DirecTV CEO Bill Morrow Talks Dish Merger

Published Oct 1, 2024, 3:49 PM

DirecTV CEO Bill Morrow speaks on the company's acquisition of Dish TV and Sling TV from EchoStar Corp. He speaks with Bloomberg's Caroline Hyde. 

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Echo Star announced yesterday that it's selling its video distribution business to direct TV, a merger that the satellite providers have flirted with for almost two decades. We caught up with EchoStar CEO Hamid Akaban. Here's what you have to say.

The founders was that this business ends up in great hands and continue to develop according to their lifelong work vision to you know, make it, you know, one of the greatest companies they can make, and you know, the combination of the two companies now will be that company. The company that you know is unique in his position in the marketplace. So it's bittersuite, you know, in a way they see it in you know, great hands. They're coming together and being that challenger that Charlie has created over time. But it's also letting it go. It's also very difficult. So the answer is bittersweet, not really obvious.

Satellite TV is ultimately in a state of decline. Will this be a period of managed to client for the company.

It's certainly as part of the thesis that you know right now, this is not you know at the time that it used to be ten or fifteen years ago when the you know, position of these two companies that are coming together was unique and was very strong. The two companies have lost sixty percent of their subscribers over the past since since twenty sixteen, they've lost that Everyone has access to broadband today, whether it be terrestrial or through satellite startlink. You know, the direct to a consumer digital providers programmers going around these two companies are ten to twenty times largely in terms of customer base. So it is time for these companies to come together to increase their sustainability and ability to negotiate better deals that it can pass on to the consumers.

That was Ekosta CEO Hamid Akavan. Now let's continue this PATV merger. We're joined by Well who Echo Star sold Dish to DirecTV. The CEO now joins us, Bill Morrow. Bill, Welcome to the show. And I ask you this now going forward to combine nineteen million subscribers you now have, what do you offer them? Is it managed to climb?

Well, thanks Caroline, and actually we're going to offer them something that the new kind of competition cannot. You think about the volume of directed consumer subscription type services. These are the Netflix, Amazon, Primes, that HBO Max's that are out there. They have a very narrow scope of the content that they offer. The way in which they can only navigate through their platforms, consumers are left with having to pick and choose multiple subscription services and manage this on their own. They're having the difficulty now to navigate across these different platforms. With a new company with DirecTV and Dish will do is number one. It will actually bundle all of those different services together. We'll still have a form of linear or time of day type programming, but we're going to let the consumer pick and choose two or three or four if that's what they want. Of these other directed consumer programs. We'll wrap a user interface around that. We'll make navigation easy, we'll make search and recommendation easy. But equally as important to Caroline is that the combined entity with the just under twenty million subscribers will give us them a very needed influence on the industry to work with the programmers. To say, the days of the past. If two hundred and fifty channels are gone, consumers don't want to pay for content that they are never going to watch, and the programmers are still kind of tied to those old carriage agreements. This influence is going to change that. It is in the interest of the consumers. We think it's in the industry, the programmers in the long run, and of course to our company as well.

Bill, I can see how you offer from a price perspective, and I can also see how ultimately this is about slimming down costs. But what about growth. Do you think you will ever increase that number subscribers or is it about just serving the ones you have?

Well? Well, Caroline, really study the market and what are the pain points in the current environment that consumers feel and again having to manage multiple subscriptions, not knowing where your content is even the biggest search engines that can't keep up when you're looking for a particular season or episode of your favorite series, or a movie that you want to watch. We know that the consumers need more than what's available today. By combining these two companies having the influence to be able to change those carriage agreements, We're going to give them thinner, linear bundles of genres that they can pick. We'll let them add in and insert in the s FOD or those directed consumer Netflix or Amazon Primetype services and again with a very different kind of experience that will allow us to get back into a growth situation. Now we need the two companies to come together because we are falling fast. You've heard this from a number of different industry experts. So this buys us some time, gives us the influence to shape the industry. That's all about the consumer, and it's going to give some than to them that they haven't had.

But do we need more streaming? I know that you're thinking about DirecTV stream and Dish TV, and ultimately it sounds like we're going back to the past by rebundling the things we've already snipped in terms of the cord.

Nob of it is that bundle past is not going to service going into the future, and that's why we believe with a new kind of carriage agreement, it's going to allow you, the rest of the consumers, the rest of your viewers, to pick and choose the genres of their choice and not pay for all the rest of it. So it's not as big of a bundle as what we've seen in the past, and that's what we've been advocating. That was the deal that we struck with Disney we fought so hard for to be able to get let the consumers pick what they want to watch and not force them to pay for stuff that they will never tune into, and that is our future.

You have other stakeholders, largely private equity now when it comes to TPG, but also the creditors, and a lot of this is based upon whether or not the bondholders of Dish in particular sign up to this thing that will go through. How painful is it to take those sorts of haircuts.

Well, we think the current bondholders of the DBS business under EchoStar with Dish are going to have a better deal by converting and exchanging into the debt that we're offering. We think it'll be better leverage ratios than what they see today. There's better confidence in terms of this business model about looking forward into the future without the risk that they might perceive today with that DBS business. We also have advocated and explained that while our initial leverage ratio will be in the two and a half times, that still is better than any other PayTV provider that is out in the marketplace today, and within a twelve to twenty four month window, we're going to be very focused on bringing that leverage ratio down to below two. So that's the reason that we believe they're interested in making this exchange, lowering that debt, making sure that this M and A deal can happen. And then we of course proceed to the FCC, the DOJ for the needed regulatory approvals.

We'd like to keep in touch as you go through those approvals Direct TV CEO Bill Morrow. We really appreciate your time.

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