DirecTV is a “centerpiece” for Liberty Media to build on, and the satellite company’s new big shareholder poses less potential conflicts than the old one, News Corp., DirecTV CEO Chase Carey told an investor conference Thursday.
Asked about allaying DirecTV shareholder concerns about Liberty Media’s intentions, Carey said that John Malone’s company only wants to best for the nation’s largest satellite provider.
Speaking at the Lehman Brothers Worldwide Wireless and Wireline Conference, Carey noted that DirecTV appears to be “a top priority” for Liberty Media.
Chairman Malone is “a great believer in what we’re doing and where we’re going and the opportunities in front of us,” Carey said. “He wants DirecTV to be as truly successful as we can be.”
Carey said he thinks that DirecTV is an asset “they (Liberty) are very excited about, and look [at] as a centerpiece to build, not one to figure out how to take advantage of, or handicap or damage or create conflicts in. They want us to be strong as we possibly can.”
Liberty Media closed its $11 billion swap deal to acquire News Corp.’s 41% stake in DirecTV back in February. Malone’s company has since increased its ownership to 48%, and Wall Street has speculated that ultimately, Liberty Media will seek to acquire the remainder of DirecTV.
“I honestly believe Liberty, in every discussion I’ve had, they want to make DirecTV successful,” Carey said.
In some ways, the relationship with Liberty Media is easier than the one with News Corp. was, according to Carey.
While saying that while News Corp. never tried “to put a straightjacket” on DirecTV, Carey added, “News Corp. had a lot of businesses that related to us and certainly, probably was disinclined to be enthused about us going into areas where we’d be competing with them. Liberty doesn’t really have that breadth of businesses and therefore, in its most simplistic sense, is looking for us to be opportunistic about pursuing any ways we can create value for the business.”
On Thursday Carey reiterated many of the remarks he made earlier this month during a conference call on first-quarter results, when DirecTV reported that it had netted 275,000 subscribers, beating Wall Street’s expectations.
Once again, Carey downplayed the impact of a wireless-broadband joint venture that includes Clearwire, Sprint Nextel, Comcast, Time Warner Cable, Bright House Networks, Intel and Google.
“The list of six-party partnerships that have been raging successes is pretty short,” Carey said. “You’ve got a lot of competing agendas there….and a big task you’re tackling.”
He conceded that the competitive impact of cable’s triple-play bundle—of voice, video and high-speed data—is “certainly not behind us. It is probably at the front of cable’s message to the marketplace.”
But Carey implied that the triple play was losing some steam, as broadband penetration matures and customers come off triple-play bundles as prices go up.
He was once again asked whether DirecTV planned to pursue its own wireless broadband plan, WiMax, rather than just offering a triple play in conjunction with telco partners.
Carey claimed it was never DirecTV’s goal to own its own WiMax business—“it’s a tough business”—but rather to have distribution arrangements, to be sure that his subscribers have choices for broadband and telephony that are compatible with the satellite provider.
“Customers are finding those choices,” he said.
During the conference, Carey also maintained that the dour economy, mortgage fiasco and slowdown in housing starts really haven’t had a major impact on DirecTV’s business.
“The economic issues have really been minimal,” Carey said.
He told the conference that DirecTV’s successful strategy was not “a one-note song about HD,” even as cable operators try to ramp up their HDTV rosters.
According to Carey, the satellite provider has enjoyed success not only as an HDTV leader but also its tent poles of sports programming; original content such as Friday Night Lights, which joins its lineup in the fall; good customer service; DVRs and coming video on demand.
“It’s really been nuts and bolts,” he said. “There’s no silver bullet…build the brand around all those things.”
Carey also said that while “it’s great” for his competitors “to put out press releases” about their HDTV expansions, it takes a lot of time and effort to really gear up and have a substantial HDTV roster.
“The leadership position we have is a multi-year process to build,” he said.
As for competition from Verizon’s FiOS service, Carey conceded that the telco—with its aggressive marketing and HD TV-set giveaways – does take away customers when it enters a market initially.
“We hold up actually pretty well, but certainly we get impacted,” he said.