DirecTV is not sold on OTT, eyes margins

DetailsMichelle Clancy | 23 February 2015

DirecTV is mulling the launch of an over-the-top (OTT) service, but CEO Mike White is far from sold on the idea.

Even though its arch-rival DISH Network has gone live with its Sling TV OTT service, White told investors that "the margins are pretty thin on those packages. It's not clear to me that it's a particularly profitable idea".

However, he added: "It is something we are considering."

DirecTV delighted investors with better-than-expected earnings for the fourth quarter and notably, the satcaster saw an improvement in average revenue per user (ARPU) of 5%, up from $111.74 last year to $117.30. And despite the price hikes and competition from online video streaming services, the company added 149,000 net subscribers domestically during 4Q, a significant improvement from the comparable period last year, when it added 93,000 net subs. That makes for strong margins in a hypercompetitive environment, which the company likely doesn't want to jeopardise.

Further, White noted that its more traditional investments are paying off for the company. He said that subscribers for the NFL Sunday Ticket premium package increased 10% for the last American football season, "almost" offsetting the increased cost of its renewal deal with the league.

When asked about HBO, CBS, Nickelodeon and, especially, WWE, which spent millions to launch an OTT offering that so far has had lacklustre success, White noted that the jury is out in terms of their accretive value to their respective media organisations.

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