DIRECTV 2010 Annual Report Download - page 39

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DIRECTV
ITEM 1A. RISK FACTORS In addition, cable television operators have grown their subscriber bases
through mergers and acquisitions. Moreover, mergers, joint ventures and alliances
You should carefully consider the following risk factors. The risks described among franchise, wireless or private cable television operators, telcos, broadband
below are not the only ones facing our company. Additional risks not presently service providers and others may result in providers capable of offering bundled
known to us or that we currently deem immaterial may also impair our business, television, data and telecommunications services in competition with our services.
financial conditions or results of operations.
We do not currently offer local channel coverage to markets covering
Our business, financial condition or results of operations could be materially approximately three percent of U.S. television households, which places us at a
and adversely affected by the following: competitive disadvantage in those markets. We also have been unable to secure
certain international programming, due to exclusive arrangements of programming
We compete with other MVPDs, some of whom have greater resources than we providers with certain competitors, which has constrained our ability to compete for
do and levels of competition are increasing. subscribers who wish to obtain such programming. And as discussed below, certain
We compete in the MVPD industry against cable television, telcos and wireless cable-affiliated programmers have withheld their programming from us in certain
companies and other land-based and satellite-based system operators with service markets, which has further constrained our ability to compete for subscribers in
offerings including video, audio and interactive programming, data and other those markets.
entertainment services and telephony service. Some of these competitors have In the United States, various telcos and broadband service providers have
greater financial, marketing and other resources than we do. deployed fiber optic lines directly to customers’ homes or neighborhoods to deliver
Some cable television operators have large, established customer bases and video services, which compete with the DIRECTV service. It is uncertain whether
many cable operators have significant investments in, and access to, programming. we will be able to increase our satellite capacity, offer a significant level of new
According to the National Cable & Telecommunications Association’s 2008 services in existing markets in which we compete or expand to additional markets
Industry Overview, 96% of the 128.6 million U.S. housing units are passed by as may be necessary to compete effectively. Some of these various telcos and
cable. Of the 128.6 million U.S. housing units, approximately 97.6 million broadband service providers also sell the DIRECTV service as part of a bundle with
subscribe to an MVPD service and approximately 62% of MVPD subscribers their voice and data services. A new broadly-deployed network with the capability
receive their programming from a cable operator. Cable television operators have of providing video, voice and data services could present a significant competitive
advantages relative to us, including or as a result of: challenge and, in the case of the telcos currently selling the DIRECTV service,
could result in such companies focusing less effort and resources selling the
• being the incumbent MVPD operator with an established subscriber base in DIRECTV service or declining to sell it at all. We may be unable to develop other
the territories in which we compete; distribution methods to make up for lost sales through the telcos.
• bundling their video service with efficient two-way high-speed Internet As a result of these and other factors, we may not be able to continue to
access or telephone service on upgraded cable systems; expand our subscriber base or compete effectively against cable television or other
• having the ability to provide certain local and other programming, including MVPD operators in the future.
HD programming, in geographic areas where we do not currently provide
local or local HD programming; and Emerging digital media competition could materially adversely affect us.
• having legacy arrangements for exclusivity in certain multiple dwelling units Our business is focused on television, and we face emerging competition from
and planned communities. other providers of digital media, some of which have greater financial, marketing
and other resources than we do. In particular, programming offered over the
Internet has become more prevalent as the speed and quality of broadband
17