DIRECTV 2011 Annual Report Download - page 46

DIRECTV
operations for any one period. Further, no assurance can be given that any adverse or a portion thereof, and not the business interruption or other associated direct
outcome would not be material to our consolidated financial position. See ‘‘Legal and indirect costs.
Proceedings-Intellectual Property Litigation’’ in Part I, Item 3 which is incorporated In-orbit risks include malfunctions, commonly referred to as anomalies, and
by reference herein. collisions with meteoroids, other spacecraft or other space debris. Anomalies occur
as a result of satellite manufacturing errors, problems with the power systems or
We rely on key personnel. control systems of the satellites and general failures resulting from operating
We believe that our future success will depend to a significant extent upon the satellites in the harsh space environment. We work closely with our satellite
performance of certain of our key executives. The loss of certain of our key manufacturers to determine and eliminate the potential causes of anomalies in new
executives could have a material adverse effect on our business, financial condition satellites and provide for redundancies of critical components as well as having
and results of operations. backup satellite capacity. However, we cannot assure you that we will not experience
anomalies in the future, nor can we assure you that our backup satellite capacity
Construction or launch delays on satellites could materially adversely affect our will be sufficient.
revenues and earnings. Any single anomaly or series of anomalies could materially adversely affect our
A key component of our business strategy is our ability to expand our offering operations and revenues and our relationships with our subscribers, as well as our
of new programming and services, including HD programming. In order to ability to attract new subscribers for our services. Anomalies may also reduce the
accomplish this goal, we need to construct and launch new satellites. The expected useful life of a satellite, creating additional expenses due to the need to
construction and launch of satellites are often subject to delays, including provide replacement or backup satellites and potentially reducing revenues if service
construction delays, unavailability of launch opportunities due to competition for is interrupted. Finally, the occurrence of anomalies may materially adversely affect
launch slots, weather, general delays when a launch provider experiences a launch our ability to insure our satellites at commercially reasonable premiums, if at all.
failure, and delays in obtaining regulatory approvals. A significant delay in the While some anomalies are currently covered by existing insurance policies, others
delivery of any satellite would materially adversely affect the use of the satellite and are not now covered or may not be covered in the future.
thus could materially adversely affect our anticipated revenues and earnings. If Our ability to earn revenue also depends on the usefulness of our satellites.
satellite construction schedules are not met, there can be no assurance that a launch Each satellite has a limited useful life. A number of factors affect the useful life of a
opportunity will be available at the time a satellite is ready to be launched. Certain satellite, including, among other things:
delays in satellite construction could also jeopardize a satellite authorization that is
conditioned on timely construction and launch of the satellite. • the design;
• the quality of its construction;
Satellites are subject to significant launch and operational risks. • the durability of its component parts;
Satellites are subject to significant operational risks relating to launch and • the insertion of the satellite into orbit;
while in orbit. These risks include launch failure, incorrect orbital placement or
improper operation. Launch failures result in significant delays in the deployment • any required movement, temporary or permanent, of the satellite;
of satellites because of the need both to construct replacement satellites, which can • the ability to continue to maintain proper orbit and control over the
take up to 36 months, and to obtain other launch opportunities. Any significant satellite’s functions; and
delays or failures in successfully launching and deploying our satellites could • the remaining on-board fuel following orbit insertion.
materially adversely affect our ability to generate revenues. While we have Generally, the minimum design life of the satellites in our fleet is between 12
traditionally purchased insurance covering the launch and, in limited cases, and 16 years. The actual useful lives of the satellites may be shorter or longer, in
operation of our satellites, such policies typically cover the loss of the satellite itself some cases significantly. Our operating results could be adversely affected if the
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