DIRECTV 2005 Annual Report Download - page 10

Two more satellite launches
are planned for early 2007, giving us the capacity to deliver over 150 national and
all local HD channels to nearly every home in America. With these capabilities, DIRECTV
will have the most extensive and compelling HD service in the United States.
pay television households, the market is attractive
and has yet to be fully tapped. We are in the
unique position of bringing our experience in the
U.S. market to bear in Latin America.
In Mexico, we have combined our platform
with Sky Mexico and own over 40 percent of the
combined business. We expect to combine with
Sky Brazil after receiving regulatory approval later
this year, giving us more than 70 percent of the
new company. In the region’s other markets, we
own over 80% of DIRECTV Latin America and offer
service in 26 countries.
We believe we have successfully established
ourselves as the market leader for quality pay
television across the region. Our subscriber base
in Latin America will be approaching four million
when we complete the Brazilian consolidation and
we expect solid subscriber growth going forward.
More importantly, the key operating results are
improving and the businesses are rapidly moving
toward profitability and cash flow growth.
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While television excellence will be at the heart of
our success, we recognize that the widening avail-
ability of bundled services – television, broadband
Internet, and telephony – will have an impact on
our business.
We believe that DIRECTV is well positioned
to benefit from broadband development. First,
broadband options will exist beyond the cable and
telephone companies. Wireless broadband options
like WiFi or WiMax show great potential and
are already being brought to market, while other
technologies will emerge in the coming years.
Second, broadband runs the increasing risk of
commoditization. Price competition is intense today,
and services that many thought would provide new
revenue streams – such as voice – may instead be
offered as free applications. Therefore, in providing
broadband, the advantage will go to those with
lower costs and a more flexible infrastructure. And
emerging wireless broadband services will cost a frac-
tion of the tens of billions of dollars that cable and
phone companies have spent and will spend to build
their systems. Furthermore, mobility is for most con-
sumers no longer a preference and a luxury; it is an
expectation and a necessity. Wireless services provide
a flexibility and freedom that consumers demand.
We fully recognize this will be an increasingly
competitive business both in television and beyond
with competitors that have significant resources.
However, DIRECTV has a unique set of strengths
including our brand, national reach, low cost flexible
infrastructure, large subscriber base with a great
demographic profile, diverse and unique content, and
unparalleled distribution. Our strategy going forward
will be to leverage these strengths as we take advan-
tage of emerging technologies and outperform rivals
with larger bureaucracies and higher costs.
Ultimately, success will depend on execution. So
we are excited to have built a strong management
team over the past year. These executives represent
a unique mix of expertise and skills from television,
distribution, technology, marketing and service.
We have streamlined the company’s organization
to improve our focus on key goals and to enhance
coordination across divisions. With this team in
place, we truly believe we are well positioned
for a great future as we begin to deliver on the
tremendous potential of DIRECTV.
Rupert Murdoch Chase Carey
Chairman of the Board, President and CEO,
The DIRECTV Group, Inc. The DIRECTV Group, Inc.