DIRECTV 2011 Annual Report Download - page 51

DIRECTV
Our strategic initiatives may not be successfully implemented, may not elicit ITEM 3. LEGAL PROCEEDINGS
the expected customer response in the market and may result in competitive (a) Material pending legal proceedings, other than ordinary routine litigation
reactions. incidental to the business, to which we became or were a party during the year
The Company has identified a number of strategic initiatives that it intends to ended December 31, 2011 or subsequent thereto, but before the filing of the
pursue which are discussed in more detail in the ‘‘Business Strategy’’ section report, are summarized below:
beginning in Part I, Item 1 of this Annual Report. The successful implementation Liberty Media Corporation Litigation. As previously reported, a purported
of those strategic initiatives requires an investment of time, talent and money and is class action complaint was filed on February 9, 2010 and amended on April 23,
dependent upon a number of factors some of which are not within our control. 2010 in Delaware Chancery Court against certain past and present directors of
Those factors include the ability to execute such initiatives in the market, the Liberty Media Corporation alleging, among other things, that the defendants
response of existing and potential new customers, and the reaction of competitors. breached their fiduciary duties as Liberty board members in connection with the
If we fail to properly execute or deliver products or services that do not address business terms and approval process by Liberty stockholders of the merger of
customers’ expectations, it may have an adverse effect on our ability to retain and Liberty Entertainment, Inc. with a subsidiary of DIRECTV as part of the Liberty
attract customers and may increase our costs and reduce our revenues. Similarly, Transaction. The plaintiff purports to represent approximately 85 former Liberty
competitive reaction to our initiatives or advancements in technology or competitive Media Corporation stockholders (other than the defendants) that allegedly held
products or services could impair our ability to execute or could limit the approximately 1.8 million Liberty Media Corporation shares prior to the
effectiveness of those strategic initiatives. There can be no assurance that we will consummation of the Liberty Transaction. The complaint alleges, among other
successfully implement these strategic initiatives or that, if successfully pursued, they things, that John Malone and certain other Liberty Media Corporation stockholders
will have the desired result on our business or results of operations. received disparate allocation of consideration in the Liberty Transaction. The
complaint seeks equitable reallocation and disgorgement of the improper
We may face other risks described from time to time in periodic reports filed consideration received by the defendants and other relief. The defendants have
by us with the SEC. requested indemnification and have tendered defense of this litigation to DIRECTV
We urge you to consider the above risk factors carefully in evaluating forward- pursuant to agreements executed as part of the Liberty Transaction and DIRECTV
looking statements contained in this Annual Report. The forward-looking has elected to take control of the defense. After extensive discovery, the parties
statements included in this Annual Report are made only as of the date of this conducted mediation on January 11, 2012. The mediation resulted in a tentative
Annual Report and we undertake no obligation to publicly update these forward- settlement, including payment to plaintiffs of $10 million, substantially all of which
looking statements to reflect subsequent events or circumstances. will be paid by insurance, subject to entering into a settlement agreement and court
approval.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Pegasus Development Corporation and Personalized Media
None.
Communications L.L.C. In December, 2000, Pegasus Development Corporation,
ITEM 2. PROPERTIES or Pegasus, and Personalized Media Communications L.L.C., or PMC, filed suit in
the United States District Court for the District of Delaware against
As of December 31, 2011, we had approximately 240 owned and leased
DIRECTV, Inc., Hughes Electronics Corporation, Thomson Consumer
locations operating in the United States and Latin America. The major locations of
Electronics, Inc., and Philips Electronics North America Corporation. The suit
the DIRECTV U.S. segment include eight administrative offices: two broadcast
alleged infringement of certain claims of seven United States patents and sought an
centers and six call centers. The major locations of the DIRECTV Latin America
injunction and a monetary award including damages for infringement, interest,
segment include 10 administrative offices, four broadcast centers and eight call
costs, and attorney’s fees. In May, 2003, the suit was stayed pending reexamination
centers. We consider our properties adequate for our present needs.
by the United States Patent and Trademark Office of certain claims of the asserted
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