Satellite TV operator DISH freezes pricing to 2009

By Yinka Adegoke

NEW YORK (Reuters) - EchoStar Communications Corp (DISH.O) said on Monday it will freeze the prices of its most popular satellite television packages until 2009 as competition sharpens in the slowing U.S. economy, sending its shares down more than 5 percent.

The owner of the DISH Network said it is also offering three months free programming to new customers and will waive activation fees.

The move comes as stronger concerns over a U.S. recession prompt investors to question where consumers will cut their home spending on goods and services.

The concerns have intensified competition for pay-TV customers among satellite television operators, cable TV companies and telephone companies that have launched nascent video services.

"I personally don't like the discounting side of the business," said EchoStar Chief Executive Charlie Ergen, speaking at the Consumer Electronics Show in Las Vegas.

EchoStar has traditionally marketed its services to lower income households, as well as to the higher end, while larger satellite rival DIRECTV Group Inc (DTV.O) has more recently focused on higher income households by tightening credit requirements for new customers.

Some analysts believe this is one of the reasons EchoStar has seen a sharper slowdown in subscriber growth as economic pressures first begin to be felt at the lower end of market.

EchoStar said it will freeze the starting price of DishDVR Advantage packages at $39.99 a month until February 2009.

"I think we're just really trying to simplify our business. We really want to give somebody real value," said Ergen.

The move comes after Ergen told analysts in November that the weaker U.S. housing market had made the pay-TV market more competitive for all players.

"There's a backdrop of fewer housing starts, so there are fewer customers to go round," he said at the time.

A spokesman for DirecTV said: "We are in the latter stages of evaluating price structure for 2008, but don't currently have any plans to freeze prices this year."

The U.S. largest cable operator Comcast Corp (CMCSA.O) said it will increase it video costs this year by around 5 percent on average, although its average customer bill, including Internet and telephone, would rise by around 3.1 percent.

New York-based Cablevision Systems Corp (CVC.N) said in October it will raise the price of its average video package by 4.7 percent due to increases in programming costs.

Verizon Communications Inc (VZ.N) said in November it will raise the subscription price of its advanced video service by nearly 12 percent.