DirecTV drew the straw to be the 1st MVPD to report earnings after last week’s Comcast-Time Warner Cable merger announcement (anyone else looking forward to Charter reporting on Fri, 2/21?). Not surprisingly, cable consolidation was the 1st question satellite execs received from analysts on Thurs’ 4Q earnings call.
CEO Mike White cautioned that it’s very early in the process and that DirecTV is still assessing the competitive implications. However, he said “if the deal is approved as proposed, it clearly represents an unprecedented media concentration of 1 company.” White called for regulators to appropriately scrutinize it, suggesting the deal could create an effective broadband monopoly that might include as much as 2/3 of the country. He also pointed to the “interaction between horizontal power and vertical power that they would have with content costs.”
The CEO acknowledged that negotiating contracts for 30mln subs would give the new company more leverage, which might combat rising programming costs, but said “it’s a very complicated dynamic because leverage might not flow through to other competitors.” Plus, Comcast-TWC would own a lot of programming themselves.
Thurs’ call also provided some color on the upcoming Dodgers net, which Time Warner Cable is managing. White called the net’s rate a “staggering increase relative to any other benchmark in Major League Baseball,” adding that L.A. customers may expect to see “more than the average increase” in the sports surcharge if such a deal is done. “My biggest concern is our customers. I think we all forget that none of our customers have an income like those of us on the call here,” he said.
Other highlights from the call: DirecTV is embracing a hybrid satellite cloud structure for its core business, while exploring a more niche OTT offering (emphasis on niche, meaning DTV will not be making 200+ channels available over the Internet). White has his doubts about how much 4K content there will be, but said DirecTV is prepared to take a lead role when it’s ready. It’s launching later this year a satellite that should help it get the 4K biz going.
Not much talk about Weather Channel, which has been dark on DirecTV for more than a month. “We may have lost a few thousand customers in 1Q related to Weather Channel,” White said. DirecTV, which acquired wireless home security provider LifeShield last year, continues to be bullish on home monitoring, though it’s very early days. The company has made approx 300-400 home monitoring sales, with the offering not national yet. The plan is to get the execution flawless (different licenses are needed for installs, sometimes an electrician), with DirecTV rolling out nationally by year-end.