DirecTV's Carey Eyes Wireless Play

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After reporting its best basic subscriber growth in about four years, DirecTV Group CEO Chase Carey said the satellite TV giant would look for ways to further differentiate itself from the competition, including investigating offering a mobile wireless product.

 DirecTV reported 301,000 net new subscriber additions in the fourth quarter, well above analyst consensus estimates of about 224,000 additions. On a conference call with analysts Tuesday afternoon, Carey said that the bulk of those new customers came from rival satellite TV operator Dish Network and cable operators.
Also helping to boost subscriber numbers were aggressive promotional offerings to new and existing subscribers. Carey said that the strategy for promotional offers is to "neutralize, rather than one-up" rival offerings, adding that DirecTV would not compete on price alone.

The DirecTV CEO pointed to three priorities for 2009 -- continuing to drive its brand and content leadership, including boosting HD offerings and original programming like Friday Night Lights; further strengthening and focusing its sales efforts; and developing tools and technology that improve customer-service performance.

Carey said that DirecTV has had success in attracting high quality subscribers and would continue its efforts to do that, adding that one opportunity for the company may lie in an area that cable has held up for the moment -- wireless telephony.

While cable operators are currently involved in the Clearwire wireless joint venture, for the most part that is focused on data applications. Although he did provide specifics, Carey said a relationship with the cellular telephone industry would be "a real opportunity to put cable on its heels."
Carey said that DirecTV already has a relationship with two of the biggest wireless players - Verizon and AT&T - and that some kind of expansion of that relationship to the wireless arena would be advantageous for all parties.
"The real opportunity is for us to expand our relationship in a win-win way," Carey said. "I think mobility is going to become a more and more valuable attribute and a more and more important one... What's the shape or form of that as we go forward? We'll have to see as we discuss those things."
Carey also added that he sees opportunity for subscriber growth in the possible bankruptcy of Charter Communications. Charter hired a bankruptcy lawyer last week and is expected to file a pre-packaged Chapter 11 reorganization in the near future.
Carey pointed to the success DirecTV had in targeting areas dominated by Adelphia Communications Corp. when that cable operator filed for bankruptcy in 2002 -- an effort that took one of its buyers,Time Warner Cable, months to reverse in key markets.
"That is certainly an opportunity for us," Carey said, adding that DirecTV has made similar efforts in times of competitive turmoil, including retransmission consent, sports channel disputes and services disruptions tied to transitioning a market to all-digital .
"One of the core themes is at all levels to be nimble, agile and opportunistic in whatever shape or form those things present themselves," Carey said. "They can be retrans fights, or sports channel fights or any other noise in the market. As this market gets more competitive you have to be able to take advantage of every one of those opportunities."
Carey said that in light of the economic climate, DirecTV will plan for the worst. But still he believes 2009 will be very similar to 2008, with revenue expected to rise 10%, net subscriber growth in the 4% to 5% range and cash flow to finish north of $3 billion for the year.

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