Telco TV

DirecTV’s Carey Shrugs Off Impact Of Clearwire-Cable WiMax Venture

5/07/2008 9:14 PM Eastern

DirecTV Wednesday downplayed the impact of its wireless-broadband partner, Clearwire, going into business with several of the satellite provider’s cable archrivals in a $3.2 billion WiMax joint venture.

DirecTV CEO Chase Carey, during a first-quarter conference call, was asked about the morning’s announcement that Clearwire and Sprint Nextel were teaming with Comcast, Time Warner Cable, Bright House Networks, Intel and Google to create a nationwide wireless-broadband network.

“Bottom line, this is not something that is going to be impacting the business a whole lot in the next couple of years,” Carey said.

Almost a year ago, DirecTV and Echostar did a deal to partner with Clearwire, a wireless high-speed Internet provider, in order to offer satellite customers a three-service bundle of video, voice and data.

“Clearwire really hasn’t had any meaningful—I don’t mean this in any derogatory way, they may have been focused on other things—but Clearwire has not been a meaningful part of anything we’ve been doing,” Carey told analysts after announcing stronger-than-expected subscriber growth, a gain of 275,000 customers in the quarter.

“We have an agreement, but we’re not doing a whole lot with it, and they haven’t been doing a whole lot with the business,” Carey said.

While he claimed that any wireless-broadband news is positive because it “sort of creates energy and alternatives in the broadband space,” Carey said the new Clearwire joint venture faces challenges and will take years to get off the ground.

“Clearly, there are issues about six-party partnerships and other things that time will tell,” Carey said. “We don’t even have WiMax technology deployed yet, and you’ve got to build it out. Wireless, even the wireless sort of core services, really is not part of the bundle today.”

At least one analyst, Sanford C. Bernstein & Co.’s Craig Moffett, wrote in a report Wednesday that the Clearwire-Sprint joint venture spells the end of Clearwire’s year-old deal with DirecTV and Echostar.

“The satellite operators DirecTV and Dish would look to be the ‘odd men out,’” Moffett wrote. “Both have a tenuous JV with Clearwire to provide wireless broadband that will now presumably be dissolved."

DirecTV is doing a $3 billion stock buyback, and Wednesday disclosed that its large new shareholder, Liberty Media, has agreed to limit its voting power to its current ownership percentage, 47.9%, regardless of the number of shares DirecTV buys through its stock repurchase program.

Liberty Media increased its stake in DirecTV from 41% to nearly 48% back in April.

“We’re only a couple of months into our new ownership with Liberty, and just actually had our first board meeting less than two weeks ago. But I think these steps should be clarification that Liberty and DirecTV are working well together, and working well to move DirecTV forward,” Carey said.

“Clearly, we and Liberty believe there are other steps that make sense for us together and expect to continue to move forward expeditiously as we work through short-term items,” he said. “It’s a great start under our ownership structure, and we look forward to the future.”

DirecTV plans to launch its video-on-demand service by the end of the second quarter, Carey also told analysts. 

“I think our product really will distinguish us first and foremost in easy use and customer attractiveness,” he said, although later adding that products like DVRs are more important at this juncture.

“VOD continues to be probably a long-term proposition,” Carey said. “I’ve said before, DVRs and HD I think are much more powerful forces in the marketplace today. I think VOD, that’s not diminishing any VOD, will grow. I think it will grow over a longer time frame."

With a recent satellite launch, DirecTV will continue to add to its HDTV offerings, which now stand at 95 national HD networks and local HD service in 77 markets, according to Carey.

Beating expectations, DirecTV reported a net gain of 275,000 subscribers, up 17% in the first quarter, while average monthly revenue per customer rose nearly 9%, to $79.70.

The nation’s largest satellite provider—which now has 17 million subscribers, up 5% from a year ago—also saw its lowest first-quarter monthly churn rate in 10 years, at 1.36%.

 

 

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