DirecTV: Broadband Unlikely Until Year-End

New York -- DirecTV Group Inc. is feverishly working on a broadband product to complement its direct-broadcast satellite video offerings, but it won’t likely hit the streets until the end of the year, a company executive told analysts and investors Wednesday.

Executive vice president and chief financial officer Mike Palkovic, speaking at the Banc of America Securities Media, Telecommunications and Entertainment conference here, said the DBS giant is working hard on a high-speed-Internet solution and it should decide on a transmission technology by midyear.

That seemed to contradict News Corp. chairman Rupert Murdoch’s promise in late December at an investor conference in Phoenix that details of DirecTV’s broadband plans would be known to the public “within probably two months.”

News Corp. owns a controlling interest in DirecTV. Murdoch, who is also chairman of the DBS giant, has said that DirecTV would invest as much as $1 billion in a broadband initiative, and that it was investigating several different ways to offer a product -- through partnerships, on its own, or reselling another service.

Since Murdoch’s December comments, DirecTV has said that it was talking with No. 2 DBS provider EchoStar Communications Corp. about jointly developing a broadband product.

Palkovic said WiMax -- a wireless-communications technology that can transmit data at the rate of 40 megabits per second -- appears to be the most feasible way for DirecTV to offer broadband.

But he added that speculation that DirecTV could come out with a broadband product in such a short period of time was probably a little ahead of itself.

“We’re working pretty hard on it. We’ve got people working on it pretty much everyday. [DirecTV CEO] Chase [Carey] is personally involved in it, but you’ve got technologies that have to be evaluated, you’ve got various partnering strategies, whether they be manufacturers or folks that hold the various pieces of spectrum,” Palkovic said.

“It’s not the easiest boilerplate deal to put together,” he added. “It’s kind of uncharted territory. I’m personally very bullish on the expectation that we’ll get something done.”

He said the most important thing is that DirecTV takes the time to determine which technology will work the best. “It’s important enough to get it right,” Palkovic added.

Separately, Palkovic said the recently announced merger between AT&T Inc. and BellSouth Corp. may have an impact on its distribution deal with BellSouth, but not in the near term.

He added that DirecTV recently renewed its deal with BellSouth, prior to the merger announcement, for five years. Palkovic said the merger should take some time to complete, and its contract with BellSouth allows for a grace period where the telco cannot work with another DBS provider.

“During that time period, if the relationship continues to do well, they’re going to be pretty hard-pressed to think that there’s a better scenario for them than DirecTV,” Palkovic said. “We’ll keep working it to make it successful and, if we’re faced with that issue down the road, we’ll deal with it then.”

Palkovic added that if the BellSouth relationship is scuttled, it could make up for the lost gross customer additions through its direct-sales channel and its third-party dealer network.