DirecTV is in play with a potential $50 billion acquisition by AT&T, but CEO Mike White is continuing to run the satcaster with an eye to competing aggressively with cable and telco TV rivals as the company faces flat to negative subscriber growth.
White, speaking at the MoffettNathanson Media & Communications Summit in New York, said that DirecTV last year acquired “stacking rights” to Turner Broadcasting System full current seasons for VOD, with plans to launch the content by the end of the year. Comcast announced a deal with Turner this week for several in-season shows, as well as full previous seasons, available across multiple platforms.
DirecTV is currently working on a dynamic ad-insertion system for VOD that will support the Turner on-demand programming, White said.
A Turner rep confirmed the VOD rights deal with DirecTV. “Offering Turner’s most popular programming on demand provides an opportunity to expand our audience and introduce new viewers to programming which, in turn, adds further value for our brands and enhances the platform for our distribution partners,” the programmer said in a statement.
The issue of “stacking rights” is putting programmers like Turner and other networks in a difficult spot. While they want to cater to their biggest customers, the cable and satellite distributors, with the expanded content rights, such deals hurt their relationships with studio suppliers for new shows, which see the VOD access hurting demand for syndication and subscription VOD deals.
In another new feature, DirecTV next week will launch a “rewind-restart TV” capability for subscribers, White said, which will be similar to Time Warner Cable’s “Start Over” feature that lets viewers watch a program in-progress from the beginning.
White did not discuss reports that AT&T is in advanced talks with DirecTV about a potential acquisition. At the start of the session, MoffettNathanson senior analyst Craig Moffett informed the audience that White would not be able to discuss the reported AT&T talks with DirecTV. White then quipped, “I gotta turn off my cellphone in case I get a call.”
Overall, White acknowledged that growth in the pay-TV business has flat-lined. The industry raises consumer priced 4%-5% a year, “in a difficult housing market — then you wonder why there’s no growth for anyone… hello?” In the first quarter of 2014, DirecTV added just 12,000 subs, versus 21,000 a year earlier.
About the steady rise in pay-TV rates, White said, “There’s no panacea. There’s no silver bullet.” He predicted a growing wave of cord-cutting, unless the industry can figure out a way to contain costs.
DirecTV is entering into negotiations this year on a renewal of its distribution pact with Disney. “Clearly they are looking for a big increase,” White said. “All we’re interested in is getting a fair deal relative to our size and scale.”
Regarding the over-the-top rights Dish Network secured for five Disney-owned networks, including ESPN, White said, “I’m not so convinced the Dish deal was all that groundbreaking.”
The DirecTV topper remains skeptical that it’s possible to assemble a stripped-down pay-TV bundle at a price point that will be compelling to consumers, because programmers will insist that an OTT provider carry multiple networks instead of letting it “cherry-pick” channels. White cited DirecTV research finding that “there’s a pretty sharp fall-off on 12 bucks” per month for an over-the-top TV service.