DIRECTV 2010 Annual Report Download - page 48

DIRECTV
Liberty Transaction to be tax-free transactions and from any losses resulting from Furthermore, our operating activities could be subject to risks caused by
Liberty Media’s indemnity obligations to News Corporation under the tax matters misappropriation, misuse, leakage, falsification and accidental release or loss of
agreement between News Corporation and Liberty Media. If DIRECTV is required information maintained in our information technology systems and networks,
to indemnify Liberty Media or certain related persons under the circumstances set including customer, personnel and vendor data. We could be exposed to significant
forth in the Tax Sharing Agreement, we may be subject to substantial liabilities not costs if such risks were to materialize, and such events could damage our reputation
limited in amount or subject to any cap. In such a circumstance, we may be and credibility and have a negative impact on our revenues. We also could be
required to make payments or dividends to satisfy such liabilities that could either required to expend significant capital and other resources to remedy any such
breach covenants in our credit facilities and bond indentures or require additional security breach. As a result of the increasing awareness concerning the importance
or accelerated payments, which could materially adversely affect our financial of safeguarding personal information, the potential misuse of such information and
position and short term operating results. legislation that has been adopted or is being considered regarding the protection,
privacy and security of personal information, information-related risks are
We may be required to forgo certain transactions in order to avoid the risk of increasing, particularly for businesses like ours that handle a large amount of
incurring significant tax-related liabilities. personal customer data.
We might be required to forgo certain transactions that might have otherwise We face risks arising from the outcome of various legal proceedings.
been advantageous in order to preserve the tax-free treatment of the Liberty
Transaction. In particular, we might be required to forgo certain transactions, We are involved in various legal proceedings, including those arising in the
including asset dispositions or other strategic transactions for some period of time ordinary course of business, such as consumer class actions and those described
following the Liberty Transaction so as not to trigger any liability under the tax under the caption ‘‘Legal Proceedings’’ in Part I, Item 3 incorporated by reference
indemnification obligations. herein. Such matters include investigations and legal actions by the Federal Trade
Commission where regulators may seek monetary damages and may also seek to
We rely on network and information systems and other technology, and a require or prohibit certain actions by us with regard to our current or potential
disruption or failure of such networks, systems or technology as a result of, customers. While we do not believe that any of these proceedings alone or in the
misappropriation of data or other malfeasance, as well as outages, natural aggregate will have a material effect on our consolidated financial position, an
disasters, accidental releases of information or similar events, may disrupt our adverse outcome in one or more of these matters or the imposition of conditions
business. by regulators on the conduct of our business could be material to our consolidated
results of operations and cash flows for any one period. Further, no assurance can
Because network and information systems and other technologies are critical to be given that any adverse outcome would not be material to our consolidated
our operating activities, network or information system shutdowns caused by events financial position.
such as computer hacking, dissemination of computer viruses, worms and other
destructive or disruptive software, and other malicious activity, as well as power We may face other risks described from time to time in periodic reports filed
outages, natural disasters such as earthquakes, terrorist attacks and similar events, by us with the SEC.
pose increasing risks. Such an event could have an adverse impact on us and our
customers, including degradation of service, service disruption, excessive call volume We urge you to consider the above risk factors carefully in evaluating forward-
to call centers and damage to our broadcast centers, other properties, equipment looking statements contained in this Annual Report. The forward-looking
and data. Such an event also could result in large expenditures necessary to repair statements included in this Annual Report are made only as of the date of this
or replace such networks or information systems or to protect them from similar Annual Report and we undertake no obligation to publicly update these forward-
events in the future. Significant incidents could result in a disruption of our looking statements to reflect subsequent events or circumstances.
operations, customer dissatisfaction, or a loss of customers or revenues.
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