WEBVTT - DirecTV CEO Bill Morrow Talks Dish Merger

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Echo Star announced yesterday that it's selling its video distribution

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<v Speaker 2>business to direct TV, a merger that the satellite providers

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<v Speaker 2>have flirted with for almost two decades. We caught up

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<v Speaker 2>with EchoStar CEO Hamid Akaban. Here's what you have to say.

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<v Speaker 3>The founders was that this business ends up in great

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<v Speaker 3>hands and continue to develop according to their lifelong work

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<v Speaker 3>vision to you know, make it, you know, one of

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<v Speaker 3>the greatest companies they can make, and you know, the

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<v Speaker 3>combination of the two companies now will be that company.

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<v Speaker 3>The company that you know is unique in his position

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<v Speaker 3>in the marketplace. So it's bittersuite, you know, in a

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<v Speaker 3>way they see it in you know, great hands. They're

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<v Speaker 3>coming together and being that challenger that Charlie has created

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<v Speaker 3>over time. But it's also letting it go. It's also

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<v Speaker 3>very difficult. So the answer is bittersweet, not really obvious.

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<v Speaker 2>Satellite TV is ultimately in a state of decline. Will

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<v Speaker 2>this be a period of managed to client for the company.

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<v Speaker 3>It's certainly as part of the thesis that you know

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<v Speaker 3>right now, this is not you know at the time

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<v Speaker 3>that it used to be ten or fifteen years ago

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<v Speaker 3>when the you know, position of these two companies that

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<v Speaker 3>are coming together was unique and was very strong. The

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<v Speaker 3>two companies have lost sixty percent of their subscribers over

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<v Speaker 3>the past since since twenty sixteen, they've lost that Everyone

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<v Speaker 3>has access to broadband today, whether it be terrestrial or

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<v Speaker 3>through satellite startlink. You know, the direct to a consumer

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<v Speaker 3>digital providers programmers going around these two companies are ten

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<v Speaker 3>to twenty times largely in terms of customer base. So

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<v Speaker 3>it is time for these companies to come together to

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<v Speaker 3>increase their sustainability and ability to negotiate better deals that

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<v Speaker 3>it can pass on to the consumers.

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<v Speaker 2>That was Ekosta CEO Hamid Akavan. Now let's continue this

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<v Speaker 2>PATV merger. We're joined by Well who Echo Star sold

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<v Speaker 2>Dish to DirecTV. The CEO now joins us, Bill Morrow. Bill,

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<v Speaker 2>Welcome to the show. And I ask you this now

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<v Speaker 2>going forward to combine nineteen million subscribers you now have,

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<v Speaker 2>what do you offer them? Is it managed to climb?

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<v Speaker 1>Well, thanks Caroline, and actually we're going to offer them

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<v Speaker 1>something that the new kind of competition cannot. You think

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<v Speaker 1>about the volume of directed consumer subscription type services. These

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<v Speaker 1>are the Netflix, Amazon, Primes, that HBO Max's that are

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<v Speaker 1>out there. They have a very narrow scope of the

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<v Speaker 1>content that they offer. The way in which they can

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<v Speaker 1>only navigate through their platforms, consumers are left with having

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<v Speaker 1>to pick and choose multiple subscription services and manage this

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<v Speaker 1>on their own. They're having the difficulty now to navigate

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<v Speaker 1>across these different platforms. With a new company with DirecTV

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<v Speaker 1>and Dish will do is number one. It will actually

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<v Speaker 1>bundle all of those different services together. We'll still have

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<v Speaker 1>a form of linear or time of day type programming,

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<v Speaker 1>but we're going to let the consumer pick and choose

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<v Speaker 1>two or three or four if that's what they want.

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<v Speaker 1>Of these other directed consumer programs. We'll wrap a user

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<v Speaker 1>interface around that. We'll make navigation easy, we'll make search

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<v Speaker 1>and recommendation easy. But equally as important to Caroline is

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<v Speaker 1>that the combined entity with the just under twenty million

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<v Speaker 1>subscribers will give us them a very needed influence on

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<v Speaker 1>the industry to work with the programmers. To say, the

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<v Speaker 1>days of the past. If two hundred and fifty channels

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<v Speaker 1>are gone, consumers don't want to pay for content that

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<v Speaker 1>they are never going to watch, and the programmers are

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<v Speaker 1>still kind of tied to those old carriage agreements. This

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<v Speaker 1>influence is going to change that. It is in the

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<v Speaker 1>interest of the consumers. We think it's in the industry,

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<v Speaker 1>the programmers in the long run, and of course to

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<v Speaker 1>our company as well.

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<v Speaker 2>Bill, I can see how you offer from a price perspective,

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<v Speaker 2>and I can also see how ultimately this is about

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<v Speaker 2>slimming down costs. But what about growth. Do you think

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<v Speaker 2>you will ever increase that number subscribers or is it

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<v Speaker 2>about just serving the ones you have?

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<v Speaker 1>Well? Well, Caroline, really study the market and what are

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<v Speaker 1>the pain points in the current environment that consumers feel

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<v Speaker 1>and again having to manage multiple subscriptions, not knowing where

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<v Speaker 1>your content is even the biggest search engines that can't

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<v Speaker 1>keep up when you're looking for a particular season or

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<v Speaker 1>episode of your favorite series, or a movie that you

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<v Speaker 1>want to watch. We know that the consumers need more

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<v Speaker 1>than what's available today. By combining these two companies having

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<v Speaker 1>the influence to be able to change those carriage agreements,

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<v Speaker 1>We're going to give them thinner, linear bundles of genres

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<v Speaker 1>that they can pick. We'll let them add in and

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<v Speaker 1>insert in the s FOD or those directed consumer Netflix

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<v Speaker 1>or Amazon Primetype services and again with a very different

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<v Speaker 1>kind of experience that will allow us to get back

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<v Speaker 1>into a growth situation. Now we need the two companies

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<v Speaker 1>to come together because we are falling fast. You've heard

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<v Speaker 1>this from a number of different industry experts. So this

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<v Speaker 1>buys us some time, gives us the influence to shape

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<v Speaker 1>the industry. That's all about the consumer, and it's going

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<v Speaker 1>to give some than to them that they haven't had.

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<v Speaker 2>But do we need more streaming? I know that you're

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<v Speaker 2>thinking about DirecTV stream and Dish TV, and ultimately it

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<v Speaker 2>sounds like we're going back to the past by rebundling

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<v Speaker 2>the things we've already snipped in terms of the cord.

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<v Speaker 1>Nob of it is that bundle past is not going

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<v Speaker 1>to service going into the future, and that's why we

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<v Speaker 1>believe with a new kind of carriage agreement, it's going

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<v Speaker 1>to allow you, the rest of the consumers, the rest

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<v Speaker 1>of your viewers, to pick and choose the genres of

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<v Speaker 1>their choice and not pay for all the rest of it.

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<v Speaker 1>So it's not as big of a bundle as what

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<v Speaker 1>we've seen in the past, and that's what we've been advocating.

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<v Speaker 1>That was the deal that we struck with Disney we

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<v Speaker 1>fought so hard for to be able to get let

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<v Speaker 1>the consumers pick what they want to watch and not

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<v Speaker 1>force them to pay for stuff that they will never

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<v Speaker 1>tune into, and that is our future.

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<v Speaker 2>You have other stakeholders, largely private equity now when it

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<v Speaker 2>comes to TPG, but also the creditors, and a lot

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<v Speaker 2>of this is based upon whether or not the bondholders

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<v Speaker 2>of Dish in particular sign up to this thing that

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<v Speaker 2>will go through. How painful is it to take those

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<v Speaker 2>sorts of haircuts.

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<v Speaker 1>Well, we think the current bondholders of the DBS business

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<v Speaker 1>under EchoStar with Dish are going to have a better

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<v Speaker 1>deal by converting and exchanging into the debt that we're offering.

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<v Speaker 1>We think it'll be better leverage ratios than what they

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<v Speaker 1>see today. There's better confidence in terms of this business

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<v Speaker 1>model about looking forward into the future without the risk

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<v Speaker 1>that they might perceive today with that DBS business. We

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<v Speaker 1>also have advocated and explained that while our initial leverage

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<v Speaker 1>ratio will be in the two and a half times,

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<v Speaker 1>that still is better than any other PayTV provider that

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<v Speaker 1>is out in the marketplace today, and within a twelve

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<v Speaker 1>to twenty four month window, we're going to be very

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<v Speaker 1>focused on bringing that leverage ratio down to below two.

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<v Speaker 1>So that's the reason that we believe they're interested in

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<v Speaker 1>making this exchange, lowering that debt, making sure that this

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<v Speaker 1>M and A deal can happen. And then we of

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<v Speaker 1>course proceed to the FCC, the DOJ for the needed

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<v Speaker 1>regulatory approvals.

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<v Speaker 2>We'd like to keep in touch as you go through

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<v Speaker 2>those approvals Direct TV CEO Bill Morrow. We really appreciate

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<v Speaker 2>your time.