Pay TV is “a pretty imperfect market. It isn’t like anything sold at Walmart, I can tell you that,” DirecTV CEO Michael White said as he outlined his initiatives to an investor group. By mid-year he plans to “simplify our offer structure” and also provide his satellite customers with “a two-page bill that you can actually understand.” The change is partly an outgrowth of his view that the pay TV industry is “not very good….There’s a lot of ways to do things better.” That’s important because, now that the industry’s mature, “it’s harder and harder for things not to devolve into price competition….We’ve all made our business more complicated than the average consumer understands and that creates challenges for the bill down the road.” White reiterated his view that consumers are getting squeezed as programming prices rise. “In an economy where consumer incomes for the bottom 60% are flat and content costs are growing double digits….consumers wouldn’t sign up for that if they had a choice. But they don’t have a choice.” White pointedly noted that mergers of distributors — including DirecTV and Dish Network — “would create a new balance of power.” Still, he isn’t confident that federal regulators would allow the satellite companies to combine, which would reduce the number of pay TV choices from three to two for about 40% of the population.
While Comcast’s planned $45.2B acquisition of Time Warner Cable might help his cause, the DirecTV CEO says that there are “concerns when the top two cable guys merge” — including issues involving broadband and net neutrality. The main question, as he sees it, is “whether this is still a local business … or whether it’s becoming a national business.”
Meanwhile he’s interested in seeing what Dish does with the rights it just secured from Disney to use its channels on a personal online pay TV service that might serve broadband-only customers. DirecTV “took an aggressive stance toward Hulu” when it was on the block last year to see “what we could do with millennials and cord cutters,” White says. “If another opportunity comes along we’ll be going after that too.”
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