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Carroll School of Management

A La Carte Pricing

Audience Member: (inaudible) they don’t like the cable companies or the satellite companies because they watch 10 networks, and they have to pay for 90 of them that they never watch. And whether that’s a reality or a perception, that’s how consumers feel.

So then you have HBO that announced with great fanfare that they are going to allow you, in 2015, just to subscribe to HBO. CBS, Moonves, follow suit—says CBS is going to allow the exact same thing. This has got to have huge ramifications for the satellite companies and the cable companies.

So I have two questions: (a) Do you think that’s good for consumers or bad for consumers, and what does that mean for DirecTV moving forward?

White: Well, again, I think you’re mixing apples and oranges here. So I would love—I mean I’d be happy to price my content a la carte. I’m not allowed to. It’s not my decision to stick you with 200 channels. Every negotiation—and we have about 200 of them a year with the content companies—is not just a rate card, but it also mandates how much I have to sell that service to how many of my households, and it’s usually 80%. So I have my hands tied.

And I have argued for this. I argued about the Dodgers to get it a la carte. I’ve argued about the Pac-12 to be a la carte, because it’s taxing everybody, including consumers in New England, which is crazy.

Unfortunately, that’s where our industry is right now. And I don’t see the content companies changing. Now, let’s—each of those are two different topics. I mean CBS is not going to have the NFL, and therefore my prediction is it ain’t going to be a big home run. OK?

I think HBO is already a la carte at DirecTV and all the distributors, where you can take it or not take it. And as long as they don’t undercut the price, I don’t have a problem with them selling it a la carte. In fact Richard Plepler told me he wants to partner with DirecTV.

And what they’re really trying to do is get at the millennials that are renters—there’s about 10 million of them—and that aren’t taking pay TV today. And so I would love to find a way to get a smaller bundle working together with the media companies that we could kind of sell in a smaller bundle to those consumers. That’s really the opportunity. And we all would like to see that, because we want to participate as millennials change the world.