DirectTV

Direct TV
The DIRECTV Group, Inc. provides digital television entertainment in the United States and Latin America. It operates in two segments, DIRECTV U.S. and DIRECTV Latin America. The DIRECTV U.S. segment provides direct-to-home (DTH) digital television services, as well as multi-channel video programming distribution services in the United States. As of December 31, 2007, the segment provided approximately DirectTV 16.8 million subscribers with access to channels of digital-quality video pictures and CD-quality audio programming that it transmit directly to subscribers' homes or businesses via high-powered geosynchronous satellites. It distributes approximately 1,800 digital video and audio channels, including 190 basic entertainment channels, 33 premium movie channels, 36 regional and specialty sports networks, an aggregate of 1,400 local channels, 101 Spanish and other foreign language special interest channels, and 31 pay-per-view movie and event choices. It also provides high definition (HD) local channels and national HD television channels; and professional and collegiate sports programming, such as the NFL SUNDAY TICKET package, which allows subscribers to view the selection of NFL games available each Sunday during the regular season. The DIRECTV Latin America segment provides DTH digital television services in Latin America, which includes South America, Central America, and Puerto Rico. It provided a selection of local and international programming under the DIRECTV and the SKY brands to approximately 1.5 million subscribers in Brazil; 1.7 million subscribers in PanAmericana; and 1.6 million subscribers in Mexico. The company was founded in 1977 and is based in El Segundo, California.
The DIRECTV Group, Inc. is a leading provider of digital television entertainment in the United States and Latin America. Their two business segments, DIRECTV U.S. and DIRECTV Latin America, which are differentiated by their geographic location, are engaged in acquiring, promoting, selling and/or distributing digital entertainment programming via satellite to residential and commercial subscribers.
DIRECTV U.S. DIRECTV Holdings LLC and its subsidiaries, which they refer to as DIRECTV U.S., is the largest provider of direct-to-home, or DTH, digital television services and the second largest provider in the multi-channel video programming distribution, or MVPD, industry in the United States. As of December 31, 2007, DIRECTV U.S. had over 16.8 million subscribers.
DIRECTV Latin America. DIRECTV Latin America, or DTVLA, is a leading provider of DTH digital television services throughout Latin America. DTVLA is comprised of: PanAmericana, which provides services in Venezuela, Argentina, Chile, Colombia, Puerto Rico and certain other countries in the region through their wholly-owned subsidiary, DIRECTV Latin America, LLC, or DLA LLC; their 74% owned subsidiary, Sky Brasil Servicos Ltda., which they refer to as Sky Brazil; and their 41% equity method investment in Innova, S. de R.L. de C.V., or Sky Mexico. As of December 31, 2007, PanAmericana had approximately 1.7 million subscribers, Sky Brazil had approximately 1.5 million subscribers and Sky Mexico had approximately 1.6 million subscribers.
Through DIRECTV U.S., they provide over 16.8 million subscribers with access to hundreds of channels of digital-quality video pictures and CD- quality audio programming that they transmit directly to subscribers' homes or businesses via high-powered geosynchronous satellites.
They believe they provide one of the most extensive collections of programming available in the MVPD industry. They currently distribute to their subscribers more than 1,800 digital video and audio channels, including about 190 basic entertainment channels including over 70 XM Satellite Radio music channels, 33 premium movie channels, over 36 regional and specialty sports networks, an aggregate of over 1,400 local channels, over 101 Spanish and other foreign language special interest channels, and over 31 pay-per-view movie and event choices. Although they distribute over 1,400 local channels, a subscriber generally receives only the local channels in the subscriber's home market. As of December 31, 2007, they provided local channel coverage in standard definition to approximately 143 markets, covering about 94% of U.S. television households. In addition, they provided high definition, or HD, local channels in 68 markets representing 72% of U.S. TV households, as well as over 90 national HD television channels. With the expected launch of one additional satellite, they expect to extend their advantage of having the most HD channels in the industry.
They also provide premium professional and collegiate sports programming such as the NFL SUNDAY TICKET™ package, which allows subscribers to view the largest selection of NFL games available each Sunday during the regular season. Under their contract with the NFL, they have exclusive rights to provide this service through 2010, including rights to provide related HD, interactive and mobile services.
To subscribe to the DIRECTV® service, subscribers acquire receiving equipment from either us, their national retailers, independent satellite television retailers or dealers, or regional Bell operating companies, or RBOCs. Most set-top receivers provided to new and existing subscribers are leased subsequent to the introduction of a lease program on March 1, 2006.
The receiving equipment consists of a small receiving satellite dish antenna, a digital set-top receiver and a remote control, which they refer to as a DIRECTV® System. After acquiring and installing a DIRECTV System, subscribers activate the DIRECTV service by contacting us and subscribing to one of their programming packages.
Key Strengths
  • Large Subscriber Base. They are the largest provider of DTH digital television services and the second largest MVPD provider in the United States, in each case based on the number of subscribers. They believe that their large subscriber base provides us with the opportunity to obtain programming on favorable terms and secure unique and exclusive programming. They also believe that their large subscriber base contributes to achieving other economies of scale in areas such as DIRECTV System equipment purchasing, customer service, broadcast operations and general and administrative services.
  • Leading Brand Name. Results from a study they commissioned in 2007 indicated that over 93% of consumers in the United States are aware of the DIRECTV service. They believe the strength of their brand name is an important factor in their ability to attract new subscribers. In addition, they believe their recognized brand name enhances their ability to secure strategic alliances with programmers, distributors and other technology and service providers.
  • Substantial Channel Capacity and Programming Content. As a result of Football their significant channel capacity, they believe they are able to deliver to their subscribers one of the widest selections of local and national programming available today in the United States, including exclusive programming such as the NFL SUNDAY TICKET package and international programming. In addition, they have a substantial amount of capacity in the Ka-Band spectrum that provides us with the capability to offer the most national HD programming currently available in the industry.

  • High-Quality Digital Picture and Sound, Including HD Programming. Their video and audio programming is 100% digitally delivered, providing subscribers with digital-quality video and CD-quality sound. They believe this compares favorably with cable providers that frequently offer popular programming in an analog format and offer a limited selection of digital channels for an additional fee. In addition, they believe they currently offer the nation's most comprehensive selection of HD programming.
  • Strong Customer Service. They have attained top rankings in customer satisfaction studies for their industry. For example, in 2007 DIRECTV was ranked "Highest in Customer Satisfaction Among Satellite/Cable TV Subscribers" in the Southern, Western and Eastern regions of the United States, according to the J.D. Power and Associates 2007 Residential Cable/Satellite TV Customer Satisfaction Study SM . The three regions where DIRECTV ranked highest encompass 43 of the 48 contiguous states. In addition, they have been rated ahead of every cable company in customer service for seven consecutive years in the University of Michigan's American Consumers Satisfaction Index. They believe that providing high-quality customer service is an important element in minimizing subscriber disconnection, or churn, and attracting new subscribers.
  • Valuable Orbital Slots and Satellite-Based Technology. They believe their regulatory authorization to use desirable orbital slots and broadcast spectrum helps sustain their position as one of the leading Satellite companies in the MVPD industry. The Federal Communications Commission, or FCC, has designated three direct broadcast satellite, or DBS, orbital slots in the Ku-Band spectrum that provide full coverage across the 48 contiguous states of the United States, often referred to as CONUS coverage. Within these three orbital slots, there are 96 assigned DBS frequencies. They hold licenses to broadcast their services from 46 of these 96 DBS frequencies. The FCC is currently considering licensing additional DBS slots for satellites that are sometimes referred to as "tweeners" which would provide CONUS coverage. See "Government Regulation—FCC Regulation Under the Communications Act" and "Risk Factors—The ability to maintain FCC licenses and other regulatory approvals is critical to their business" for more information related to these types of slots and satellites. In addition, they hold licenses in three orbital slots (99° west longitude, or WL, 101° WL, and 103° WL) in the Ka-Band spectrum. The satellites that have been and will be launched into these orbital slots will substantially increase their channel capacity, allowing us to provide the most HD programming currently available across the United States. They also have obtained approval from the FCC to transmit their signal in the Ku-Band from one of their satellites that has been stationed at a temporary orbital location at 72.5° WL and from leased capacity on a satellite at 95° WL. Their satellite-based service provides us with many advantages over ground-based cable television services. They have the ability to distribute hundreds of channels to millions of recipients nationwide with minimal incremental infrastructure cost per additional subscriber. In addition, they have comprehensive coverage to areas with low population density in the United States and the ability to quickly introduce new services to a large number of subscribers.