DirecTV Weighs Alternatives To Broadcast Retrans

CEO Says Retrans Costs Up 50%; Customers Could “Demand Alternatives”

DirecTV chairman and CEO Mike White said the satellite giant is weighing its options to providing broadcast television service, including investigating antennas and Aereo-like technologies that could bring programming to customers at a lower price.

White, speaking on a conference call with analysts to discuss its third quarter results, said the satellite giant has always had the option of providing antennas to customers and has looked into installing antennas on set-top boxes as a way to avoid paying high retransmission fees. White said with retrans fees up 50% this year and expected to climb higher in the future, customers will demand a solution, including buying their own antennas to avoid paying for local stations.

While White said nothing is imminent, the satellite giant continues to research the matter.

“We are trying to anticipate with new technologies what we might be able to do,” White said. “…Mostly it’s a function of what level of discipline we see in retransmission fees.”
Aereo has developed a technology that captures broadcast signals and delivers them to customers for a monthly fee. The service is currently available in several cities but has been sued by several broadcasters that believe the service infringes on their copyrights.

According to reports, distributors like Time Warner Cable and DirecTV are investigating whether to come up with a similar technology if Aereo is deemed legal.

White stopped short of admitting DirecTV was involved in developing its own answer to Aereo – he called the technology “unique” – but said the satellite giant was looking at its options.

“We have done some work this year to see whether from an R&D standpoint we might see additional ideas going forward that could be leveraged,” White said. “I don’t have anything imminent and I don’t think speculating on Aereo make a lot of sense. That’s kind of a unique business in and of itself.”    

DirecTV reported better than expected net new subscriber growth in the third quarter, but not at the expense of Time Warner Cable, which was in the middle of a heated retransmission consent blackout in New York, Los Angeles and Dallas in August.

“I made a policy decision a couple of years ago that we would not try to take advantage of these circumstances,” White said. “I don’t think it’s in any distributor’s interests to do so. I just don’t think it’s smart. What goes around comes around in these programming disputes.”