DirecTV's White: OTT service is possible but not particularly profitable

DirecTV (NASDAQ: DTV) is considering matching rival Dish Network (NASDAQ: DISH) with its own over-the-top service, but the prospect of launching such a product doesn't necessarily excite the satellite operator.

Michael White, DirecTV

White (Source: DirecTV)

"The margins are pretty thin on those packages," said DirecTV president and CEO Mike White, speaking to investors during the company's fourth-quarter earnings call Thursday.

"It's not clear to me that it's a particularly profitable idea," he added. "It is something we are considering."

White dismissed the flurry of programmers--HBO, CBS, Nickelodeon, WWE, just to name a few--launching OTT services outside the pay-TV bundle. He believes these products are undermining deals with companies like DirecTV and he delivered an undirected threat, noting that the option is always available to switch their channels to a service like Pandora.

"I don't think Worldwide Wrestling took the best approach," White said.

DirecTV is coming off a strong Q4, during which it experienced record-low churn and grew subscribers by 149,000, largely thanks to former Dish subscribers leaving the DirecTV rival amid programming disputes.

White was asked several times about projected synergies following the regulatory culmination of DirecTV's merger with AT&T (NYSE: T).

He said the deal continues to be reviewed by the FCC and Justice Department, but is bogged down by the unwillingness of programmers to disclose their licensing agreements with the two pay-TV operators.

White said he has no insight as to when the deal, announced all the way back in May, will finally close. "We do know that the [FCC regulatory review] clock runs out on March 23."

White was also coy about any joint planning going on in terms of combining DirecTV's operations with AT&T's U-verse. He said DirecTV has been careful to observe "the Chinese Wall" between the two companies mandated by the regulatory process.

"I don't have a lot of visibility into the AT&T U-verse business, nor should I at this stage of game. But if you take a satellite-first video platform and you augment it with their broadband, you have a heck of a product for consumers, and I think it's going to unlock growth opportunities we couldn't otherwise get on our own."

White also said that subscribers for NFL Sunday Ticket increased 10 percent last season, "almost" offsetting DirecTV's added cost associated with its huge renewal deal with the pro football league.

For more:
- visit this DirecTV investor relations page

Earnings summary: Sizing up pay-TV earnings for the fourth quarter of 2014

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