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DirecTV CEO Ponders Next OTT Video Move

Satellite Giant ‘Disappointed’ that Hulu Pulled Back, But DirecTV Prepared to Pursue Plan B, Says Mike White 8/02/2013 6:23 AM Eastern

DirecTV president and CEO Mike White said the satellite giant is mulling new over-the-top video options after its bid for Hulu failed and the owners of the Web TV hub opted to stand pat and plow more money into the business.

“Look, no question we were very interested in the asset and we are certainly disappointed in the decision that was made to pull it off the market,” he said Thursday during DirecTV’s second quarter earnings call, when asked by an analyst about the Hulu situation. “We made what we thought was an aggressive and attractive bid for it and we had done a lot of work internally to develop the strategy.”

White explained that DirecTV established a digital group 18 months ago headed by senior VP of digital entertainment products Tony Goncalves aimed at accelerating the company’s TV Everywhere strategy, resulting on both on-demand and live TV streaming both in the home, and a portion offered to customers while they are on the go. DirecTV believed a successful acquisition of Hulu could help the company flesh out that strategy.

That didn’t pan out, so it’s on to Plan B.

“Post–Hulu, we have had to take a step back and look at other ideas that will probably be more targeted,” White said. We are looking at some subscription VOD ideas, and obviously when I’m ready to announce those I’ll share them with you. But for competitive reasons I’ll keep them to ourselves right now. But certainly we continue to believe that there are opportunities for DirecTV in that space and we’ll continue to be opportunistic in looking at them.”

Meanwhile, other pay TV operators have been pursuing subscription-based VOD strategies and offerings that in some ways look to replicate the success of Netflix. Verizon, for example, has partnered to develop Redbox Instant by Verizon, while Comcast has launched Streampix, a subscription service that delivers a menu of VOD fare to set-top boxes and to connected devices.

White was also asked for his views on M&A in the pay TV sector and how Dish Network could factor into that thinking, given  that Liberty Media chief John Malone continues to agitate for more cable consolidation.

“Further industry consolidation does make sense to help address what are unsustainable cost increases for the average customer,” White said, noting earlier that the balance between content providers and distributors “is out of whack.”

“Further industry consolidation does make sense to help address what are unsustainable cost increases for the average customer. In that sense, John [Malone] is 100% correct – scale matters.”

But given that DirecTV operates in a regulated industry, “the options on consolidation for DirecTV are rather few,” White added. “But we never say never, and we'll be opportunistic when the right moment arrives.”

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