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DIRECTV, Hilton Worldwide to Enhance TV Service

Zacks Equity Research

One of the leading U.S satellite TV operators, DIRECTV (DTV), and Hilton Worldwide Holdings Inc. (HLT) are planning to collaborate to offer high-quality in-room TV viewing experience for hotel guests.

As per the deal, DIRECTV will be the preferred satellite TV distributor for Hilton Worldwide and will deliver its popular HD channels with user friendly remote controls to over half a million hotel guest rooms across the U.S.

Moreover, Hilton Worldwide will continue to use DIRECTV’s Residential Experience (DRE) technology. The DRE platform will not only lower cost per channel but will also reduce power consumption. Hilton Worldwide has already installed the DRE technology in more than 220 hotels across the country and expects to cover each of its hotels in the nation going forward.

DIRECTV will also benefit from the Hilton Worldwide’s new promotional offer for members of Hilton HHonors, which is an award-winning customer loyalty program. The offer promises loyalty points or free stays at Hilton Worldwide properties in 2014 to members who opt for DIRECTV services at their residence.

DIRECTV’s Residential Experience technology, which was launched in 2011, is gaining significant popularity in the hospitality industry. The technology enhances the TV viewing experience in hotels for a reasonable cost. An anti-microbial remote control is also available with the Residential Experience TV service.

In the fourth quarter of 2014, the DIRECTV U.S. segment added net 93,000 subscribers as compared with 103,000 in the year-ago quarter. Average monthly subscriber churn rate in the reported quarter was 1.41% against 1.43% in the previous-year quarter.

Hence, we believe that the new deal with Hilton Worldwide will not only drive the company’s top line but will also safeguard its position against cable and satellite TV operators like DISH Network Corp. (DISH) and Comcast Corp. (CMCSA).

DIRECTV currently has a Zacks Rank #2 (Buy).

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