DIRECTV 2009 Annual Report Download - page 39

DIRECTV
infringe claims contained in pending patent applications. Further, without lengthy litigation, it is often
not possible to determine definitively whether a claim of infringement is valid.
We cannot estimate the extent to which we may be required in the future to obtain intellectual
property licenses or the availability and cost of any such licenses. Those costs, and their impact on our
earnings, could be material. Damages in patent infringement cases may also include treble damages in
certain circumstances. To the extent that we are required to pay royalties to third parties to whom we
are not currently making payments, these increased costs of doing business could materially adversely
affect our operating results. We are currently being sued in patent infringement actions related to use
of technologies in our DTH business. There can be no assurance that the courts will conclude that our
services or the products used to transmit or receive our services do not infringe on the rights of third
parties, that we or the manufacturers would be able to obtain licenses from these persons on
commercially reasonable terms or, if we were unable to obtain such licenses, that we or the
manufacturers would be able to redesign our services or the products used to transmit or receive our
services to avoid infringement. The final disposition of these claims is not expected to have a material
adverse effect on our consolidated financial position, but could possibly be material to our consolidated
results of operations for any one period. Further, no assurance can be given that any adverse outcome
would not be material to our consolidated financial position.
See ‘‘Legal Proceedings—Intellectual Property Litigation’’ in Part I, Item 3 of this Annual Report.
John C. Malone has significant influence over actions requiring stockholder approval and his interests
may differ from ours.
The Chairman of our Board of Directors, John Malone, is also Chairman and Chief Executive of
Liberty Media, Chairman of Liberty Global, Inc., and owns significant voting interests in each of
DIRECTV, Liberty Media, Liberty Global, and Discovery Communications, Inc. Mr. Malone, his wife
and certain trusts for the benefit of their children own shares of DIRECTV common stock, which
represent approximately 24.3% of the total voting power of the outstanding shares of DIRECTV as of
December 31, 2009. DIRECTV has two classes of common stock, the Class A common stock entitling
holders to one vote per share and the Class B common stock entitling holders to 15 votes per share.
The shares of DIRECTV Class B common stock also have certain limited consent rights with respect to
certain share distributions and certain amendments to the DIRECTV Amended and Restated
Certificate of Incorporation. By virtue of such rights as well as Mr. Malone’s position as DIRECTV’s
Chairman, Mr. Malone may have significant influence over the outcome of any corporate transaction or
other matters submitted to DIRECTV stockholders for approval, including the election of directors,
mergers, consolidations and the sale of all or substantially all of DIRECTV’s assets.
We rely on key personnel.
We believe that our future success will depend to a significant extent upon the performance of
certain of our key executives. The loss of certain of our key executives could have a material adverse
effect on our business, financial condition and results of operations.
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
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