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About DIRECTV being taken over by Liberty Media January 6, 2007

Posted by John M McKee in Business.
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In 1992 I was hired as one of the founding senior executives at DIRECTV. Before it was a household name, with millions of subscribers, it was an interesting idea at a company called Hughes Communications based in El Segundo, California.

Over the years, we figured out how to make a good television service (“Up to 150 all digital channels!”), learned about marketing through retailers (“we know what the consumer wants – they trust us..”) , developed a pretty good customer service focus that was unlike many cable companies back then, and with the help of some acqusitions of our competitors, DIRECTV became number 1.

It was a satisfying experience – building from the ground up. Our team grew too, of course. One of the companies we bought, Primestar Satellite, had more employees then we did (about 3800 vs our lower number of about 1100) which really caused growth internally. I was asked to step in to manage Primestar at that time and consequently started commuting to Denver each week.

Primestar had been owned by Liberty Media when we bought it. I was impressed with many of their executives and employees – often a higher caliber than we had at DIRECTV; and very impressed with their focus on being #1 in customer service which had developed intense loyalty with their subscribers. DIRECTV cared about customers; but Primestar was driven by an intensity I hadn’t seen since I left the retail sector years earlier. Technical decisions were often determined from the perspecitve of what was right for the Primestar customer. Very smart and in my mind, the only way to build long term relationships.

After an extremely successful integration of the 2 companies, I left DIRECTV in 2002 and set up my coaching and consulting practice. I remain attached emotionally because of old friends and the initial focus of my practice which is media and broadcast. In 2004 Rupert Murdoch’s team from News Corp acquired control from then-owner of DIRECTV, General Motors. They assumed the management of it and as these things always happen, new approaches were put into place and new ideas took hold.

Since then, customer-first thinking has become far less a priority. We can see this daily: in how they use their bandwidth to push other services and products from the News Corp entity vs when they previously offered a wide choice of pay per view movies, how they answer their phones (or don’t), how they treat their outsourced service providers (which in turn harms the consumers’ good will toward DIRECTV), and the churn of management and employees who were focused on the issue in many departments.

Libery Media, run by John Malone’s team, will make changes in how DIRECTV functions. They are already reaching out to Cablevision to see if some joint activity for Hi – Def programming can be done together. This is smart. I know that because I spent 2 years consulting with that entity’s boss, Chuck Dolan, as he attempted to launch an all HD satellite TV service starting in 2004. Both Malone and Dolan have been around the TV business forever, and their successes and longevity show they know what works over the long haul. Both understand that lots of HD is a customer service benefit which could cause consumers to leave a cable or satellite provider for another. Expect to see more focus elsewhere on what the customer wants as well. This is not an expense line – it’s a business investment as much or more than new equipment, or marketing costs.

I am very optimistic that DIRECTV will return to the roots which made it such a phenom in the last decade. The first boss of the company, Eddy Hartenstein, understood the importance of looking after one’s paying customers. We all knew it. Our growth and DIRECTVs then levels of customer satisfaction showed it. Here’s to the future of a once fabulous organization which has gone stale.

– john

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