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How 'Undercover Boss' is improving DirecTV
Former PepsiCo vice chairman Mike White joined the board of satellite TV giant DirecTV late in 2009 and took over as CEO at the start of this year. He spoke to The Hollywood Reporter about his experience so far, concerns about the Comcast-NBC Universal merger and how critical NFL and other content is for his company.
The Hollywood Reporter: You are featured in Sunday's episode of CBS' "Undercover Boss," where they had you do DirecTV field work. Was there a benefit to doing the show beyond getting some publicity for the company?
Mike White: I'm still a new CEO in a new industry. I spent 20 years in the consumer-products world selling Pepsi and Doritos. I really thought it would be an invaluable opportunity to learn more about our business. We critically depend on our field technicians and call agents who are the voice of DirecTV to our customers, and this was a great opportunity to connect with them.
THR: Did you learn anything new about DirecTV or its customers?
White: When you get out there, you realize how complex and sophisticated the technology we have is, and that every home is different. Trying to activate that technology in the home means you bump up against all kinds of unique things. I was struck by how physically demanding the technician job is and how complex the call-agent job is. We take 127 million calls a year, and you would like to think every one is perfect. But it is a bit like a needle in the haystack when you got someone on the other end of the phone trying to troubleshoot what the customer's problem is. I was really pleased with some things. Our folks are incredibly passionate about customer service. But some things weren't working exactly the way we drew them up in the laboratory.
THR: Can you give an example of one of those things that didn't quite work and how you will improve it?
White: When a technician is trying to get to the home, sometimes you can get delayed. Anything can happen: weather-related issues while you are in the middle of an installation, traffic. ... We had no easy way of changing our schedule for the day. A dynamic scheduling system, which we are already working on, would make a difference. We also found that the time it takes to load the software when you are first installing a set-top box was a bit longer than ideal and saw that as an opportunity [to improve] as well.
THR: PepsiCo is known for its marketing. Have you changed much about DirecTV's packaging and marketing approach?
White: I am a big believer in when you come into a job, take some time. We took [some time] to take a fresh look at everything. And there are some things we do pretty well; our marketing and brand-building has been terrific. But I felt we had an opportunity to get smarter about consumer segmentation -- Hispanics, lower-income consumers or rural vs. urban areas -- beyond sports enthusiast, on which we have always focused.
THR: Beyond offering segmented product packages, any other big near-term initiatives?
White: Our biggest initiative close in is the relaunch of DirecTV Cinema this quarter. As a satellite TV provider, historically we have only had 20 or 25 pay-per-view slots, which limits the variety of movie choices. We have done some changes with our satellite technology that enable us to -- with no changes to your set-top box -- immediately get you to 400 options. We will also step up our focus on trying to get consumers to connect their television to the Internet. Then we can give them thousands of free movies on top of what we can do with pay-per-view. And next year, we will continue to build on movies and how we take the iPad ... to get to what [Time Warner CEO] Jeff Bewkes calls TV Everywhere.
THR: Is there anything that content or Hollywood people may not know or fully understand about DirecTV?
White: One lesson I also learned from the "Undercover Boss" experience is that characters and stories still matter, and that's good. Differentiated content has always been a hallmark of DirecTV. Sometimes maybe our constituents on the content side don't realize how much investment in content we are making to strengthen our technology and innovate our service to make it an even better entertainment experience. We are committed to providing the best entertainment experience in the world.
THR: You have signed some deals for specific shows...
White: We have signed "Damages" [exclusively] and are very excited about what we are doing with our 101 Network [that features exclusive and acclaimed shows and special sports content].
THR: You have acquired select shows. How do you feel about buying a studio or entertainment company, especially now that Comcast is getting closer to buying NBC Universal?
White: I don't think so. Comcast has its own strategy, and I respect [CEO] Brian Roberts and what he is doing. We have some regional sports networks, but our core competence is being a world-class video aggregator and distributor. We do content with a twist. Frankly, I don't think it's our strength to run a movie studio. There are others who can do that one heck of a lot better than I can. ... I don't think you'll see us looking to acquire a big content business. We are quite happy partnering with all of our content providers. "Damages" is a great example of where we could pick something up. It probably fits better on a targeted platform.
THR: Is such content mainly a subscriber-acquisition or retention tool?
White: It's both. As a business matures, retaining customers becomes more important than necessarily bringing on new customers. We have to do both, but keeping our churn down and increasing customers' passion to retain DirecTV as their service is really important to us. Differentiated content is another way to differentiate our service.
THR: There has been a debate about cord-cutting -- whether and why consumers might look to end their pay TV subscriptions amid the availability of content online. See any signs that it is a real problem?
White: We continue to perform well. We had an excellent second quarter and continue to be very pleased with our continued strength. I don't see significant cord cutting going on at this time. There are two phenomena that we all need to be sensitive [about], though. This is a tough economy, and there may be customers at the bottom end -- $15-a-month customers -- who are dropping out. It's not because they are going to an over-the-top [Web-to-TV] play on the Internet, but because they don't have the money for their monthly pay TV bill. The implication for all of us -- both content and distributor -- is that we need to be sensitive to the value consciousness of all consumers today [versus] three years ago. I also agree with [Verizon chairman] Ivan Seidenberg that young people have different habits in how they consume video, and that iPad-type devices will significantly expand the amount of video that is consumed on wireless devices. We intend to be there: We launched NFL Sunday Ticket with an iPad app this year, and we are accelerating the development of My DirecTV-TV Everywhere plans to expand that next year and beyond.
THR: Since you brought up Seidenberg, let me ask a question that comes up regularly among investors and analysts. Any interest in merging with a telecom company or even your competitor Dish Network?
White: I wouldn't comment on rumors since I have been asked the question for a year now every month. Nothing has changed. We spent six months doing an in-depth look at all our strategies to fine-tune how we go forward in a new digital world. We shared the thinking with our board in August, and they were very pleased and confident in the future of our company. And we continue to perform very well.
THR: How key is your NFL Sunday Ticket contract in the digital age?
White: Sports is fundamental to our identity at DirectTV, and certainly the NFL is one of the most popular sports in America. For us, our partnership, which we have had for over 15 years, is really important. This year we expanded our service with the addition of the iPad application. It continues to be an important part of DirecTV.
THR: Is Sunday Ticket a profitable business?
White: I wouldn't comment on specifics. We have a new deal with the NFL negotiated a year ago, and we are going to look to expand the franchise.
THR: Programming carriage talks have been contentious this year. What do you think about this topic?
White: Clearly, the advertising model for broadcast networks has been severely damaged in the recession. I can understand their desire to establish two streams of revenue. But at the end of the day, a lot of disputes are positioned as a distributor versus a content provider. I think it's best for all to remember that the consumer at the end of the day has to pay the bill. In a tough economy, it would behoove all of us to be sensitive. If we can share that sensitivity, we will work it out. My biggest concern is to make sure not to get into these dysfunctional disputes that don't help either side, but think collaboratively about how we manage the pricing increases we have to pass on to consumers.
THR: You have spoken out against the Comcast-NBC Universal merger. What's your main concern?
White: We have shared some concerns [during the regulatory review process]. We could support the transaction subject to these concerns. One in particular is that there not be discrimination on content that is shared through the Internet. It ought to be available on like terms and conditions. Our biggest concern is to make sure there is a level playing field given that this marries a powerful content with a powerful distribution company -- and they are both a partner and a competitor for us. We hope to have a continuing constructive relationship with them.
THR: Any thoughts on DirecTV in the pre-White era?
White: I am fortunate. I inherited a company that [News Corp. president] Chase Carey did an outstanding job leading. We are trying to lay out our path forward, and we have a lot of confidence in where we are going.
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