DirecTV in the News

Roxanne Austin's Strategy for DirecTV

LOS ANGELES (The Hollywood Reporter) - July 1, 2001- Roxanne Austin, DirecTV's new president and chief operating officer, mapped out her strategy for rapidly expanding the nation's largest satellite subscription base, just as the prospect of News Corp. acquiring the satcaster is coming to a head.

While neither Austin nor DirecTV chairman and CEO Eddy Hartenstein would comment about negotiations they've both been deeply involved in with News Corp. and the satcaster's parent companies Hughes Electronics and General Motors, industry sources said that a deal for DirecTV to become part of the Rupert Murdoch empire will happen within weeks or not at all.

In one of her first interviews since her promotion was announced Tuesday, Austin said, "I think that there are several issues that remain to be worked out but that DirecTV and (Hartenstein) are moving forward with building a subscriber base first and foremost."

To that end, Austin said she plans to shift the company's marketing artillery from a national aim to the local front.

"We do have 41 markets or 61 million households across the country," she said. "I think that you'll see us much more focused on local markets rather than the big national ads you've seen in the past. You're going to see a much more call-to-action type of advertising so that consumers can get the product directly through us.

"And now, through some new satellite technology that we're about to roll out, you'll be able to spotlight local programming within a 250-mile radius, making it possible to provide local programming like never before," Austin said.

The new technology is in the form of a new "spot beam" satellite that has been completed and is about to be shipped from the Hughes complex in Los Angeles for launch within weeks, Hartenstein said.

"So what has to happen here, in short, is a sort of re-education process," Austin said. "The (cable companies) for years have been telling people that they can't get local channels. We now have to reverse that perspective, and we'll do that through a number of means: direct mail, print and television."

"Once people realize what we really have to offer, through bandwidth capacity, meaning more channels than cable can offer, our existing and new DSL services for fast Internet service will give us parity with the cable operators on two-way connectivity."

DirecTV and Hughes purchased Telocity, a DSL modem company, on April 3 and began marketing its DSL service -- which uses a separate modem much like most telecoms -- in May, Austin said. "We plan to roll out our DSL service to the retailers by the end of the third quarter," she said.

But perhaps just as important as offering fast Internet access, telephony and a vast array of programming is the ability for nearly instantaneous two-way-connectivity, media analysts have long said.

Now that it appears the cable companies are serious about rolling out video-on-demand, which differs from pay-per-view in several ways but primarily operates much like a VCR -- with pause, rewind and fast-forward capabilities -- DirecTV had to come up with a VOD solution of its own.

DirecTV has done that, Hartenstein said, by incorporating digital recording devices such as TiVo (news - web sites) and Microsoft's Ultimate TV, both of which can record up to 30-35 hours of programming onto a hard drive built into the new DirecTV systems.

AOL Time Warner CEO Gerald Levin recently told a crowd at the National Cable & Telecommunication Assn.'s annual meeting this month that DVR technologies used by TiVo and Ultimate TV will never have the capacity to compete with broadband's two-way connectivity (HR 6/14).

But Hartenstein said AOL has already hedged its bet by buying up 5% of DirecTV and that, in fact, satellite has several advantages over the cable operators when it comes to rolling out transactional or subscription VOD.

"(The cable operators) have to make enormous investment in servers at the head-end to service all their customers at the same time," Hartenstein said. "But because we are already a digital service and have at least twice the bandwidth of the (cable operators), we are already creating advanced channel guides that will allow people to choose from a vast library of content and merely choose what they want to watch.

"We took the storage issue from the head-in and put it to the hands of the home of the consumer," he added. "The idea is to have a selection of new releases, classic titles and some independent films offered up through the DirecTV service in an advanced, unique program guide."