DirecTV to Cut Dish Price to $199

Satellite television company DirecTV will slash the price of its entry-level receiver dish to $199 on Monday in an effort to grab customers before digital cable TV competitors get going, sources close to the company said Friday.

“The new entry-level price will be about $199,” said a source who did not want to be identified. DirecTV declined to comment.

DirecTV, part of Los Angeles-based Hughes Electronics Corp., is responding to recent similar price cuts by rival EchoStar Communications Corp. DirecTV’s cheapest dish currently costs $499, and models costing as much as $900 are available.

The price cuts are linked to a package of basic programming service that costs about $360 a year.

AT&T; Corp., which has a 2.5% stake in DirecTV and markets the service directly, is not expected to change the price of its dish, which will remain at $199 to consumers who are in its True Rewards program.

The source said AT&T; would begin to apply discounts to what it charges for programming, reducing the charges to $155 a year from the current $360 for members of its True Rewards program.

AT&T; customers must use loyalty points earned in the program toward the cost of the service. AT&T; declined to comment.

The dishes are made by Thomson Consumer Electronic Corp.’s RCA. Thomson is owned by Thomson Corp. of France.

DirecTV is the largest U.S. direct satellite TV service. It has 1.7 million subscribers and is growing at a rate of 20% to 30% a year.

PrimeStar is the second-largest, with 1.35 million. It is owned by a group led by cable TV firm Tele-Communications Inc. EchoStar is third with 105,000.

The turf war is already being waged among telephone companies, cable TV firms and satellite operators for the digital entertainment market, which is estimated to be worth tens of billions of dollars.

Phone firms are planning to offer wireless cable, in which programs are beamed by line of sight, and cable TV companies are planning upgraded cable services and Internet access over high-speed networks.

But satellite companies already have a lead. “They are two or three years out in front while the cable TV firms and [telecommunication firms] are just getting started,” said Jimmy Schaeffler, an analyst at Carmel Group.

One advantage of satellite services--not lost on AT&T;, which has an option to take a stake of up to 30% in DirecTV--is that consumers who buy a dish are not likely to write off the cost by switching to another provider.

AT&T;, which is battling heavy competition in long-distance telephone services, is hoping to reduce the loss of customers by tying them into a satellite TV service.