DirecTV CEO Talks Subscription VOD Plans, Dish Deal Hurdles

NEW YORK – DirecTV chairman and CEO Mike White said Thursday that he was “optimistic” he could share more details about the satellite TV giant’s subscription VOD and broadband video plans in 2014, saying the core opportunity was in reaching cord-cutting millennials. And he once again said that a combination with Dish Network would have financial benefits, but would face regulatory hurdles.

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Speaking at the company’s annual investor day, he said: “I am optimistic that over the next 12 months we’ll have more to say about [the company’s broadband video plans]. But we think it is an opportunity.”

He emphasized that the company wouldn’t try to take on Netflix with a broad-based offer. “What we are looking at is niche ideas…if we get the rights,” he said. The niche market focus could allow the company to reach cord cutters and millennials, White said.

Hinting that DirecTV was “already well down that path” of negotiating for rights, he said it would be premature for the firm to detail its plans at this stage though.

“Post–Hulu, we have had to take a step back and look at other ideas that will probably be more targeted,” White had said earlier in the year.

“Over the next three years, we are looking at electronic sell-through, subscription VOD and over-the-top” service possibilities, White told the Wall Street audience at the event, which was webcast.

Asked about Intel’s long-gestating plans to possibly launch an online pay TV service that replicates the offers of current pay TV firms, White said: “I don’t think the Intel idea is a good idea.”

Discussing DirecTV’s failed bid for Hulu, which ended up calling off its auction, White said: “We felt there were unique things we could bring to the party,” including more focus on kids offers and offers for millennial cord-cutters.

There would be substantial synergies from a DirecTV-Dish Network merger, White also said when asked about a possible merger. “In about a third of the country, you would go from three to two” pay TV providers, he added in highlighting likely regulatory concerns. But he reiterated that he feels a deal would be pro-consumer.

White also expressed optimism Thursday that DirecTV can maintain net subscriber growth despite tough competition and changing viewer behaviors.

CFO Pat Doyle, meanwhile, said that rising programming costs remain the biggest challenge for the pay TV business. And he said the company would continue to consider dropping more marginal channels.

DirecTV said it expects compound annual growth of more than 15 percent in earnings per share for the 2014-2016 period, while predicting continued challenges in Latin America. Management cited currency weakness in Brazil, Argentina and Venezuela, along with costs related to the soccer World Cup in Brazil next year.

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