DirecTV Latin America Boss Sees Continued Growth
Bruce Churchill signals at an investor conference that a spin-off of his unit is unlikely and explains continued subscriber gains by saying that "pay TV is a great product for the middle class."
NEW YORK - DirecTV Latin America has been a key growth driver for the satellite TV giant, so it was no surprise that it was in the spotlight in one of the final sessions of the 39th annual UBS Global Media and Communications Conference here on Wednesday.
DirecTV Latin America president Bruce Churchill told the Wall Street crowd that similarly to the company's U.S. positioning, his unit is a premium TV service provider with an important sports offering.
Asked if a spin-off of his part of the company could highlight its growth and value, Churchill said that topic comes up every couple of years and signaled little interest in pursuing such a strategy.
"I always understand why that's good for the bankers," he said. But Churchill said that his team gets "a lot of benefit" from working with the U.S. organization, especially in product development and being able to tap into its technology road map.
"I'm a little bit skeptical," he said about the idea that a spin would better highlight DirecTV Latin America's value. He said the company has instead decided to just talk more about Latin America to shine a spotlight on it.
Two trends in Latin America provide a particular growth engine for his firm, he told the UBS investor gathering on Wednesday. First, 70 percent of the population is under the age of 40, which means that they are "moving into [their] high earnings years." Second, Latin American economies are growing.
This creates "a huge increase" in the middle class, Churchill told the UBS conference. "Pay TV is a great product for the middle class."
These growth drivers are likely a 10-20-year trend, meaning DirecTV Latin America's upside drivers are not something that will end soon, he said.
Churchill also discussed specific markets, highlighting that Brazil has been a key market for the company. "We have had tremendous growth in Brazil," Churchill said, but added that "we have been taking share in every country across the board."
His biggest hope for upside right now lies in Colombia, he said. The country has a population that is larger than Argentina, although its economy is not as big. But Churchill emphasized that the current political leadership has cleaned up the country, plus Colombia "is earlier in its industry development."
Overall, Churchill said he is "very hopeful" that Colombia could become a third leg for the business together with Venezuela and Argentina behind Brazil. Pay TV penetration stands at about 30 percent in Colombia, 40 percent in Venezuela and 65 percent-70 percent in Argentina, he said.