How Best to Hook Up to DirecTV
Investors in DirecTV Group Inc. may be missing the big picture.
Since Rupert Murdoch took control of the satellite-television company last December, he has turned it into a ferocious competitor to the cable-TV industry. By ramping up advertising and offering aggressive promotions, DirecTV has posted record subscriber-growth numbers this year.
In response, its stock has rallied since early August, rising from about $16 a share to above $18, near its 52-week high of $18.81, although it weakened slightly yesterday, to $17.99 in 4 p.m. composite trading on the New York Stock Exchange, down 11 cents.
Not everyone on Wall Street is enthusiastic about buying stock in DirecTV, though. Some investors think it makes more sense to get their satellite exposure via Mr. Murdoch's News Corp., which has a 34% stake in the satellite firm, rather than through DirecTV itself. That is because News Corp. owns TV networks and other satellite interests that benefit from the company's ties to DirecTV, investors say.
"I would rather play the long-term success of DirecTV through News Corp.," says Fulcrum Global Partners analyst Richard Greenfield, who holds no shares in either News Corp. or DirecTV. He has a "buy" recommendation on News Corp. but doesn't rate DirecTV.
DirecTV's drive for subscribers is costly, which led the company to report a loss for the second quarter, compared with a profit a year earlier. Analysts don't expect DirecTV to generate significant "free cash flow" until at least 2006 because of its spending on new satellites, new interactive services and marketing. Free cash flow -- cash from operations after capital expenditures -- is a closely watched measure of profitability.
But while DirecTV is bearing the costs of signing up new subscribers, News Corp. is getting the benefits. News Corp. is planning to start new cable channels using DirecTV as the initial launch pad. The new cable channels will have more potential viewers if DirecTV increases its subscriber count. DirecTV, which had just over 13 million subscribers at the end of June, has said it wants to boost that count to 15 million by the end of 2006.
DirecTV's aggressive growth strategy will be good for DirecTV in the long run, but it is "immediately beneficial to News," says Henry Ellenbogen, an analyst with T. Rowe Price Associates, a big money manager. At June 30, T. Rowe owned almost 800,000 shares in News Corp.'s majority-owned U.S. unit, Fox Entertainment Group Inc., but only 100,000 shares in DirecTV, according to FactSet Research Systems.
Mr. Ellenbogen adds that News Corp. could run DirecTV "at break-even" without hurting News Corp. stock. That gives News Corp. a big advantage over its rival Comcast Corp., the biggest cable operator. Comcast couldn't embark on a similarly costly expansion program without its stock getting hit, he said.
Some investors and analysts say concerns they had about the potential for conflicts between the two companies' interests have faded as a result of measures News Corp. has taken. When News Corp. bought its stake in DirecTV last December, the satellite firm changed its bylaws to give the board's audit committee the power to review any related-party transaction. Chase Carey, a former News Corp. executive installed as chief executive after the deal, gave up News Corp. options he owned at the time of the acquisition in exchange for DirecTV options.
In an interview, Mr. Carey dismissed suggestions that DirecTV was run to suit News Corp. "We are not going to do anything that doesn't make sense for DirecTV." He said DirecTV has an opportunity right now to add subscribers. "These subscribers have significantly more value than what it costs us to acquire them." He added that it wouldn't make sense to spend money adding subscribers just to help out News Corp.'s cable channels.
"Chase's self-interest is motivating him to do what is best for DirecTV, whereas that wasn't the case before the change," said Bill Jacobs, an analyst with Harris Associates, which owned 16.6 million shares of DirecTV at June 30, according to FactSet. At that time, Harris also had 1.2 million shares in Fox. He also argues that while adding subscribers costs money, the returns on that investment are "very good ... from my perspective, every time they're adding a subscriber, they're adding value."
After its recent run-up, DirecTV is trading at a significant premium to its rival satellite operator, EchoStar Communications Corp. On an enterprise value per subscriber basis, DirecTV is trading at $1,859, compared with $1,653 for EchoStar, according to Vintage Research analyst William Kidd, using estimated year-end 2004 subscriber numbers.
Still, questions persist about potential conflict in programming negotiations between DirecTV and News Corp.'s Fox TV station group. DirecTV is negotiating the renewal of its right to carry the station group's signals. Like all broadcasters, Fox is facing a long-term erosion in its advertising sales. Fox would like DirecTV to pay cash for the right to carry its programming, establishing a precedent that Fox could use with cable-TV operators, say people close to the situation. Fox faces an uphill battle persuading DirecTV to pay cash, given the potential cost, these people say.
Mr. Carey said DirecTV negotiates with Fox the same way it negotiates with "anybody else."
Investors also are likely to scrutinize a deal expected to be announced soon consolidating News Corp. and DirecTV's satellite-TV interests in Latin America. Both companies own stakes in competing firms in the region. News Corp. is expected to sell its interests, including a significant stake in a Brazilian satellite operator, to DirecTV for cash. The satellite firm will end up with a majority stake in Latin American businesses outside Mexico.
Mr. Carey argues that DirecTV benefits from its links to News Corp., both through its relationship with the Fox programming business and News Corp.'s other satellite interests. News Corp. is big enough in the satellite arena to get advantages in new technologies, he said.
DirecTV could end up holding some of News Corp's other satellite interests. While Mr. Carey has focused on selling off DirecTV's noncore assets this year, such as its majority stake in satellite operator PanAmSat, that process is expected to be completed within a few months. At that point, he is expected to turn his attention to expanding DirecTV. Without an expansion, Mr. Carey likely would end up treading on the toes of Mitch Stern, chief executive of the DirecTV's service unit and a former colleague from News Corp.
One scenario floated is for DirecTV to buy some of News Corp.'s existing satellite interests, such as Sky Italia and Star TV, its satellite businesses in Italy and Asia, respectively. This could lift News Corp.'s stake in DirecTV substantially. Mr. Carey said "there are no plans" for DirecTV to buy News Corp.'s other satellite interests. He acknowledges, however, that it could be simpler to have all the satellite interests together in the one entity, but the advantages of such a restructuring are "at the margin."
间接持有DirecTV股票更划算
DirecTV Group Inc.的投资者可能错过了更大的盛宴。
自从鲁珀特?梅铎（Rupert Murdoch, 又译：鲁珀特?默多克）去年12月掌控这家卫星电视公司以来，他把该公司变成了有线电视行业的强有力竞争者。通过大规模的广告和促销行动，DirecTV今年的订户增长数达到创纪录水平。
受此推动，DirecTV的股价自8月初以来不断攀升，由16美元上涨至18美元以上，接近18.81美元的52周高点。不过昨日收盘时，该股下挫11美分，至17.99美元。
但是，并非所有华尔街人士都渴望购买该股。一些投资者认为，通过持有梅铎旗下新闻集团(News Corp.)的股票比直接持有DirecTV更合理（新闻集团在DirecTV持有34%的股份）。他们说，这是因为新闻集团拥有电视网络和其他卫星权益，可以从它与DirecTV的关系中受益。
Fulcrum Global Partners的分析师格林菲尔德(Richard Greenfield)称，他宁愿选择投资新闻集团的股票来享受DirecTV长期成功的益处。他对新闻集团的评级为买进，但没有对DirecTV发表评级。他不持有这两家公司的股票。
DirecTV为争取订户付出了很大代价，导致其在第二季度由上年同期的盈利转为亏损。分析师预计，至少在2006年以前，DirecTV不会实现巨大的自由现金流，原因是它正斥资购买新的卫星，推广新的互动服务以及加强营销力度。自由现金流是市场密切关注的一个衡量企业盈利能力的指标。
但是，虽然DirecTV因获得新订户需承担相应的成本，而新闻集团却将大受裨益。它打算以DirecTV为平台开设新的有线频道。如果DirecTV的订户数量增加，新频道将会拥有更多的潜在观众。截至6月末，DirecTV仅拥有1,300多万订户。它希望到2006年年底前将这一数字提高到1,500万。
大型基金管理公司T. Rowe Price Associates的分析师埃伦伯根(Henry Ellenbogen)表示，DirecTV的积极增长策略对公司长期前景将是有利的，不过直接受益者还是新闻集团。FactSet Research Systems的资料显示，截至6月30日，T. Rowe在新闻集团控股的美国子公司Fox Entertainment Group Inc.持有近80万股股票，但只持有10万股DirecTV的股票。
埃伦伯根补充道，新闻集团可能会在不损害自己股价的情况下使DirecTV实现盈亏平衡。这使得新闻集团比其竞争对手、美国最大的有线运营商康卡斯特(Comcast Corp.)更胜一筹。他说，康卡斯特无法在开展类似大规模扩张计划的同时保证其股票毫无损伤。
一些投资者和分析师表示，由于新闻集团的举措初见成效，他们对两家公司之间利益冲突的担忧有所减轻。去年12月购买DirecTV股份的时候，新闻集团修改了章程，赋予董事会审计委员会审查任何关联交易的权力。原新闻集团管理人士、收购后出任DirecTV首席执行长的卡利(Chase Carey)放弃了他在交易发生时持有的新闻集团的期权，换取了DirecTV的期权。
卡利在采访中驳斥了所谓DirecTV的运营是为了顺应新闻集团利益的说法。他说，“我们不会做任何无益于DirecTV的事情。DirecTV目前就有增加订户的可能，这些订户带来的价值明显超过当初我们收购DirecTV的成本。”他补充道，只为了支持新闻集团的有线频道而斥资增加订户是不明智的。
Harris Associates的分析师雅各布斯(Bill Jacobs)称，卡利的个人利益会促使他保证DirecTV的最大利益，而在他改变他所持有的期权之前情况并不如此。FactSet的数据显示，Harris Associates在6月30日持有1,660万股DirecTV的股票及12万股Fox的股票。他还认为，虽然增加订户加大了成本，但这种投资回报是值得的，订户的增加伴随著价值的增长。
在最近的涨势之后，DirecTV的股价明显高出竞争对手EchoStar Communications Corp。Vintage Research的分析师基德(William Kidd)根据2004年年底的预估订户数据分析，DirecTV每个订户的企业价值为1,859美元，而EchoStar为1,653美元。
不过，DirecTV与新闻集团旗下Fox电视集团之间的谈判可能仍暗含著冲突。DirecTV正在就接收该电视集团信号合约的续签问题进行谈判。和所有广播电视公司一样，Fox正面临著广告销售长期下滑的局面。知情人士透露，Fox希望DirecTV为此项交易支付现金，开辟它与有线电视运营商之间合作方式的先河。这些人士称，鉴于潜在的成本问题，Fox在说服DirecTV支付现金方面将面临很大阻力。
卡利表示，DirecTV与Fox谈判的方式和它与其他任何一方的谈判方式并无二致。
投资者可能还将认真考虑可能很快就会宣布的一项交易：新闻集团和DirecTV卫星电视业务在拉美地区的整合。两家公司在该地区的一些相互竞争的企业里持有股份。预计新闻集团将以现金方式出售其权益（包括在一家巴西卫星电视运营商的大量股份）给DirecTV，最终将只持有墨西哥以外拉美企业的多数股权。
卡利认为，DirecTV与新闻集团的结盟使其受益匪浅。他说，新闻集团在卫星电视领域拥有足够大的规模，可以获得新技术方面的优势。
DirecTV最终可能会获得新闻集团其他卫星业务的权益。虽然卡利今年一直侧重于出售DirecTV的非核心资产，如在卫星运营商PanAmSat的控股权，但预计这一过程将在几个月内宣告结束。届时，他将把注意力转到扩大DirecTV业务上。如果不扩张，卡利可能会惹恼DirecTV服务子公司的首席执行长、原新闻集团的同事斯特恩(Mitch Stern)。
市场盛传DirecTV将收购新闻集团现有的一些卫星资产，如意大利的Sky Italia和亚洲的星空卫视(Star TV)。这会使新闻集团在DirecTV的持股大幅提高。而卡利则表示，DirecTV目前无意收购新闻集团的其他卫星资产。不过他承认，将所有卫星资产放在一个实体当中可能运营起来更简单一些，但这种重组的优势是微乎其微的。
