DIRECTV 2010 Annual Report Download - page 42

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DIRECTV
• government mandated price controls. To access technologies and provide products that are necessary for us to remain
competitive, particularly in the area of broadband services, we may make future
In the past, the countries that constitute some of DTVLA’s largest markets, acquisitions and investments and may enter into strategic partnerships with other
including Brazil, Argentina, Colombia and Venezuela have experienced economic companies. Such investments may require a commitment of significant capital and
crises, caused by external and internal factors, and characterized by exchange rate human and other resources. The value of such acquisitions, investments and
instability, high inflation, high domestic interest rates, economic contraction, a partnerships and the technology accessed may be highly speculative. Arrangements
reduction or cessation of international capital flows, a reduction of liquidity in the with third parties can lead to contractual and other disputes and dependence on the
banking sector and high unemployment. These economic conditions have often development and delivery of necessary technology on third parties that we may not
been related to political instability, including political violence. If these economic be able to control or influence. These relationships may commit us to technologies
conditions recur, they could substantially reduce the purchasing power of the that are rendered obsolete by other developments or preclude the pursuit of other
population in our markets, including the middle-markets which we are targeting, technologies which may prove to be superior.
and materially adversely affect our business.
Because DTVLA offers premium pay television programming, its business may Our business relies on intellectual property, some of which is owned by third
be particularly vulnerable to economic downturns. DTVLA has experienced, and parties, and we may inadvertently infringe patents and proprietary rights of
may in the future experience, decreases or instability in consumer demand for its others.
programming, as well as subscriber credit problems. DTVLA’s inability to adjust its Many entities, including some of our competitors, have or may in the future
business and operations to adequately address these issues could materially adversely obtain patents and other intellectual property rights that cover or affect products or
affect its revenues and ability to sustain profitable operations. services related to those that we currently offer or may offer in the future. In
general, if a court determines that one or more of our services or the products used
Our ability to keep pace with technological developments is uncertain. to transmit or receive our services infringes on intellectual property owned by
In the video industry, changes occur rapidly as new technologies are developed, others, we and the applicable manufacturers or vendors may be required to cease
which could cause our services and products that deliver our services to become developing or marketing those services and products, to obtain licenses from the
obsolete. We may not be able to keep pace with technological developments. If the owners of the intellectual property or to redesign those services and products in
new technologies on which we intend to focus our investments fail to achieve such a way as to avoid infringing the intellectual property rights. If a third party
acceptance in the marketplace or our technology does not work and requires holds intellectual property rights, it may not allow us or the applicable
significant cost to replace or fix, we could suffer a material adverse effect on our manufacturers to use its intellectual property at any price, which could materially
future competitive position, which could cause a reduction in our revenues and adversely affect our competitive position.
earnings. For example, our competitors could be the first to obtain proprietary We may not be aware of all intellectual property rights that our services or the
technologies that are perceived by the market as being superior. Further, after products used to transmit or receive our services may potentially infringe. In
incurring substantial costs, one or more of the technologies under development by addition, patent applications in the United States are generally confidential until the
us or any of our strategic partners could become obsolete prior to its introduction. Patent and Trademark Office issues a patent. Therefore, we cannot evaluate the
In addition, technological innovation depends, to a significant extent, on the extent to which our services or the products used to transmit or receive our services
work of technically skilled employees. Competition for the services of these may infringe claims contained in pending patent applications. Further, without
employees has been vigorous. We cannot assure you that we will be able to lengthy litigation, it is often not possible to determine definitively whether a claim
continue to attract and retain these employees. of infringement is valid.
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