DIRECTV 2012 Annual Report Download - page 42

DIRECTV
Our subscriber acquisition costs could materially increase. DIRECTV Latin America is subject to various additional risks associated with
doing business internationally, which include political instability, economic
We incur costs for subscribers acquired by us and through third parties. These instability and foreign currency exchange rate volatility.
costs are known as subscriber acquisition costs and include the cost of set-top
receivers and other equipment, commissions we pay to third parties, and the cost of All of DIRECTV Latin America’s operating companies are located outside the
installation, advertising, marketing and customer call center expenses associated with continental United States. DIRECTV Latin America operates and has subscribers
the acquisition of new subscribers. Our subscriber acquisition costs may materially located throughout Latin America and the Caribbean, which makes it vulnerable to
increase if we offer more costly advanced equipment or services, including risks of conducting business in foreign markets, including:
connecting our receivers to the customers’ broadband service, continue or expand • difficulties and costs associated with complying with a wide variety of
current sales promotion activities or introduce more aggressive promotions. Any complex laws, treaties and regulations;
material increase in subscriber acquisition costs from current levels would negatively
impact our earnings and could materially adversely affect our financial performance. • unexpected changes in political or regulatory environments;
• earnings and cash flows that may be subject to tax withholding requirements
Results are impacted by the effect of, and changes in, economic conditions and or the imposition of tariffs, exchange controls or other restrictions;
weakening economic conditions may reduce subscriber spending and our rate
of growth of subscriber additions and may increase subscriber churn. • restrictions on, or difficulties and costs associated with, the repatriation of
cash from foreign countries to the United States;
Our business may be affected by factors that are beyond our control, such as
downturns in economic activity, or in the MVPD industry. Factors such as interest • political and economic instability;
rates and the health of the housing market may impact our business. A substantial • import and export restrictions and other trade barriers;
portion of our revenues comes from residential customers whose spending patterns
may be affected by prevailing economic conditions. Our market share in multiple • difficulties in maintaining overseas subsidiaries and international operations;
dwelling units such as apartment buildings is lower than that of many of our • difficulties in obtaining approval for significant transactions;
competitors. If unemployment and foreclosures of single family residences increase,
our earnings and financial performance could be negatively affected more than • government imposition of limitations on foreign ownership;
those of our competitors. In addition, if our customers seek alternative means to • government takeover or nationalization of business; and
obtain video entertainment, they may choose to purchase fewer services from us or
may discontinue receiving our services. Due to the economic and competitive • government mandated price controls.
environment, we may need to spend more, or we may provide greater discounts or In the past, the countries that constitute some of DIRECTV Latin America’s
credits, to acquire and retain customers who in turn spend less on our services. If largest markets, including Brazil, Argentina, Colombia and Venezuela have
our ARPU decreases or does not increase commensurate with increases in experienced economic crises, characterized by exchange rate instability, currency
programming or other costs, our margins could become compressed and the devaluation, high inflation, high interest rates, economic contraction, a reduction or
long-term value of a customer would then decrease. The weak economy may affect cessation of international capital flows, a reduction of liquidity in the banking
our net subscriber additions and reduce subscriber spending and, if these economic sector and high unemployment. These economic conditions have often been related
conditions continue or deteriorate, subscriber growth could decline and churn could to political instability. If these economic conditions recur, they could substantially
increase which would have a material adverse effect on our earnings and financial reduce the purchasing power of the population in our markets, including the
performance. middle-markets which we are targeting, and materially adversely affect our business.
Also, foreign currency exchange controls are currently in effect in Venezuela and
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