DIRECTV 2007 Annual Report Download - page 30

THE DIRECTV GROUP, INC.
our website at www.directv.com as soon as reasonably practicable after they are electronically filed with,
or furnished to, the SEC.
ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors, as well as the more detailed descriptions
of our business elsewhere in this Annual Report. The risks described below are not the only ones
facing our company. Additional risks not presently known to us or that we currently deem immaterial
may also adversely affect our business, financial condition or results of operations.
Our business, financial condition or results of operations could be materially and adversely affected
by the following:
Construction or launch delays on satellites could materially adversely affect our revenues and
earnings.
A key component of our business strategy is our ability to expand our offering of new
programming and services, including increased local and HD programming. In order to accomplish this
goal, we need to construct and launch new satellites. The construction and launch of satellites are often
subject to delays, including satellite and launch vehicle construction delays, periodic unavailability of
reliable launch opportunities due to competition for launch slots, weather and also due to general
delays that result when a launch provider experiences a launch failure, and delays in obtaining
regulatory approvals. A significant delay in the future delivery of any satellite would materially
adversely affect the use of the satellite and thus could materially adversely affect our anticipated
revenues and earnings. If satellite construction schedules are not met, there can be no assurance that a
launch opportunity will be available at the time a satellite is ready to be launched. Certain delays in
satellite construction could also jeopardize a satellite authorization that is conditioned on timely
construction and launch of the satellite.
Our satellites are subject to significant launch and operational risks.
Satellites are subject to significant operational risks relating to launch and while in orbit. Launch
and operational risks include launch failure, incorrect orbital placement or improper commercial
operation. Launch failures result in significant delays in the deployment of satellites because of the
need both to construct replacement satellites, which can take up to 36 months, and obtain other launch
opportunities. We estimate the overall historical loss rate for all launches of commercial satellites in the
last five years to be approximately 5% but it may be higher. Any significant delays or failures in
successfully launching and deploying our satellites could materially adversely affect our ability to
generate revenues. While we have traditionally purchased insurance covering the launch and, in limited
cases, operation of our satellites, such policies typically cover the loss of the satellite itself or a portion
thereof, and not the business interruption or other associated direct and indirect costs. For our
DIRECTV 11 satellite, scheduled for launch in the first quarter of 2008, we expect to purchase launch
insurance covering a portion of the satellite and launch vehicle costs in the event of a total loss of the
satellite prior to separation from the launch vehicle. We do not currently expect to purchase in-orbit
insurance for the DIRECTV 11 satellite.
In-orbit risks include malfunctions, commonly referred to as anomalies, and collisions with
meteoroids, other spacecraft or other space debris. Anomalies occur as a result of various factors, such
as satellite manufacturing errors, problems with the power systems or control systems of the satellites
and general failures resulting from operating satellites in the harsh space environment. We work closely
with our satellite manufacturers to determine and eliminate the potential causes of anomalies in new
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