More With DirecTV's Michael White: An Extended Interview

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For
part one of this interview, click here.


ON BROADBAND:

MCN: The broadband offering
through your partners is primarily digital subscriber line?

MW: With the telcos it is. We''ve also
done things with Wild Blue [Communications] and we're looking at a number of
other opportunities as well that are in process. We are eager to broaden the
ways that we can partner with telcos and we''ve had a number of discussions
about that. I don't have anything to announce in that regard today. You'll see
us continuing to broaden our telco partnerships in the weeks ahead but beyond
that I think. We're eager to provide compelling broadband bundles and we're
open to looking for a variety of different ways to do that with our customers.

New DirecTV CEO Michael White

MCN: Former CEO Chase Carey had
focused more on the video product, leaving broadband for others to worry about.
But as wireless technology has evolved, is there increasing pressure to come up
with a broadband offering of your own?

MW: No, I don't think so. I don't
think Chase and I would disagree, I think what we do best is our video
offering. We certainly believe strongly that we want to ensure that our
customers have an option to create a synthetic bundle that includes broadband
and if we need to facilitate that, we are going to be proactive in looking for
many ways to do that, short of becoming a broadband provider ourselves, which I
don't see us doing.

ON REGIONAL SPORTS:

MCN: You also mentioned in the
first quarter about possibly beefing up your regional sports presence. Are you
making any headway on that front?

MW: We have a terrific RSN team
under Mark Shuken and certainly if there are opportunities out there we're
going to be open and looking at each of them as ways to expand our presence
there. But as you well know, most contracts in that area are long-term
contracts and they only come up every now and then and as they come up we'll be
opportunistic in taking a look at it.

I
certainly believe we have a terrific team that is capable of managing more
sports networks than we currently have. But it's got to be the right time,
right place and it needs to make sense for our shareholders. But certainly
we'll be opportunistic in looking at those opportunities.

ON INTERNATIONAL:

MCN: International has been one
of your fortes during your career, so is international something that you want
to put an increased focus on? Is it just in Latin America, or would you like to
concentrate on another area of the world?

MW: I think you have to look at a
given situation and figure out where the opportunities are. Certainly I think
international is a big opportunity for Direct TV because I believe this company
has core skills and competencies that can be leveraged far beyond the United States.

Having
said that, there are a few realities. The first is that there are significant
government restrictions on ownership in many, many countries. Fortunately for
us, they aren't in Latin America. We are one building block in the building and
having compelling content and having a distribution model like we do, you need
both to make DTV work. And in many countries in emerging markets you have
free-to-air still, you have significant government constraints over what you
can and can't do.

We've
taken a look since I got here at opportunities internationally and I would say
my initial conclusion was, while I'd never say never about the Chinas, Indias
and Russias of the world, our focus ought to be on Latin America. We control
our own destiny [there], we have ownership in all of the countries, we don't
have significant government constraints and, most importantly, we have an
outstanding leadership team. In the end, there's some global content, but most
content is local and you need savvy local management and operators. I've been
down to Latin America and I'm impressed with the quality of our Latin American
team.

MCN: Do you think you're not
getting full credit for what you're doing internationally, with the Latin
American operation still housed within DirecTV?

MW: In fairness, I think it's up to
us to make sure that our investors give us credit and the way you need to do
that is with transparency about your strategy, your expectations. We've started
to, over the last year, increase the visibility of our head of Latin America,
Bruce Churchill, who's doing a terrific job. And at least in my own experience,
if you're not getting credit it's because you're not providing clarity around
the strategy and the expectations and we certainly intend to do that.

ON SPINOFFS:

MCN: There has been talk that you
could unlock the value of that unit by spinning it off.

MW: Well I did a spinoff in 1998. I
was the chief financial officer of PepsiCo, helping facilitate the spinoff of
our bottling group. The last I checked, when you do an IPO, there's about a 20%
discount, so I don't know how you create value when you've got negative
synergies, given that our broadcast centers leverage the same skill sets and
the same infrastructure, given that a lot of the innovation of set-top boxes on
high def and in Latin America comes from the U.S. business. So I would tell you
I think there could be some significant dis-synergies to unbundling. And,
furthermore, trying to do some kind of an IPO or split off or spinoff, I don't
see that as in our shareholders' best interest at this time.

Now,
you never say never. And if someone wants to offer us a premium typical of
acquisitions, I guess we'd have a different conversation, we'd have to look at
it for our shareholders. But at least at this time, we're focused on continuing
to grow our Latin American business. We think it's our best growth opportunity.

MCN: You'd entertain an offer to
sell it if the price was right?

MW: Boards of directors these days
are obligated to listen to [everybody]. That isn't specific to Latin America;
I'm not trying to put out a ‘for sale' sign. All I'm saying is people came to
me and said, ‘Why don't you spin it off?' and I'm just saying that makes no
sense to me financially, as a former finance guy, particularly given the strategic
advantage of satellite in that region, the synergies that we have between the U.S.
and Latin America and the growth opportunities. I'll leave it at that.

ON CONTENT:

MCN: What about content in
general? Is that something you would want to expand on?

MW: I think we'll probably continue
on the strategy that we've had as it relates to content and that is first and
foremost we want to ensure we have the best sports content out there bar none.
Second, that when we get great content, we always add a Direct TV twist to it.
So we have a feature group with Master's or we have our stats that we have with
the NBA League Pass or other things. We'll continue to look for ways to put a
little twist to the content we have. And third, we're going to continue to try and
provide compelling content on the 101 Network.

But
I would say again I see this as being opportunistic there. I don't see some
big, transformational move in the content arena in the United States. And I
would say certainly in Latin America, we'll continue to be also very open about
looking at content.

Keep
in mind I believe our core strength, what we do well, is exactly what you said
earlier -- we are a superb aggregator and distributor of video and I don't see
us as a content company with the skill set. I think we have other skills that
are outstanding and we've got to leverage our strengths, rather than try to be
what we're not.

MCN: So you're not going to go
out and buy Viacom any time soon I guess?

MW:
 (Laughter) I wouldn't comment on acquisitions.
I would say our focus is elsewhere.

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