DIRECTV 2006 Annual Report Download - page 10

is best exemplifi ed by the following statistics:
customers who have HD and/or DVR services
currently generate almost 50 percent greater
ARPU and churn at roughly half the rate of
those who do not have these services.
By combining these strong top-line
trends with our commitment to increase
margins through disciplined cost manage-
ment, DIRECTV U.S. expects to continue
generating strong profi tability and cash
fl ow growth in the future.
Achieving the Potential of DIRECTV
Latin America
With just 20 million pay TV households
in Latin America out of 100 million total
households, this untapped market represents
signifi cant opportunity for our DIRECTV Latin
American businesses. Following the comple-
tion of the Sky Brazil acquisition in 2006,
we’ve now completed the consolidation of
all our satellite businesses in the region.
And with the purchase earlier this year
of the remaining 14 percent interest in
DIRECTV Latin America, we now own 74
percent of SKY Brazil, 41 percent of SKY
Mexico and 100 percent of PanAmericana,
which covers most of the remaining coun-
tries in the region.
DIRECTV Latin America and its part-
ners reach more than 4 million customers
throughout Latin America, with 1.3 million
at SKY Brazil, 1.4 million at PanAmericana
and 1.4 million at SKY Mexico. Importantly,
these businesses reap signifi cant benefi ts
from being part of DIRECTV. As examples,
less expensive set-top boxes are now avail-
able by piggybacking on the U.S. efforts,
and DVRs were introduced far ahead of the
competition in Latin America. DIRECTV Latin
America continues to show the promise we
envisioned when we restructured the busi-
nesses, and it is poised to generate positive
free cash fl ow in 2007 and signifi cant growth
thereafter.
On the Horizon
It’s clear that we are facing an increasingly
intense and complex competitive environ-
ment that includes cable, telephone and
Internet businesses. This heightened compe-
tition not only raises the bar for us, but also
creates signifi cant opportunities. While our
competitors focus on a multitude of services,
our highest priority is to provide the best
television experience, which continues to
defi ne our success.
The bundle of video, voice, data and
wireless offered by some of our competitors
is clearly a challenge, but research shows
that the main reason consumers purchase
a bundle is to save money. Therefore, as long
as customers have broadband choices and
there are new entrants who provide options,
we believe we will continue to compete
effectively against the bundle. While we
continue to explore the many emerging
broadband opportunities, our primary focus
will be to utilize our assets – including our
strong brand, more than 16 million subscrib-
ers and a national service infrastructure – to
help bring these new broadband technologies
to market in a timely and effi cient manner.
We would like to take this opportunity to
thank Rupert Murdoch and News Corp. for the
tremendous support and insights provided
over the past several years. We look forward
to beginning a new chapter with Liberty, com-
plete with the strong leadership and expertise
that John Malone and his team will bring to
our company. We have a seasoned Board of
Directors to help guide our efforts, a strong
management team to steer DIRECTV toward
excellence and a committed group of employ-
ees to execute effi ciently on our goals.
DIRECTV has the right assets, the right
people and the right products in place. With
the successful execution of our priorities,
DIRECTV is poised to continue delivering
substantial value to shareholders, customers
and employees.
8 DIRECTV
Chase Carey
President and Chief Executive Offi cer
The DIRECTV Group, Inc.