DIRECTV 2012 Annual Report Download - page 45

DIRECTV
Generally, the minimum design life of the satellites in our fleet is between 12 limit its operations from those locations which could materially adversely affect
and 16 years. The actual useful lives of the satellites may be shorter or longer, in DIRECTV Latin America’s transmission capacity and its ability to compete in
some cases significantly. Our operating results could be adversely affected if the regions served from those orbital slots.
useful life of any of our satellites were significantly shorter than 12 years from the
date of launch. The loss of a satellite that is not insured could materially adversely affect our
earnings.
In the event of a failure or loss of any of DIRECTV U.S.’ satellites,
DIRECTV U.S. may relocate another satellite and use it as a replacement for the Any launch vehicle failure, or loss or destruction of any of our satellites, even
failed or lost satellite. In the event of a complete satellite failure, DIRECTV U.S.’ if insured, could have a material adverse effect on our financial condition and
services provided via that satellite could be unavailable for several days or longer results of operations, our ability to comply with FCC regulatory obligations and
while backup in-orbit satellites are repositioned and services are moved. DIRECTV our ability to fund the construction or acquisition of replacement satellites in a
U.S. is not insured for any resultant lost revenues. The use of backup satellite timely fashion, or at all. At December 31, 2012, the net book value of in-orbit
capacity for DIRECTV U.S. programming may require DIRECTV U.S. to satellites was $1,664 million, none of which was insured.
discontinue some programming services due to potentially reduced capacity on the
backup satellite. Relocation of a DIRECTV U.S. satellite may not require prior DIRECTV U.S. depends on the Communications Act for access to cable-
FCC approval if, among other things, the replacement satellite would operate affiliated programming and changes impacting that access could materially
within the authorized or coordinated parameters of the failed or lost satellite. If that adversely affect us.
is not the case, prior FCC approval would be required. Such FCC approval may DIRECTV U.S. purchases a substantial percentage of programming from
not be obtained. DIRECTV U.S. believes we have in-orbit satellite capacity to programmers that are affiliated with cable system operators, including key RSNs.
expeditiously recover transmission of most of our programming in the event one of Currently, under certain provisions of the Communications Act governing access to
our in-orbit satellites fails. However, programming continuity cannot be assured in programming, cable-affiliated programmers generally must sell and deliver their
the event of multiple satellite losses. programming services to all MVPDs on non-discriminatory terms and conditions.
DIRECTV Latin America provides its services in PanAmericana and Brazil Any change in the Communications Act or the FCC’s rules that would permit
using leased transponders on two satellites. Sky Mexico provides its services from programmers that are affiliated with cable system operators to refuse to provide
leased transponders on a separate satellite. Backup satellite capacity is available to such programming or to impose discriminatory terms or conditions could materially
serve Sky Brasil and Sky Mexico. In the event of a failure of a satellite used to adversely affect our ability to acquire programming on a cost-effective basis, or at
provide services to Sky Brasil or Sky Mexico, we believe DIRECTV Latin America all. Most recently, the Communications Act prohibitions on certain cable industry
has sufficient in orbit back-up capacity to recover transmission of most of its exclusive contracting practices with cable-affiliated programmers expired in October
programming distributed in those markets. However, in PanAmericana, DIRECTV 2012. Under the remaining rules, DIRECTV may bring complaints on a
Latin America has no designated back up satellite capacity for the region and, case-by-case basis alleging that a particular instance of exclusivity constitutes a
therefore, programming continuity cannot be assured in the event of a satellite loss. prohibited ‘‘unfair practice’’ that has the purpose or effect of significantly hindering
In addition, DIRECTV Latin America is dependent on third parties for the or preventing DIRECTV from providing programming to consumers. The FCC is
orbital slots in which its leased satellites are located. If those third parties fail to currently considering whether to adopt additional safeguards, such as rebuttable
adequately protect their rights to continued use of and other rights related to those presumptions in favor of complainants, but we cannot predict what if any action
orbital slots, or fail to take appropriate steps to manage potential conflicts with the FCC will take. Regardless of the outcome of those considerations, the
rights holders for adjacent orbital slots, then DIRECTV Latin America could lose weakening of the program access rules may increase the ability of cable-affiliated
rights to operate from those locations or may otherwise be required to modify or programmers to deny DIRECTV access to their programming.
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