DirecTV pushes premium brand, even in weak economy

By Yinka Adegoke

NEW YORK (Reuters) - When comedy talk show host Jimmy Kimmel acts as a pitch man for DirecTV this summer, he joins a list of celebrities the U.S. satellite television provider has engaged to promote itself as a premium brand.

A focus on high-definition programming has helped DirecTV Group Inc (DTV.O) drive subscriber growth, but it could become a liability as consumers tighten their purse strings in the face of rising gas prices and the weak economy, analysts say.

"There is the possibility that being a premium brand at the high end of the pay-TV market may end up being negative for DirecTV," said Kaufman Bros analyst Todd Mitchell.

DirecTV's growth is expected to have slowed in the second quarter, when it is forecast a gain of 100,000 to 150,000 net customers, according to three analysts polled by Reuters. That compares with 275,000 additions in the first quarter.

But growth is still seen better than that of rival DISH Network Corp (DISH.O), which positions itself as a low-cost provider of satellite TV and has suffered operational missteps compounded by the poor economy. The analysts expect DISH to have added between 19,000 and 75,000 net subscribers.

DirecTV has been more successful than other U.S. pay-TV operators in building a reputation for high-definition and exclusive programming, including football's NFL Sunday Ticket, which Kimmel will promote.

It has the highest average video revenue per user in the U.S. pay-TV market, at around $80 a month. In second place is cable company Comcast Corp (CMCSA.O) with $76, while DISH generates $68.

The strategy to build a premium brand was adopted by DirecTV Chief Executive Chase Carey in conjunction with Chief Marketing Officer Paul Guyardo early in 2006. They decided to raise credit requirements for people signing up to the service and to focus on the best-paying customers.