.

I'd guess leasing is the way DTV top brass figures that's how they will cut their churn. Well, that and a life time commitment with every receiver. :rolleyes:

Plus the entire industry, cable and SAT is heavy into leasing.

But this is just me guess.

#3 OFFLINE   BillyBob_jcv

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Posted 06 March 2006 - 07:29 AM

A cash rebate hits the P&L as an expense. If D* owns the HW they can capitalize it - probably over 3 years. That is a huge difference to the bottom line.

#4 OFFLINE   DonLandis

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Posted 06 March 2006 - 07:55 AM

A cash rebate hits the P&L as an expense. If D* owns the HW they can capitalize it - probably over 3 years. That is a huge difference to the bottom line.



Do I smell the makings of Enron accounting? :joke:

#5 OFFLINE   Greg Bimson

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Posted 06 March 2006 - 08:05 AM

Do I smell the makings of Enron accounting? :joke:

Acutally, it is DirecTV doing what Dish Network has been doing for years. This is the first time DirecTV has been leasing their receivers.

Leasing should substantially improve the bottom line, as DirecTV will continue to own the receivers. DirecTV can then take the depreciation charges for an asset they own over three years, as opposed to "giving" the receivers away as an expense which impacts the bottom line immediately.

#6 OFFLINE   vurbano

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Posted 06 March 2006 - 08:10 AM

This is what Im seeing for someone that cancels after a month under the new lease program with a new HR10-250 with info gathered by LonghornXP at satelliteguys.com. http://www.satellite...r...8618&page=3
The matter is currently being reviewed by the courts in Florida:

$499 HD DVR reciever upfront lease charge + monthly lease fee
$300 programming termination fee.
-$12.50 (credit for 1 month service)
if you send the reciever back you are out $786.50 bucks and have nothing to show for it

If you keep the reciever:
$499 HD DVR reciever upfront lease charge + monthly lease fee
+ $300 programming termination fee.
+ $470 D* charge for not returning the reciever, and this does NOT dissappear after 2 years
- $12.5 (credit for 1 month service)
= $1256.50 and they can charge you with grand theft according to longhorn's sources


Is it worth it? 1300 bucks?

before 2/28 I could get an Hr10-250 off ebay new for around $450 - $200 rebate = $250 dollars with the $300 cancellation fee for a cost of $550 - 12.5 = $537.5 dollars if I cancelled after one month correct? So overnight D* has decided to screw us out of another $700 dollars.

In short to answer the original poster, it benifits D* by extracting an ADDITIONAL 700 dollars from every new HDtivo owner that cancels service. So, how does everyone like paying for those Spaceway spotbeam sats and greedy network affiliates for HDLIL now?

#7 OFFLINE   ScoB

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Posted 06 March 2006 - 08:21 AM

This is what Im seeing for someone that cancels after a month under the new lease program with a new HR10-250 with info gathered by LonghornXP at satelliteguys.com. http://www.satellite...r...8618&page=3
The matter is currently being reviewed by the courts in Florida:

$499 HD DVR reciever upfront lease charge + monthly lease fee
$300 programming termination fee.
-$12.50 (credit for 1 month service)
if you send the reciever back you are out $786.50 bucks and have nothing to show for it

If you keep the reciever:
$499 HD DVR reciever upfront lease charge + monthly lease fee
+ $300 programming termination fee.
+ $470 D* charge for not returning the reciever, and this does NOT dissappear after 2 years
- $12.5 (credit for 1 month service)
= $1256.50

Is it worth it? 1300 bucks?

before 2/28 I could get an Hr10-250 off ebay new for around $450 - $200 rebate = $250 dollars with the $300 cancellation fee for a cost of $550 - 12.5 = $537.5 dollars if I cancelled after one month correct? So overnight D* has decided to screw us out of another $700 dollars.

In short to answer the original poster, it benifits D* by extracting an ADDITIONAL 700 dollars from every new HDtivo owner that cancels service. So, how does everyone like paying for those Spaceway spotbeam sats and greedy network affiliates for HDLIL now?


You can still buy one on ebay. No need to activate it at all. I really don't blame them for smacking a person who would cancel after 1 month - why would they want to encourage that in any way? After all, when you take the DVR you have agreed to a 24 month committment - haven't you?

#8 OFFLINE   vurbano

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Posted 06 March 2006 - 09:03 AM

You can still buy one on ebay. No need to activate it at all. I really don't blame them for smacking a person who would cancel after 1 month - why would they want to encourage that in any way? After all, when you take the DVR you have agreed to a 24 month committment - haven't you?

My guess is if you buy it on ebay now, D* is going to treat it as leased. I would expect them to just stop activating them soon

#9 OFFLINE   ScoB

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Posted 06 March 2006 - 10:26 AM

My guess is if you buy it on ebay now, D* is going to treat it as leased. I would expect them to just stop activating them soon


I don't know the answer to that, but I am still curious why you are so concerned about people that sign a 24 month contract and cancel in the first month. If I owned a business I would want to penalize and deter peeps from doing that also. That's a quick way to go out of business IMO. They subsidize the cost of equipment and in reality are entitled to a profit - why else be in buisness?

#10 OFFLINE   Blurayfan

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Posted 06 March 2006 - 11:21 AM

Working Link. Information everyone must know about the Lease Program

#11 OFFLINE   vurbano

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Posted 06 March 2006 - 01:58 PM

I don't know the answer to that, but I am still curious why you are so concerned about people that sign a 24 month contract and cancel in the first month. If I owned a business I would want to penalize and deter peeps from doing that also. That's a quick way to go out of business IMO. They subsidize the cost of equipment and in reality are entitled to a profit - why else be in buisness?

If you cancel after one month and return the HDtivo D* ends up with 800 dollars in their pocket and the HR10-250 in their possession which they will lease to some other sucker. Thats not making profit. That is robbery. And if that next sub cancels, theyve made 1600 dollars in a couple of months and still have the box. Who else makes those kind of profit margins? The mob? drug dealers?

#12 OFFLINE   dan8379

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Posted 06 March 2006 - 02:26 PM

I still don't understand why someone would cancel after one month? Don't people do their homework on the service before going through the trouble of having dishes installed, wires run, etc? The only part of this lease program that seems a little excessive is for the HD DVR. I'm a huge NFL fan, so commitments don't matter to me. I'm not going anywhere.

#13 OFFLINE   CCarncross

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Posted 06 March 2006 - 03:32 PM

The bottom line is if a new customer wont commit to 12-24 months of programming, D* shouldnt want them as a customer in the 1st place....make the penalty high enough and you weed out all the idiots...lets face it, thats how our criminal justice system works as well. If they still get enough people that try cancelling after a month, I hope they double it......its the only way people will learn

#14 OFFLINE   Wolffpack

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Posted 06 March 2006 - 05:47 PM

The bottom line is if a new customer wont commit to 12-24 months of programming, D* shouldnt want them as a customer in the 1st place....make the penalty high enough and you weed out all the idiots...lets face it, thats how our criminal justice system works as well. If they still get enough people that try cancelling after a month, I hope they double it......its the only way people will learn

Yes, agreed. I don't see how the penalty for cancelling early can be criticized by anyone.

#15 OFFLINE   Laserjock

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Posted 06 March 2006 - 06:42 PM

I don't think the issue around this leasing shift is concerned with leasing itself, but the fact you stil have to pay the same price for the hardware up front and yet you now no longer own it. I have had D* since 1997 and I refuse to pay $500 for a DTivo and not even own the thing. That in my mind is the issue.

#16 OFFLINE   damondlt

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Posted 06 March 2006 - 06:55 PM

They should only make you have a 12 month lease not 24. At an average $48 a month AT LEAST AT THE VERY LEAST thats almost $600 a year.I might add my bill is $106.96 per month and i only have an H20 and 2 SAMSUNG SIR-S310W!!.I think they can manage. no matter how you look at it , you should do your research before you sign any contract.there should be no need for breaking you contract.

#17 OFFLINE   kathymoore

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Posted 07 March 2006 - 01:10 AM

Yes, anyone who cancels after one month is an idiot... (unless they have a real good reason)

However, DirecTV's leasing and 2-year requirement basically prevents a lot of subscribers from going to another service provider with better prices, better equipment, and/or better service. In some parts of the country, cable and FIOS TV are now better choices. However, if someone has a 2-yr contract with DirecTV, I doubt he'll make the switch.

Does anybody think that in the short term, this will cause DirecTV to sign up fewer new customers?

#18 OFFLINE   Kheldar

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Posted 07 March 2006 - 01:14 AM

Yes, anyone who cancels after one month is an idiot... (unless they have a real good reason)

However, DirecTV's leasing and 2-year requirement basically prevents a lot of subscribers from going to another service provider with better prices, better equipment, and/or better service. In some parts of the country, cable and FIOS TV are now better choices. However, if someone has a 2-yr contract with DirecTV, I doubt he'll make the switch.

Does anybody think that in the short term, this will cause DirecTV to sign up fewer new customers?


Yes, but D* openly admits that. They want to sign up fewer customer, but customers that are willing to actually pay for their services. They don't want people that are willing to jump to another provider just to save a couple bucks.
Their investors think this change in policy is a good thing.

#19 OFFLINE   vurbano

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Posted 07 March 2006 - 06:48 AM

Yes, agreed. I don't see how the penalty for cancelling early can be criticized by anyone.


You dont think that a new customer that sees downrezzed 1280x1080i at Superbit DVD bitrates might want to cancel?? And those people are idiots? Perhaps D* just wants to lock people in before they realize how crappy HD PQ is?? And then Rape them when they do.




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