DirecTV deal not window dressing
By Andy Vuong, Staff Writer
Tuesday, December 19, 2006
Qwest receives recurring revenue from its relationship with
DirecTV and would continue to resell the satellite-TV
service when, or if, the company launches a broad video
initiative, said Qwest chief executive Dick Notebaert.
Some analysts had speculated that the DirecTV relationship
provided Qwest with little or no revenue and was a tool used
mostly to reduce wireline losses.
"We get an annuity," Notebaert said in an interview with The
Denver Post. "It has a positive margin. If I can get
margin on it that's positive, then this is a good thing."
He wouldn't disclose specifics.
Qwest has heavily promoted DirecTV's offerings as part of
its bundle of services since May 2005.
This week, DirecTV will return the favor through a
direct-mail marketing campaign pitching a dual-play of
satellite TV and Qwest's high-speed Internet service. The
campaign will reach consumers throughout Qwest's 14-state
territory, DirecTV spokesman Darris Gringeri said.
From the 52nd floor of the company's headquarters in
downtown Denver, Notebaert reflected on a year in which
Qwest posted three straight quarterly profits. The company,
which announces fourth-quarter results in February, has
improved customer service, reduced debt and is on target to
generate $1.35 billion to $1.5 billion in free cash flow for
Notebaert hopes for much of the same in 2007.
"Our goal is to continue to improve the quality of customer
service," Notebaert said. "Our goal is to sustain profits
and cash flows and margins -- and improve yet again."
He said 2007 will be a telling year for Internet Protocol
Television, or IPTV, which is the technology Qwest uses to
offer its own video services to a few select neighborhoods.
"I think we're going to see an acceleration of customers'
acceptance of newer applications," Notebaert said. "The
whole idea of IPTV ... we'll see if that works-- if
customers accept it -- next year."
He said Qwest will continue to seek video franchise
agreements throughout its service territory. The
Denver-based company already has agreements in select
neighborhoods in Colorado, Arizona, Nebraska and Utah.
Notebaert wouldn't disclose when, or whether, the company
might launch a broader video initiative. But he said
Qwest's relationship with DirecTV would continue.
He wouldn't expand on Qwest chief financial officer Oren
Shaffer's recent comments that wireline losses should
decelerate "not very far from now." Qwest's wireline losses
have accelerated as competition from cable companies has
"I don't like predicting things like that," Notebaert said.
"Oren gave you his personal opinion."
Chris King, an analyst with Stifel Nicolaus, said a
deceleration in access-line losses is "not out of the realm
"I'm not necessarily sure wireless substitution will be as
important a factor in access-line losses as it has been in
the past," King said. "From that perspective, they could
see access-line losses stabilize a bit."
Staff writer Andy Vuong
can be reached at 303-954-1209 or