At first glance the compensation for Michael White listed in DirecTV‘s new proxy statement looks like a big pay cut. But it may simply reflect an accounting fluke: The satellite company gave him $12M in option awards in …
While he hasn’t decided whether to oppose the deal in Washington, DirecTV CEO Mike White says Comcast’s $42.5B pact to buy Time Warner Cable would result in “unprecedented media concentration in one company.” The No. 1 satellite service provider is “still assessing some of the competitive implications” but White wants to “ensure it’s appropriately scrutinized” — especially the “effective broadband monopoly they might have in two-thirds of the country.” The owner of NBCUniversal also would have a lot of power to raise content prices. That “creates some significant changes in the competitive landscape that we have to think hard about.” Couldn’t Comcast use its clout, with 30M subs after a merger, to slow the rate of increase in programming costs? Perhaps, but “it’s a complicated dynamic because that leverage may not flow through to its competitors.”
White says he’ll continue to resist high programming costs.”None of our customers have an income like those of us on the call here.” He wouldn’t comment on the state of the carriage negotiations with The Weather Channel, which went dark on DirecTV in January, but says that his company “may have lost a few thousand customers in the first quarter” due to the dispute. “Fundamentally I continue to believe if your viewership goes down ….that should be reflected in the price.”
The No. 1 satellite company will look at set-top box data to “determine cost/value tradeoffs” different channels offer — and then “prune/drop less popular channels when necessary” — it said today in an Investor Day gathering. ”Programming costs is the biggest issue affecting our industry,” DirecTV CFO Pat Doyle says. He hopes to hold the annual growth in U.S. programming costs to between 7% and 9% a year through 2016, roughly even with this year’s 9%. Execs are eager to persuade the Street that the company’s annual U.S. revenues will grow by “mid-single digit” rates through 2016 — possibly ahead of the consensus estimate of 4.4%. They also forecast “high single digits” annual cash flow growth, beating expectations for 6.6%. New businesses could add $1B to the top line in a few years — and one could be an Internet video service. “We’re going to be opportunistic in looking at that space,” CEO Mike White says. It probably would be less ambitious than, say, Intel’s attempt to offer a full-fledged pay TV service on the Web. That “wouldn’t make sense” as broadband providers move to usage based pricing. Noting that a niche service might work, White added “we’ll have more to say about that later in the year.” Meanwhile, he has little interest in integrating Netflix into DirecTV’s set top box. Although it’s “not that hard to do,” it wouldn’t be in his interest to “undermine our pay-per-view movie business.” About 30% of DirecTV subs currently also subscribe to Netflix.
EXCLUSIVE: A quarter century after Doogie Howser, another teen prodigy is looking to headline a comedy series. Enlightened creator/exec producer Mike White has teamed with Joe Port and Joe Wiseman for an untitled single-camera comedy, which has gone to NBC with a put pilot commitment. Written by Port and Wiseman, the ensemble workplace comedy centers on a driven but naive 16-year-old prodigy chef who gets a job working in the kitchen for his idol, a temperamental and unpredictable celebrity chef. It was inspired by Flynn McGarry, a 14-year-old Los Angeles chef who has been making national headlines. McGarry will serve as a producer on the series, from White’s RipCord Prods and 20th Century Fox TV where Port and Wiseman are under an overall deal. White, Port and Wiseman executive produce with RipCord’s David Bernad (Enlightened). Enlightened, which ended its two-season run on HBO, was nominated for two Emmys this year, including for lead Laura Dern. This marks Port and Wiseman’s return to NBC where they wrote and exec produced another comedy through 20th TV last year, Joe Joe And Jane, which went to pilot.
Investors are becoming so obsessed with the idea of a DirecTV-Dish Network merger that it seems to be just a matter of time before the companies succumb. Questions about the possibility kept popping up in Dish Network’s quarterly earnings call yesterday. Company watchers “seem to be fixated” on the subject, Brean Capital’s Todd Mitchell says. And execs don’t seem to mind. Last week DirecTV CEO Michael White said he’d “never say never.” And Evercore Partners’ Bryan Kraft says he has “never heard [Dish Network Chairman Charlie Ergen] speak as openly and positively regarding the possibility of a combination with DirecTV” as he did yesterday. The FCC blocked a satellite TV merger in 2002 on the grounds that it would leave many rural subscribers, who don’t have cable, with just one pay TV provider. But Ergen says that the business is “materially different” than it was then. Verizon FiOS and AT&T U-verse serve many markets. “And then of course, you have almost an unlimited number of people now on digital Internet getting into the business, whether it be from Netflix to Hulu to Amazon to everything else that you can do on the Internet,” Ergen says. “And that’s only going to grow.” Later he added that “there’s not any question that putting Dish and DirecTV together makes a lot of sense…. If you just wanted to create short-term value, that would be probably your No. 1 option.”
DirecTV CEO Mike White is no stranger to taking a stand against rising programming costs, pulling 16 Viacom channels off his service during the summer for 10 days before reaching a carriage deal. Now his company and Dish Network are the lone pay TV providers serving Southern California who don’t have an agreement to carry the LA Lakers’ newly created TV homes: Time Warner Cable SportsNet and Time Warner Cable Deportes. The satellite companies are balking at the $3.95-per-sub-per-month price that TWC reportedly wants. (Verizon, AT&T, Charter and, as of today, Cox Communications have made deals and are carrying the channels.) DirecTV, with about 1.2 million subs in SoCal, also is holding out on making a deal for a third rookie regional sports net, the Pac-12 Networks. It says that costs are out of control. (A fine Sports Business Journal report on the LA mess calculates providers must pony up about $10 per sub per month to carry all the RSNs in town). White was, well, direct during his company’s earnings call yesterday when asked about negotiations. Sounds like the Lakers, who play their fifth game of the season tonight in Utah, won’t be on DirecTV anytime soon:
In terms of Los Angeles, I think it’s another example of how broken this system is. People take the same content, package it up, bid it up for 3 times the national average on a per-game basis and then try and stick it back to the other distributors in the geography. And I think that’s very unfortunate. We have a system of very carefully tracking churn by day to look at kind of what we think our customers will be most interested in. We are continuing to have active discussions about the Lakers network. We hope to have a deal on that content. But all of these new channels that – everybody here wants a new channel and they want to stick it into the bundle, is not right. I mean we are taxing most of our customers who wouldn’t be willing to pay for that content. And I’ve said before, I think the regional sports network structure in the industry is broken. And it is. But I’m probably not going be able to change that overnight. But adding other stuff to the bundle that the average consumer can’t pay for without allowing it to be sold to those that want to pay for it is just not right. So we’ll continue to stand strong for our customers.
EXCLUSIVE: Enlightened creator/executive producer Mike White has signed an overall deal with HBO for his production company RipCord Prods. Under the pact, White, along with producing partner David Bernad, will create and develop new projects for the pay cable network.
RipCord recently wrapped filming the second season of White’s dark HBO comedy Enlightened, which will premiere in January. The series, starring Laura Dern and Luke Wilson, received Golden Globe nominations for best comedy series and best comedy series actress, winning for Dern’s performance. RipCord has several projects in development at HBO, where the company had a first-look deal, including an untitled comedy from writer Steve Conrad. RipCord also produced digital series The Boring Life Of Jacqueline, created by Sebastian Silva, which launched in August on HBO GO.
Shares are up in pre-market trading as the satellite company performed well in Q4, with a lot of help from Latin America. DirecTV had net income of $718M in the year-end quarter, up 16.2% vs the period in 2010, on revenues of $7.5B, up 12,7%. The revenue figure slightly beat the $7.4B that the Street anticipated. Earnings at $1.02 a share were well ahead of the 92 cents forecast. At the main business, the U.S. satellite service, revenues were up 9% to $6B as rate increases and higher sales of NFL Sunday Ticket subscriptions outweighed the growing number of discounts DirecTV offered to new customers. The company ended the year with 19.9M domestic subscribers, up 3% vs the end of 2010. The net addition of 125,000 customers in the quarter represents a sharp retreat from the period last year when DirecTV added 289,000 U.S. subscribers.
The Hollywood Foreign Press Assn. went for an extreme makeover on the TV series side, snubbing a lot of long-time favorites for first-time nominees. Seven of the 10 best series nominees are freshman shows: dramas Homeland (Showtime), Boss (Starz), Game Of Thrones (HBO) and American Horror Story (FX) and comedies Enlightened (HBO), New Girl (Fox) and Episodes (Showtime). Five of them hail from pay cable where audience reach is limited. Earlier today, Deadline contributor Ray Richmond spoke with the showrunners of some of the first-time best series nominees, Mike White, Farhad Safinia, Howard Gordon & Alex Gansa, Ryan Murphy & Brad Falchuk and Liz Meriwether, about the nominations and their impact on the rookie shows:
Mike White, creator of HBO’s Enlightened, nominated for best comedy series and best actress, Laura Dern:
“Getting Golden Globe attention could really make a difference for Enlightened. That’s what makes it so cool. I mean, shows like Glee and Modern Family, I can’t see how the Globes are going to get them new viewers. They’re already part of the landscape. But for a show like ours, it could really have an impact. I don’t want to be presumptuous, but it could be a perception changer and game-changer. Because we’re struggling to find a bigger audience, and we’re still waiting to hear about getting renewed for season two. So this really puts the spotlight on us a little bit. HBO could be deciding our fate even as we speak, and they sounded really stoked about this today. We’re still kind of in the gray. Something like this gives you validation, gives you more ammunition to convince them that this is a show they should be proud to have and want to keep making.”
“We were hoping that maybe Laura (Dern) would get nominated. But we didn’t dream much beyond that…It’s so weird. I had this dream the other night where I was looking online to see if we were nominated, and there was a show called Enlightened on the list. But it was like in the children’s category. So I have to say I’m glad we weren’t accidentally categorized as a kids show.”