DIRECTV 2007 Annual Report Download - page 20

THE DIRECTV GROUP, INC.
into a single platform in each of the major territories served in the region. These transactions
were completed as follows:
• On February 16, 2006, we completed the acquisition of our equity interest in Sky Mexico,
which included the acquisition of a 12% equity interest in Sky Mexico in exchange for the
sale of DIRECTV Mexico subscribers to Sky Mexico, as well as our acquisition of News
Corporation’s and Liberty Media International’s interests in Sky Mexico.
• On August 23, 2006, we completed the merger of our Brazil business, Galaxy Brasil Ltda.,
or GLB, with Sky Brazil, as well as our purchase of News Corporation’s and Liberty Media
International ‘s interests in Sky Brazil.
As a result of these transactions, we own 100% of PanAmericana, 74% of Sky Brazil, and 41% of
Sky Mexico. Globo owns the other 26% of Sky Brazil and Televisa owns the other 59% of Sky Mexico.
The results of PanAmericana and Sky Brazil are consolidated in our results. We account for our 41%
interest in Sky Mexico under the equity method of accounting.
Key Strengths
•High Quality Digital Picture and Sound. Our video and audio programming is 100% digitally
delivered, providing subscribers with digital-quality video and CD-quality sound, as well as
interactive features. We believe that this compares favorably with cable providers in Latin
America, who typically continue to broadcast only analog services or a combination of analog
and digital services to a large percentage of their subscribers.
•Large Subscriber Base and Pan-Regional Scale of Service. On a regional basis, we are the largest
provider of pay television services in Latin America. We believe that this scale provides us with
the opportunity to obtain programming on favorable terms, and contributes to economies of
scale in other areas, such as customer service, equipment and technology purchasing and
broadcast operations.
•Relationship with DIRECTV U.S. We believe that DTVLA’s relationship with DIRECTV U.S. is a
key strength. Sky Brazil, PanAmericana and Sky Mexico are in the process of aligning their set
top box specifications and middleware technologies with those of DIRECTV U.S., allowing them
to take advantage of DIRECTV U.S.’s economies of scale. We believe it will also allow DTVLA
to launch new features and services at a lower cost and on a faster timetable than its
competitors in Latin America.
•Leading Brands. The process of combining the DIRECTV and SKY businesses in Latin America
allowed us to select the strongest of the two brands in each of the three Latin American
territories. In addition, the national scale of our operations in each individual country enhances
our ability to leverage a strong brand across each market.
•Strong Customer Service. We believe that we have a higher level of customer service than our
competitors, and that this is an important element in minimizing subscriber churn and attracting
new subscribers.
Business Strategy
Our goal is to provide subscribers with the best television experience available. Our strategy
focuses on leveraging our competitive advantages that differentiate our service offerings from those of
our competitors.
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