BellSouth Builds Early Bundling Momentum With DirecTV
The early returns from BellSouth’s [BLS] bundled service offering shows that its partnership with El Segundo, Calif.-based DirecTV is producing results.
Creative marketing efforts by BellSouth and a new holiday advertising blitz by DirecTV that offers free movie channels to new subscribers could spur a strong fourth quarter of sales. The promising forecast for this alliance could help to fuel more partnerships between traditional telecommunications services providers and satellite TV operators as a way to compete against cable TV in bundling Internet, video and VoIP (voice over Internet Protocol) services.
The fourth quarter traditionally is strong for TV service sales. The holiday selling season entices people to buy satellite TV equipment and BellSouth currently is offering free programming through its partnership with DirecTV that includes “NFL Sunday Ticket,” which features all the NFL games each week.
Jim Rozier, senior director/video services at Atlanta-based BellSouth, said that his company’s partnership with DirecTV helped to attract 35,000 of the telephone company’s customers to become new DirecTV subscribers and 57,000 existing DirecTV subscribers to take BellSouth’s bundled offering. BellSouth’s offer to provide wireline phone, Internet access, DirecTV’s satellite television and Cingular Wireless LLC’s cellular-phone services offer a “grand slam” that cable rivals cannot match.
“We are not only having existing customers take advantage but we have a ton of new customers coming on board,” Rozier said in an interview last week. “I am excited about the success of this so far. Customers really like this bundle.”
Another factor that could spur sales is that the nation’s shift to Daylight Savings Time each fall aids television sales as consumers find the nights becoming dark much earlier.
“We certainly expect to take advantage of fourth-quarter seasonal sales,” Rozier said. “We just started a direct response mail campaign,” involving millions of pieces of mail, he added.
The effort includes a “substantial” television advertising campaign in more than 22 markets throughout the southeast where BellSouth offers its services. The marketing thrust also will encompass newspapers, magazines and radio.
BellSouth’s fourth-quarter spending on marketing will equal its third- quarter advertising blitz that successfully focused on the company’s ability to offer a “grand-slam bundle” to trump cable’s triple play of Internet, voice and video services. Because BellSouth is a 40-percent owner of Cingular Wireless, it can offer a cellular service as part of its discounted offering, Rozier said.
Cingular Wireless, 60-percent owned by SBC Communications Inc. [SBC], just got the government nod to acquire rival cellular provider AT&T Wireless. Cingular officials expect the transaction to close later this quarter. BellSouth will be gearing up to offer its bundled package with DirecTV to all the AT&T Wireless customers in BellSouth’s territory.
A study released Nov. 1 by 2Wire, a San Jose, Calif.-based broadband service provider, found that 79 percent of the people surveyed would cancel their cable subscriptions if they could receive a triple-play bundle offering from their phone companies. Roughly 55 percent of the respondents said they would choose their telephone company rather than their cable company to provide a triple-play bundle if both could offer it.
“A clear majority would rather get their communications services from us rather than other providers,” Rozier said. “People are looking for a company that can provide a grand- slam bundle with the professionalism and service that they have come to expect from BellSouth.”
A marketing agreement between BellSouth and DirecTV involves cost- sharing between the two services for their bundled offering.
“Our agency deal gives us a portion of the marketing expenses back in a co-op arrangement,” Rozier said. For example, direct-mail and media advertisements are BellSouth-centric but they mention DirecTV.
One new TV advertisement features Santa Claus buying bundled BellSouth service for people on his Christmas shopping list, Rozier said. Another TV ad that has “pulled well” in early airings shows a man on the street spinning around because he is happy to have just received the newly offered DirecTV video service from BellSouth.
“We have an enormously exciting promotion for the first quarter,” Rozier continued. “It is going to be nothing like the last two promotions. It is directionally the same message: Get data services and DTV from BellSouth.”
BellSouth’s decision to team up with DirecTV was undertaken with care but the results quickly have shown the choice was the right one, Rozier said.
“We agonized for almost a year,” Rozier told us. “We talked to both companies (DirecTV and EchoStar Communications [DISH]) as well as Bell Canada and other potential partners. I think we were judicious in our decision.”
(Jim Rozier, BellSouth, 404/829-8721; Jimmy Schaeffler, The Carmel Group, 831/643-2222; Chuck Hewitt, 410/544-4108; Chase Carey, DirecTV, 310/726-4656; Paul Brunato, 2Wire, 408/503-1088)