DirecTV CEO Likens Television Industry to Health Care
DirecTV CEO Mike White defended the price of his product and lamented faster-rising programming costs that are a function of an "indirect system," which he likened to health care in the U.S.
"If you care about consumers' prices, they are much more driven by the dynamic between the distributors and the content providers upstairs than they are horizontally. That's a question for the government to try and wrestle with," White said at the Deutsche Bank Media, Internet & Telecom Conference in Palm Beach, Fla. on Tuesday.
"Consumer incomes for the bottom 60 percent are flat and content costs are growing double digits," he said. "Consumers wouldn't sign up for that if they had a choice. But they don't have a choice."
For markets to work well, White said, you don't want intermediaries. "I actually liken our business to a little more like health care," he said. "Ours is an indirect system where some of the pieces that get bundled, if you let the consumer decide, the consumer probably wouldn't buy them."
White said that DirecTV has become more "analytical" when negotiating the price it pays for programming. He added, though, that it is still "a pretty imperfect market … It certainly doesn't work like anything that's sold at Walmart."
He also weighed in on the impending merger of Comcast and Time Warner Cable, and said the government should look at the industry not as a local one, as in the past, but as a national one. "That requires the government to take a different perspective on the industry," White said. "With the power of programming costs and the impact that's having on the industry, that tends to be a national negotiation."
"Clearly I think there are concerns when the top two cable companies merge," he added. "I would guess the concerns the government will focus on are certainly the Internet and broadband."
If the merger is approved, it won't affect the way DirecTV does business, he said. "We've always been competing with bigger guys. And I like to remind our guys, bigger is not always better. When you're not the biggest guy, you have to lace up your sneakers and run faster."
White didn't say whether DirecTV still has a desire to merge with Dish Network, but he suggested that such a plan should be easier for regulators to approve of nowadays, given the many new alternatives consumers have.
"The last time Dish tried to acquire DirecTV was 10 years ago and the government rejected it. Since then, in half of America, you've got a very robust Telco competitor now. That's a change," he said.
He also reiterated that DirecTV plans to simplify its "offer structure" so that customers can "actually understand" their bill.