DIRECTV 2011 Annual Report Download - page 50

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