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News Corp. Turns to DirecTV's Carey Again


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#1 OFFLINE   Earl Bonovich

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Posted 27 July 2006 - 09:42 AM

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July 26, 2006


News Corp. turns to DirecTV's Carey again


By Diane Mermigas

CHICAGO -- DirecTV president and CEO Chase Carey has accomplished virtually everything News Corp. asked of him since it acquired a controlling interest in the satellite giant three years ago. Now the veteran News Corp. executive faces his toughest challenge yet: making the dominant satellite TV provider interactive enough to compete with cable's triple play of offering video, broadband and telephone services.

One sure solution is helping to build a national broadband platform, a task that could lead DirecTV into alliances with WiMax players such as Clearwire, Mobile Satellite Ventures, Intel and Motorola or to partner or even merge with rival EchoStar Communications to acquire their own spectrum in an Aug. 9 auction managed by the FCC (Mermigas on Media, HR 7/18).


Controlling its own broadband platform driven by WiMax technology, which is more secure and far reaching than Wi-Fi, would allow the satellite providers to compete more aggressively with cable and telephone companies.

Wall Street analysts and investors are responding favorably to such prospects, despite wariness that government regulators will continue to block a DirecTV-EchoStar merger. Increased competition from cable, telephone and other players provides a very different environment for considering such a union, renewed speculation on which boosted the share price of both companies. A merger could realize an estimated $3 billion in annual savings, improved program economics and lower subscriber retention and acquisition costs.

"The broadband revolution is coming," Rupert Murdoch, chairman of News Corp. and DirecTV, said in a recent interview with PBS' Charlie Rose. "There are so many more alternatives, (so many) ways of getting pictures and information, that I think it would be harder for the government to turn (the merger) down today. We'd have to get through the negotiating stage, which would be very painful."

However, the reservation of many analysts about the financial payback of a broadband investment is based on concerns Carey is struggling to address. Bear Stearns analyst Spencer Wang has warned of satellite TV's "structurally challenged" inability to replicate cable's bundled services.

DirecTV may face some Wall Street and subscriber ire in rolling out more advanced high definition digital video recorders more gradually than expected. Carey contends that issue has been blown out of proportion. Satellite's bigger problem will continue to be the lack of more advanced interactivity that can come only from a costly long-term wireless broadband solution, analysts say.

"The big opportunities include technology research and development," Carey said. "We all have set-top boxes and are developing HDTV and DVRs and interactivity and software. We feel good about where we are there. But we have to be looking to develop the next generation. There are cost and scale advantages to doing it with other companies. There will be opportunities for unique alliances."

DirecTV has been announcing a steady stream of such strategic program alliances, a WiMax venture will be more expansive and accretive to its bottom line as long as Carey can hold its investment to about $1 billion in a national service rollout that could cost many times that amount.

Some sources say the most likely scenario is that DirecTV and EchoStar will partner with the likes of an upstart such as Mobile Satellite Ventures or Craig McCaw's more financially powered Clearwire to gain traction in building out a wireless broadband network in the U.S. over the next several years. Murdoch considers it a top priority -- and that makes it a top a priority for Carey, who has held various a range of management posts at News Corp. since joining Fox Broadcasting Co. in its infancy in 1988.

"It's less important what our ownership position is as opposed to the risk-reward that we bring," Carey said. "We and EchoStar are uniquely positioned to provide a bundling opportunity for a new entrant in broadband to drive the business. To the degree we can do something that is smart and intelligent for us and helps bring a third player evolve in the broadband space, I think that's what we are interested in doing."



Earl - Gotta Love Karma

DIRECTV employee since April 2008.
All comments are my own. Unless specifically stated, my views do NOT represent the views of DIRECTV

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#2 OFFLINE   jonaswan2

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Posted 27 July 2006 - 11:06 AM

Poor, poor Chase. He has got a lot on his shoulders/




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