DirecTV’s Carey Soft Pedals Content, Distribution Synergies
Synergies Yes, But 'Only The Right Content At The Right Value'
By Linda Moss and Tom Steinert-Threlkeld -- Multichannel News, 2/28/2008 7:58:00 AM
New York – A day after Liberty Media officially became one of his major shareholders, DirecTV CEO Chase Carey Thursday downplayed the benefits of having content and distribution capabilities under one corporate roof.
“I do believe that content and distribution have synergies, but it’s only the right content, only the right content at the right value,” Carey said during a DirecTV presentation for investors in Manhattan.
Carey, head of the nation’s largest satellite provider, made his remarks during a question-and-answer session for the more than 200 analysts and press at the meeting.
The event came the day after Liberty Media – whose programming assets includes full or partial ownership in Discovery Communications,QVC, Starz and GSN -- finally closed its $12 billion deal to swap its 16.3% of News Corp. for a 41% stake in DirecTV, a major video distributor. Liberty Media also got regional sports networks in Denver, Pittsburgh and Seattle, as well as $465 million in cash, as part of the deal.
At the investor meeting, Carey was questioned about the strategic benefits of owning both content and a distribution outlet.
“Do I think there are synergies between content and distribution?” Carey said. “There are win-win opportunities. You can do things. Maybe you can launch channels, maybe you can just launch product extensions. You can use your distribution, I believe that’s true. That doesn’t mean, necessarily, you’re going to acquire content.”
As to whether DirecTV will now suddenly be on a content-acquisition hunt, Carey said, “If there was something there that was really compelling and we thought made sense, I guess we’d look at it. But I don’t see it any of that today. I think it ends up being one of these theoreticals that people like to write about.”
Carey was also asked about the future relationship and synergy between DirecTV, which has 16.8 million subscribers as of the fourth quarter,and Liberty holdings like Starz and QVC.
“It’s probably premature to say,” Carey said. “We obviously carry those channels, especially Starz and QVC channels. What are the opportunities for us to win-win with them? I think we’ve probably got to sit down with them and see what’s there. Historically, we’ve been a strong distributor of Starz.”
In remarks outside the presentation, Carey said he expects to have a “more wide-ranging set of options" in the future, under Liberty Media and its chairman, John Malone.
Under News Corp. and Rupert Murdoch, consideration of its other media interests -- from the Internet social site MySpace and the Fox broadcast and cable networks -- played a role in shaping DirecTV strategy, Carey said.
“I think they’ll [Liberty Media] look for us to be successful and pursue whatever paths we have to maximize our success,” Carey said. “Not that News Corp. wouldn’t want us to be successful, but they’d want us to pursue paths that fit within the other News Corp. businesses.”
But Carey would not define what new options or directions DirecTV would pursue, under Liberty and Malone.
Liberty does control Starz, the second-largest premium movie and pay TV service; and Malone’s Discovery Holding is the dominant shareholder in Discovery Communications and its set of networks.
But Carey downplayed any chance DirecTV might somehow have its interests take precedence within Discovery, noting that Liberty Media, now DirecTV’s largest stakeholder, has spun out its stake in the Discovery business.
However, a number of industry analysts and veterans expect that Malone will in fact use DirecTV’s distribution clout as a bargaining chip to win better terms for his own programming. For example, DirecTV could withhold contract renewals or rate increases for networks owned by Time Warner or Comcast if services like Discovery’s channels or GSN don’t get favorable carriage from those two operators.
During Thursday’s presentation, Carey lowered his forecast for DirecTV’s subscriber count this year from 18 million to “north of 17 million,” in the 17.5 million-range.
He was also asked whether DirecTV and its direct-broadcast satellite rival Dish Network, are trying to find ways to partner
“I think we continue to be open to trying to find ways,” Carey said. “We do a few things today. I wouldn’t say they’re major differentiators. I think we will continue to look of there are opportunities to do things with EchoStar. We’d certainly look to doing it, but I can’t get into a whole lot of specifics.”
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