DIRECTV 2004 Annual Report Download - page 15

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THE DIRECTV GROUP, INC.
•
Association with a Leading Global Media Company. With News Corporation, a leading global media company,
owning 34% of our outstanding common stock through Fox, DIRECTV U.S. is associated with a company that has
unrivaled experience in developing and managing successful pay-television platforms around the world. DIRECTV
U.S. believes that its association with News Corporation will continue to improve its competitive position and growth
prospects.
Business Strategy
DIRECTV U.S.’ overall goal is to provide customers with the best television experience in the United States. Its strategy
focuses on offering its customers differentiated and exclusive content, attaining leadership in technology and enhancing its sales
and marketing, distribution and customer service.
•
Offer Differentiated and Exclusive Content. To fulfill its goal, DIRECTV U.S. believes it must have the most
extensive collection of valuable programming services available. DIRECTV U.S. will improve its programming
service by expanding its HDTV programming, introducing new interactive services, continuing to distribute local
channel programming to additional markets, enhancing its new electronic program guide and expanding its
international programming. For example, in November 2004, DIRECTV U.S. announced an agreement with the NFL
to extend its exclusive rights to carry the NFL SUNDAY TICKET package through the 2010 season. In addition,
DIRECTV U.S. gained the right to develop and significantly expand the package and expects to introduce innovative
new features, interactive services and expanded programming for NFL SUNDAY TICKET package subscribers.
•
Expand HDTV Programming. DIRECTV U.S. launched its DIRECTV HD programming package on July 1,
2003, and currently offers seven national HDTV channels, network HDTV programming from FOX, ABC, CBS
and NBC in their owned and operated markets as well as several NFL games through its NFL SUNDAY TICKET
package. In September 2004, DIRECTV U.S. announced plans to launch four new satellites that will provide it
with the capacity to offer greatly expanded HDTV programming, including local HDTV programming.
DIRECTV U.S. expects to launch the first two of these satellites, SPACEWAY 1 and SPACEWAY 2, by mid-
2005, which will have the capability to provide HDTV programming to over half of U.S. television households.
The next two satellites, DIRECTV 10 and DIRECTV 11, are expected to launch in 2007. In total, these four new
satellites will be capable of broadcasting more than 1,500 local and 150 national high-definition channels to all
U.S. television households, although a customer receiving local high-definition channels will generally only
receive such channels in the customer’s home market.
•
Introduce New Enhanced and Interactive Services. DIRECTV U.S. believes that enhanced and interactive
services will become an important part of the DIRECTV customer experience. For example, DIRECTV U.S.
recently launched three new DIRECTV Mix Channels (one each for news, sports and kids) that enable customers
to view up to six live channels in each genre all on one screen. In addition, DIRECTV U.S. intends to launch
DIRECTV Active™ in the first quarter of 2005, which will offer services such as local weather information,
financial market summaries and other interactive services. DIRECTV U.S. also plans to add Mix Channels and
interactive services to the NFL SUNDAY TICKET package and it is developing services that will use the digital
video recorder, or DVR, to provide content-on-demand services.
•
Expand Local Channel Service. Over the last several years, expanded local channel service has been a
significant driver of DIRECTV U.S.’ growth. In general, DIRECTV U.S. attains greater subscriber growth, lower
churn and higher ARPU in those markets where it delivers local channels to subscribers. As of December 31,
2004, DIRECTV U.S. offered local channels to over 100 million television households in approximately 130
markets representing about 92% of all U.S. television households. In 2005, DIRECTV U.S. plans to introduce
local channels to an additional nine markets representing approximately 1.7 million television households.
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