DIRECTV 2012 Annual Report Download - page 47

DIRECTV
theft of our satellite programming signals. There can be no assurance that we will All of our FCC satellite authorizations are subject to conditions imposed by
succeed in developing the technology we need to effectively restrict or eliminate the FCC in addition to the FCC’s general authority to modify, cancel or revoke
signal theft. If our current access cards are compromised, our revenue and our those authorizations. Use of FCC licenses and other authorizations are often subject
ability to contract for programming could be materially adversely affected. In to conditions, including technical requirements and implementation deadlines.
addition, our operating costs could increase if we attempt to implement additional Failure to comply with such requirements, or comply in a timely manner, could
measures to combat signal theft. lead to the loss of authorizations and could have a material adverse effect on our
ability to generate revenue. For example, loss of an authorization could potentially
In addition, particularly in Latin America, we also face other forms of signal reduce the amount of programming and other services available to our subscribers.
theft, including illegal retransmission of our signal through unauthorized cable The materiality of such a loss of authorization would vary based upon, among
head-ends and internet key sharing schemes. If we are not able to contain and other things, the orbital location at which the frequencies may be used.
combat these and other forms of signal theft, such schemes could limit our growth
and materially adversely affect our ability to generate revenue. Moreover, some of our authorizations and future applications may be subject
to petitions and oppositions, and there can be no assurance that our authorizations
The ability to maintain FCC licenses and other regulatory approvals is critical will not be canceled, revoked or modified or that our applications will not be
to our business. denied. The outcomes of any legislative or regulatory proceedings or their effect on
our business cannot be predicted. You should review ‘‘Item 1. Business—
If we do not obtain all requisite U.S. regulatory approvals for the construction, Government Regulation—FCC Regulation Under the Communications Act and
launch and operation of any of our existing or future satellites, for the use of Related Acts,’’ which is incorporated here by reference.
frequencies at the orbital locations planned for these satellites or for the provision
of service, or the licenses obtained impose operational restrictions on us, our ability DIRECTV U.S. has significant debt.
to generate revenue and profits could be materially adversely affected. In addition,
under certain circumstances, existing licenses are subject to revocation or The carrying value of DIRECTV U.S.’ debt, which is guaranteed by
modification and upon expiration, extension or renewal may not be granted. If DIRECTV, totaled $17,528 million as of December 31, 2012. If we do not have
existing licenses are not extended or renewed, or are revoked or materially modified, sufficient income or other sources of cash, it could affect our ability to service debt
our ability to generate revenue could be materially adversely affected. and pay other obligations.
Other U.S. regulatory risks include: We may not be able to obtain or retain certain foreign regulatory approvals.
• the relocation of satellites to different orbital locations if the FCC There can be no assurance that any current regulatory approvals held by us
determines that relocation is in the public interest; are, or will remain, sufficient in the view of foreign regulatory authorities, or that
• the denial by the FCC of an application to replace an existing satellite with any additional necessary approvals will be granted on a timely basis or at all, in all
a new satellite, or to operate a satellite beyond the term of its current jurisdictions in which we operate, or that applicable restrictions in those
authorization, or to operate an earth station to communicate with such jurisdictions will not be unduly burdensome. The failure to obtain and maintain
satellite; and the authorizations necessary to operate satellites or provide satellite service
internationally could have a material adverse effect on our ability to generate
• the authorization by the United States or foreign governments of the use of revenue and our overall competitive position.
frequencies by third party satellite or terrestrial facilities that have the
potential to interfere with communication to or from our satellites, which
could interfere with our contractual obligations or services to subscribers or
other business operations.
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