DIRECTV 2008 Annual Report Download - page 29

THE DIRECTV GROUP, INC.
All of our satellites and earth stations are or have been licensed by the FCC. Currently, three of
our satellites are licensed by the government of Canada. While the FCC generally issues DTH space
station licenses for a fifteen-year term, DBS space station and earth station licenses are generally issued
for a ten-year term, which is less than the useful life of a healthy direct broadcast satellite. Upon
expiration of the initial license term, the FCC has the option to renew a satellite operator’s license or
authorize an operator to operate for a period of time on special temporary authority, or decline to
renew the license. If the FCC declines to renew the operator’s license, the operator is required to cease
operations and the frequencies it was previously authorized to use would revert to the FCC.
Currently we have several applications pending before the FCC, including applications to launch
and operate future satellites to support DIRECTV’s services. In general, the FCC’s approval of these
applications is required for us to continue to expand our range of service offerings while increasing the
robustness of our satellite fleet. We may not obtain these approvals in a timely fashion or at all.
As a DBS/DTH licensee and operator we are subject to a variety of Communications Act
requirements, FCC regulations and copyright laws that could materially affect our business. They
include the following:
•Local-into-Local Service and Limitation on Retransmission of Distant Broadcast Television Signals.
The Satellite Home Viewer Improvement Act, or SHVIA, allows satellite carriers to retransmit
the signals of local broadcast television stations in the stations’ local markets without obtaining
authorization from the holders of copyrights in the individual programs carried by those stations.
Another portion of SHVIA, as amended by the Satellite Home Viewer Extension and
Reauthorization Act of 2004, or SHVERA, also permits satellite retransmission of distant
network stations (those that originate outside of a satellite subscriber’s local television market)
only to ‘‘unserved households.’’ A subscriber qualifies as an ‘‘unserved household’’ if he or she
cannot receive, over the air, a signal of sufficient intensity from a local station affiliated with the
same network, or falls into one of a few other very limited exceptions. SHVERA also prohibits
satellite carriers from signing up a new subscriber to distant analog or digital signals if that
subscriber lives in a local market where the satellite carrier provides local analog or local digital
signals, respectively. SHVERA imposes a number of notice and reporting requirements, and also
permits satellite retransmission of distant stations in neighboring markets where they are
determined by the FCC to be ‘‘significantly viewed.’’ In implementing SHVIA, the FCC has
required satellite carriers to delete certain programming, including sports programming, from the
signals of certain distant stations. In addition, the FCC’s interpretation, implementation and
enforcement of other provisions of SHVIA and SHVERA, as well as judicial decisions
interpreting and enforcing these laws, could hamper our ability to retransmit local and distant
network and superstation signals, reduce the number of our existing or future subscribers that
can qualify for receipt of these signals, impose costs on us in connection with the process of
complying with the rules, or subject us to fines, monetary damages or injunctions. Also, the
FCC’s sports blackout requirements, which apply to all distant network signals, may require
costly upgrades to our system. Further, an FCC order interpreting the requirement that satellite
carriers retransmit local digital signals with ‘‘equivalent bandwidth’’ of significantly viewed digital
signals may constrain our ability to deliver such significantly viewed digital signals. Moreover, the
United States Copyright Office has issued recommendations to Congress for amendments to
SHVERA, many of which could make retransmissions of broadcast signals more difficult or
expensive. The distant-signal provisions of SHVERA expire at the end of 2009. Congress may
decline to renew those provisions, which could severely restrict our ability to retransmit distant
signals. Congress could also adopt amendments to SHVERA, including those suggested by the
Copyright Office, that would limit the provision of distant signals.
16