DirecTV Grows Latin America Business
Once-Bankrupt Division Now a Top Earner
by K.C. Neel -- Multichannel News, 8/24/2009 12:00:00 AM
In 2004, DirecTV Latin America was in bankruptcy. Today, following a series of mergers and reorganization, the company is among DirecTV Group's shining stars.
DirecTV Latin America owns 74% of Sky Brazil, 41% of Sky Mexico and 100% of PanAmericana, which covers most of the remaining countries in the region. All told, the three units count 6 million customers, according to DirecTV Latin America CEO Bruce Churchill.
Many of the challenges and advantages the Latin American unit faces are similar to those DirecTV tackles in the U.S., Churchill said, but the scale is different. Cable is DirecTV Latin America's largest competitor and, like stateside cable operators and telcos, many of the largest Latin players offer triple-play bundles. DirecTV Latin America is in talks with several regional telephone companies to partner as DirecTV has done with AT&T, Verizon Communications and Qwest Communications International in the U.S. But no deals are yet in place.
DirecTV Latin America has been able to create some cost efficiencies with programming and equipment by leveraging the scale of its U.S. counterpart, Churchill said. The boxes in Latin America are the same boxes deployed stateside, for instance.
The markets are much more underdeveloped though. Pay-TV penetration in the U.S. is well over 80%, but only about 25% of Latin American homes subscribe to some type of pay-TV service. Moreover, while more than 60% of DirecTV's new U.S. customers are subscribing to advanced services such as digital video recorders and HDTV, the rates are significantly lower south of the border.
Churchill figures about 10% of DirecTV Latin America's customers subscribe to an advanced service and "we probably have the highest penetration of all our competitors. Many don't offer advanced services at all," he said. "There is plenty of upside to be had in Latin America," Churchill said. "Will it ever reach U.S. rates? Probably not. But 50% penetration is not out of the realm."
Similar to its U.S. counterpart, DirecTV Latin America is well-positioned with high-end consumers. But the company is trying to attract more middle-market homes. DirecTV Latin America recently launched a pre-pay service option with consumers throughout its footprint and is getting good traction.
"Ninety percent of all phones are paid for with pre-paid cards in South America," Churchill said. "So this concept is already well-received. Customers buy their equipment and then buy the programming ahead of time. We have some customers buying two-weeks of service at a time. This is definitely a cash society and the pre-paid option is popular. Already in Venezuela, about 300,000 of our 800,000 customers there are pre-paid customers."
Regardless of the differences between the two operations in terms of size, market penetration and maturation, the goals of both the U.S. and Latin American operations are the same. "We want to provide the best TV experience, hands down," Churchill said. "Every region is different, but the goal is the same."Looking South for Sales
12/02/2009MTVN Latin America Ups Acosta
04/23/2009Thomson Extends DirecTV Latin America Deal
09/07/2004Dish Network Adds Telenovela Channel
11/25/2008DirecTV Latin America Has a Plan
12/12/2003
VIEW ALL GALLERIES
