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DIRECTV (DTV)

Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference

March 06, 2013 8:40 am ET

Executives

Patrick T. Doyle - Chief Financial Officer, Executive Vice President and Member of Proxy Committee

Analysts

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Presentation

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Good morning. We're going to start with the next presentation. Very pleased to have with us Pat Doyle, Executive Vice President, Chief Financial Officer of DIRECTV. Pat, thanks very much for coming.

Patrick T. Doyle

Oh, great to be here.

Question-and-Answer Session

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

So look, I think what we're starting off with this conference, we've got 2013 in front of us. Everyone reported their quarters within the last 2 to 4 to 6 weeks and gave a bit of an outlook. And so we wanted to start with just thoughts around how is management at DIRECTV trying to drive value?

Patrick T. Doyle

Well, yes, that's a good question. I mean, I think, if I take first Latin America, I think you're going to see a lot of the strategy there that you've seen in the past. Our goal is to take as much advantage of the strong economies down there, the movement of the -- of customers into the middle market, into the higher income levels. So it's certainly our goal to take advantage of that, but also take advantage of that profitably. I mean, we have specifically designed our programs there to make sure that we're going to get the kind of return out of kind of the lower-end packages that we need. At the same time, we want to be the leader on the A and B markets. We want to continue to -- as those markets are attracted to stuff like DVRs and HD, we want to make sure that we're advancing those products along to that marketplace. And then, as we said, I mean, I think we've got some infrastructure things to do in Latin America, both from kind of broadcast centers from field service and call centers to deal with our growth, along with moving forward on the satellites there that we need to expand our product and services down there. So it's going to look a lot like what we've done before because it's been very successful. We continue to take share down there, and that's our goal, is to continue to take market share in Latin America, across the region. In the U.S., it's obviously a little bit different story. I think we've got a good plan there, which we've talked about, of trying to mix top line growth with profitability. We feel very comfortable that we've got a plan that really kind of deals with the rising programming costs, of trying to really push through the revenue enhancements we need. We want to get through price increases to the consumer that meet the market. And on top of that, push things, like commercial and ad sales and movies, VOD, to try to enhance the revenue stream. And then, we're keenly focused on margin and making sure that we're diligent, which is critical to us, as all of our other cost categories, we've got to be right on. And we're keenly focused on that. On top of that, we've -- we are spending a tremendous amount of time on customer service and the customer experience. We're committed to that. We're committed to continue to try to become the best in the industry at that and then also, just the whole customer entertainment. I mean, just trying to make the product better, whether it's a user interface or the services. So I think on both of those, we feel like we've got a great plan, and certainly, the management team is committed to achieve, both in Latin America and U.S., what we need. And then I think on top of that, there's obviously the return of capital strategy that layers on at the top level, where we're -- to the extent, we don't return capital or we don't have capital redeployed for higher-value projects, it would be our intention to continue to return capital to our shareholders.

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

So you sound busy?

Patrick T. Doyle

Yes.

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Okay. So I think we'll talk through a lot of those. And you ended on the operational side with improving the product, and that's where I wanted to start. And Bruce Churchill talked last week, spent a lot of time on Lat Am, and we'll touch on that. But I think we'll spend a little bit more time on the U.S. today. But product differentiation cuts across both, so it's a good place to start. What's the innovation path for DIRECTV?

Patrick T. Doyle

Well, probably it starts in 2013, with the launch of our Genie product. And we're early on in that product, but it's been well received, not only by new customers, but the demand that we're getting from our existing customers. We're seeing a lot of interest and people upgrading, obviously, much larger storage capacity than you'd see in cable, being able to record 5 shows, multiroom viewing. It's a great product. We're also still on our path of getting as much of our customers connected to broadband. We finished 2012 with over 3 million customers connected to broadband. Our goal is to get another 1 million-plus connected to broadband. I think that's important. We're moving forward on things like voice search. I mean, we're spending a lot of time on Discovery and how we can make it easier for our customers to find the right products that they want. And so on Discovery, we think the next move that we'll be testing this year is voice search because we think that's a lot more intuitive than trying to kind of type numbers. There's a lot of things that's going on. I think you'll see also a lot of -- the more we connect, the more interactivity we can get with the customer so that they can be watching a show and doing other things, whether it's weather or interacting with the show. But we've -- I think the Genie product, we're -- we really like. And I think the customer is resonating with it. Probably the next evolution of that, which is coming pretty soon, would be then wireless throughout the home for distribution, and that's not far off in our plans, either.

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