DIRECTV 2005 Annual Report Download - page 40

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THE DIRECTV GROUP, INC.
Our international operation, DTVLA, is subject to various additional risks associated with doing
business internationally, which include political instability, economic instability, and foreign currency
exchange rate volatility.
All of DTVLA’s operating companies are located outside the United States. DTVLA operates and
has subscribers located throughout Latin America and the Caribbean Basin, which makes it vulnerable
to risks of conducting business in foreign markets, including:
• difficulties and costs associated with complying with a wide variety of complex laws, treaties and
regulations;
• unexpected changes in regulatory environments;
• longer payment cycles;
• earnings that may be subject to tax withholding requirements or the imposition of tariffs,
exchange controls or other restrictions;
• political and economic instability;
• export restrictions and other trade barriers;
• difficulties in maintaining overseas subsidiaries and international operations; and
• difficulties in obtaining approval for significant transactions, such as the Sky Transactions.
In the past, the countries that constitute some of DTVLA’s largest markets, including Brazil,
Argentina, Colombia and Venezuela have experienced economic crises, caused by external and internal
factors, and characterized by exchange rate instability, high inflation, high domestic interest rates,
economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking
sector and high unemployment. These economic conditions have often been related to political
instability, including political violence. If these economic conditions recur, they could substantially
reduce the purchasing power of the population in our markets and materially adversely affect our
business.
Because DTVLA offers premium pay television programming, its business is particularly vulnerable
to economic downturns. DTVLA has experienced, and may in the future experience, decreases or
instability in consumer demand for its programming, as well as subscriber credit problems. DTVLA’s
inability to adjust its business and operations to adequately address these issues could materially
adversely affect its revenues and ability to achieve profitability.
We may not be able to obtain or retain certain foreign regulatory approvals.
There can be no assurance that any current regulatory approvals held by us are, or will remain,
sufficient in the view of foreign regulatory authorities, or that any additional necessary approvals will be
granted on a timely basis or at all, in all jurisdictions in which we operate, or that applicable
restrictions in those jurisdictions will not be unduly burdensome. The failure to obtain the
authorizations necessary to operate satellites or provide satellite service internationally could have a
material adverse effect on our ability to generate revenue and our overall competitive position.
Our principal stockholder has significant influence over our management and over actions requiring
stockholder approval and its interests may differ from ours.
As of December 31, 2005, News Corporation held approximately 34% of the issued and
outstanding shares of our common stock. K. Rupert Murdoch, Chairman and Chief Executive of News
27