DirecTV to Expand Ties With Cellular Carriers, CEO Says
DirecTV will expand ties with wireless carriers this year as it seeks to move distribution of the satellite service beyond TVs and PCs, CEO Chase Carey said in a quarterly earnings call Tuesday.
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The satellite company’s long-standing alliance with Verizon and recent resumption of resale pact with AT&T, put it in a strong position for moves to increase subscriptions, Carey said. AT&T, which switched last year to Dish Networks, returned to the DirecTV fold last fall. It resumed DirecTV service sales in 22 states last week, company officials said. But how DirecTV will bring its programming to cellphones is a long-standing goal that still hasn’t been finalized, company officials said.
News Corp. CEO Rupert Murdoch trumpeted DirecTV plans for a wireless broadband strategy three years ago. While DirecTV at the time planned to invest $1 billion and forged an alliance with WiMAX provider Clearwire, a service never materialized. DirecTV’s WiMAX interest waned when Liberty Media replaced News Corp. as its majority owner. “There will be more of an interest” between DirecTV and carriers in making wireless “more of an inter-related part” of the satellite business,” Carey said. “It’s a positive opportunity for us. What the shape and form is going to be, we'll have to see.”
In addition to wireless, DirecTV plans to begin deploying home networking software with some of its high-end HD/PVRs this year with a home server/slave unit strategy targeted for 2010, Carey said. The home networking is part of a move by DirecTV to switch its HD/PVR satellite receivers to an internally developed operating system.
While DirecTV’s video-on-demand service launched last year and the take up among customers is “improving,” it “needs to be made easier to use,” Carey said. VoD isn’t “big enough yet to drive any material” revenue for DirecTV, but “over a couple of years” that will change with emergence of home networking, Carey said.
Meanwhile, DirecTV’s Q4 profit narrowed to $332 million from $348 million a year earlier as interest expense rose to $112 million from $59 million. The rise in interest expense was tied to DirecTV’s long-term debt, which jumped to $5.7 billion from $3.3 billion a year ago. Revenue increased to $5.31 billion from $4.87 billion as DirecTV added 301,000 net new subscribers, ending the year with 17.6 million subscribers in the U.S., up from 16.8 million a year ago. - Mark Seavy