DirecTV CEO Says He’s Worried by Comcast/TWC
Comcast’s proposed $45.2 billion acquisition of Time Warner Cable potentially “creates a significant change in the landscape” of cable and satellite services, said DirecTV CEO Michael White on the DBS company’s Q4 results conference call Thursday. If approved, the deal would give Comcast control of more than 60 percent of the U.S. broadband network and grant it more power to negotiate content costs, White said. Comcast, in buying Time Warner Cable, potentially will gain added leverage with program suppliers, White said. But Comcast also will have control of programming through NBCUniversal, he said. “It is not clear” how Comcast will navigate between its cable systems and content operations, he said. Comcast agreed to pay about $45 billion for Time Warner Cable last week (CD Feb 14 p1).
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Having failed in its bid for Hulu in 2013, DirecTV will focus this year on “niche areas” for delivering over-the-top content, said White, who declined to disclose details. DirecTV will likely rely on a “hybrid” of satellites and cloud-based storage to deliver OTT content “to devices in the home,” White said. “Our focus this year will be more niche-oriented and let’s get some money,” White said. DirecTV also is weighing its options for subscription video on demand and will expand its TV Everywhere service late this year, he said. Hulu ended negotiations with DirecTV and others after current owners Fox, Disney and NBCUniversal agreed to invest another $750 million in the streaming service.
DirecTV will beam 4K content with the launch of its DirecTV-15 satellite this fall, but will initially limit it to event programming rather than broad content, White said. The strategy with 4K would contrast sharply with DirecTV’s initial approach in delivering 3D programming. DirecTV shut down its n3D channel and appears to be adopting a more conservative stance with 4K. The DirecTV-15 Astrium Eurostar E3000 satellite will launch aboard an Ariane-5 rocket, but DirecTV hasn’t disclosed its orbital position, and DirecTV representatives didn’t comment. DirecTV has trademarked the brands “4KN,” “4KNET” and “4K Network,” but hasn’t discussed specific plans for using them.
"I am not ready to say everything is 4K,” White said. “We see individual events,” including football and other sports, as potential candidates for 4K programming, he said. “It’s not clear yet how fast content” suppliers will “come on board” for 4K, but “we will be prepared,” White said. “I continue to believe our highway in the sky … is a low-cost means for providing the highest quality signal out there."
A likely candidate for 4K delivery may well be DirecTV’s NFL Sunday Ticket programming package, the agreement for which expires this year. DirecTV and the NFL have extended the period of exclusive negotiations on a new package and the satellite service provider expects to remain the sole provider, White said. The NFL and DirecTV have made “excellent progress” in discussions around a new agreement and talks thus far have been “positive and constructive,” White said. DirecTV has about 2 million subscribers to NFL Sunday Ticket, which last year cost $224 for the season for the basic service and $295 for the addition of streaming. DirecTV last paid $1 billion for the rights in 2009 for NFL Sunday Ticket, which generates slightly under $600 million in annual revenue for the satellite service, Goldman Sachs has said.
DirecTV Q4 net income declined to $810 million from $942 million a year earlier when the company posted a $111 million pre-tax one-time gain on its 42 percent stake in Game Show Network, which it jointly operates with Sony Pictures Television. DirecTV Q4 revenue rose to $8.59 billion from $8.05 billion. U.S sales improved to $6.77 billion from $6.32 billion, above Wells Fargo’s forecast for $6.71 billion, that bank’s analyst Marci Ryvicker said. DirecTV U.S.’s Q4 net subscriber additions were 93,000, down from 103,000 a year ago, but above the Wells Fargo forecast for 68,000, Ryvicker said. DirecTV blamed the downturn in net subscriber additions on a “continued focus on high quality subscribers.”