DirecTV tells Congress: “We must adapt”
June 26, 2014
By Chris Forrester
DirecTV’s Chairman and CEO Michael White told a Senate Judiciary Committee Hearing that the evolution of video had changed the very structure of its business. “Much has changed recently, particularly the growth of broadband. If we at DirecTV want to continue to compete in today’s increasingly Internet-driven economy, we must adapt as well.”
The Committee is examining the proposed merger between AT&T and DirecTV.
White praised what DirecTV had achieved, describing it as an “American success story” but returned to his theme, arguing that today’s market realities are different. He also stressed that a combined 26 million subscriber base should not be considered as an antitrust concern.
White was joined by AT&T’s president & CEO Randall Stephenson, explained how challenging life at been at AT&T with its U-Verse ‘broadcasting’ model, which he said struggles to make money. He stated that less than 2 percent of AT&T’s TV customers purchase TV services on a stand-alone basis. He said that 60 cents out of every dollar earned from U-Verse goes to programmers.
“We lose money on video,” said Stephenson. “As we move programming costs to look more like DirecTV’s programming costs, it changes the dynamic of our video product. We suddenly go from video being a loser to a profitable service, and now our broadband build is not burdened by a money-losing proposition on video,” added Stephenson.