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DirecTV chairman and CEO Mike White reiterated Wednesday that pay TV consolidation “would be pro-consumer and pro-competition,” but the U.S. regulatory environment remains “very challenging,” meaning a combination with Dish Network was unlikely to be approved in the current environment.
Analysts have suggested that a DirecTV combination with fellow satellite TV giant Dish or a deal between one of the companies and a telecom giant could make sense these days amid rising programming costs that pay TV operators have complained about.
White said at the Goldman Sachs Communacopia conference that any deal would have to educate regulators “that there are other considerations” than simply how many players in a certain sector exist. “It is a very challenging regulatory environment for any deal to get done. That is true in our space as well. if you only focus on distributors, consumer prices will continue to rise,” he said.
Asked later about Dish chairman Charlie Ergen‘s strategy for mobile broadband and beyond, White said he couldn’t comment for Dish, but said Ergen has been a very successful businessman and said he had respect for him.
“Content cost is a huge challenge for all the distributors,” the DirecTV CEO also reiterated on Wednesday in addressing one key driver of debate about mergers in the pay TV sector. Churn this year has been affected as rising prices amid programming cost increases have led to more consumer churn, he said. And White said that DirecTV’s retransmission consent costs are up 50 percent this year.
Without providing details, he also said that DirecTV is looking at a couple of ideas that would add over-the-top broadband video offerings to its product portfolio. U.K. cable giant Virgin Media recently struck a deal to integrate Netflix into its offerings, which has made analysts discuss whether other pay TV firms could also strike similar deals or offer their own versions of broadband video services.
Brazilian broadband provider GVT and Hulu have been two recent takeover targets for DirecTV, which White discussed in his appearance. He said that DirecTV in any deals is looking for strategic sense, financial sense and whether the deal was a cultural fit. The strategic question centers on whether a deal was complementary to the core business or could open up a new opportunity, which a Hulu deal would have done, he said.
Once again mentioning content costs, White said that “if you ever could consolidate, that would address that” threat.
White was also questioned about the future of NFL Sunday Ticket on DirecTV, but said it was “too soon to speculate” about that. DirecTV has held NFL rights since 1994 and sees its current deal expire at the end of the 2014 season. NFL representatives have reportedly discussed a possible rights deal with Google/YouTube executives, but it wasn’t clear whether the online companies would be interested in bidding for the rights.