DIRECTV 2010 Annual Report Download - page 41

DIRECTV
existing subscribers or increased retransmission fees paid to broadcasters may residences increase, our earnings and financial performance could be negatively
adversely affect our financial performance or cause us to increase our subscription affected more than those of our competitors. In addition, if our customers seek
rates, which could increase churn. Churn may also increase due to factors beyond alternative means to obtain video entertainment, they may choose to purchase fewer
our control, including churn by subscribers who are unable to pay their monthly services from us. Due to the economic and competitive environment, we may need
subscription fees, a slowing economy, significant signal theft, consumer fraud, a to spend more, or we may provide greater discounts or credits, to acquire and
maturing subscriber base and competitive offers. Any of the risks described in this retain customers who in turn spend less on our services. If our ARPU decreases or
Annual Report that could potentially have a material adverse impact on our cost or does not increase commensurate with increases in programming or other costs, our
service quality or that could result in higher prices for our subscribers could also, in margins could become compressed and the long term value of a customer would
turn, cause an increase in churn and consequently have a material adverse effect on then decrease. The weak economy may affect our net subscriber additions and
our earnings and financial performance. reduce subscriber spending and, if these economic conditions continue or
deteriorate further, our subscriber growth could decline and our churn rate could
Our subscriber acquisition costs could materially increase. increase which would have a material adverse effect on our earnings and financial
performance.
We incur costs relating to subscribers acquired by us and subscribers acquired
through third parties. These costs are known as subscriber acquisition costs. For DTVLA is subject to various additional risks associated with doing business
instance, we provide installation incentives to our retailers to enable them to offer internationally, which include political instability, economic instability, and
standard professional installation as part of the subscriber’s purchase or lease of a foreign currency exchange rate volatility.
DIRECTV System. In addition, we pay commissions to retailers for their efforts in
offering a DIRECTV System at a lower cost to consumers. Our subscriber All of DTVLA’s operating companies are located outside the continental
acquisition costs may materially increase to the extent we offer more costly United States. DTVLA operates and has subscribers located throughout Latin
advanced equipment or services, including connecting our receivers to the America and the Caribbean, which makes it vulnerable to risks of conducting
customers’ broadband service, continue or expand current sales promotion activities business in foreign markets, including:
or introduce other more aggressive promotions, or due to increased competition. • difficulties and costs associated with complying with a wide variety of
Any material increase in subscriber acquisition costs from current levels would complex laws, treaties and regulations;
negatively impact our earnings and could materially adversely affect our financial
performance. • unexpected changes in political or regulatory environments;
• earnings and cash flows that may be subject to tax withholding requirements
Results are impacted by the effect of, and changes in, United States economic or the imposition of tariffs, exchange controls or other restrictions;
conditions and weakening economic conditions may reduce subscriber spending
and our rate of growth of subscriber additions and may increase subscriber • difficulties and costs associated with the repatriation of cash from foreign
churn. countries to the United States;
Our business may be affected by factors in the United States that are beyond • political and economic instability;
our control, such as downturns in economic activity, or in the MVPD industry. • import and export restrictions and other trade barriers;
Factors such as interest rates and the health of the housing market may impact our
business. A substantial portion of our revenues comes from residential customers • difficulties in maintaining overseas subsidiaries and international operations;
whose spending patterns may be affected by prevailing economic conditions. Our • difficulties in obtaining approval for significant transactions;
market share in multiple dwelling units such as apartment buildings is lower than
that of many of our competitors. If unemployment and foreclosures of single family • government takeover or nationalization of business; and
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