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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
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Investor MeetingFebruary 28, 2008
Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
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Jon RubinSenior Vice PresidentInvestor Relations and Financial Planning
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Agenda
Break
Derek Chang – EVP, Content Strategy & DevelopmentContent Overview
Q&A
Chase CareyClosing Remarks
Lunch / Demos
Bruce Churchill – President, DIRECTV Latin AmericaDIRECTV Latin America
Mike Palkovic – EVP, OperationsCustomer Service Operations
Paul Guyardo – EVP, Sales & Chief Marketing OfficerSales & Marketing
Eric Shanks – EVP, DIRECTV EntertainmentDIRECTV Entertainment
Romulo Pontual – Chief Technology OfficerTechnology
Pat Doyle – Chief Financial OfficerFinancial Overview
Chase Carey – President & CEOOpening Remarks
Jon Rubin – SVP, IR & Financial PlanningWelcome
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Cautionary StatementThis presentation includes certain statements that may be considered to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These forward-looking statements generally can be identified by words such as “believe,” “expect,” “estimate,” “anticipate,” “intend,”“plan,” “foresee,” “project” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from those expressed or implied by the relevant forward-looking statement. Such risks and uncertainties include, but are not limited to: economic conditions; product demand and market acceptance; ability to (a) improve customer service or create new and desirable programming content and interactive features; government action; political, economic and social uncertainties in many Latin American countries in which DTVLA operates; foreign currency exchange rates; competition; the outcome of legal proceedings; ability to achieve cost reductions; ability to renew programming contracts under favorable terms; technological risk; limitations on access to distribution channels reliance on satellites as a significant part of our infrastructure and we may face other risks described from time to time in periodic reports filed by us with the SEC.
Non-GAAP FinancialsThis presentation includes financial measures that are not determined in accordance with GAAP, such as Operating Profit before Depreciation and Amortization, Free Cash Flow and Cash Flow before Interest and Taxes. These financial measures should be used in conjunction with other GAAP financial measures and are not presented as an alternative measure of operating results, as determined in accordance with GAAP. DIRECTV management uses these measures to evaluate the profitability of DIRECTV U.S.’ subscriber base for the purpose of allocating resources to discretionary activities such as adding new subscribers, upgrading and retaining existing subscribers and for capital expenditures. A reconciliation of these measures to the nearest GAAP measure is posted on our website and is included at the end of this presentation package.
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Chase CareyPresident & CEO
Overview
Recap Recent Results / Trends
Overview of Key Operating Areas
3-year Outlook
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4
Unique Position of Strength
Brand / Content / HD
Technology
Direct Sales
Improved tools / efficiencies
Key cost reductions
7
Opportunities to Improve
Service quality / efficiency
Upgrade spending
Niche / target subscriber growth
Fix / address weak pockets
Develop new revenue streams
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5
Competitive Market
Challenged competitors
FiOS
HD leadership
VOD solution
BundleDevelop / sell optionsUse distribution strength
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Pat DoyleChief Financial Officer
Financial Overview
Agenda
Financial Overview
Subscriber Highlights
Key Financial and Operating Metrics
Balance Sheet
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Building a Foundation for Growth
Extended DIRECTV’s video leadershipHDSportsInteractivityAdvanced equipment
Exerted greater financial disciplineStricter credit policiesImproved segmentationGreater cost controls
Enhanced Sales and MarketingAttained higher-quality subscribers Strengthened brandOptimized subscriber channels and increased Direct Sales
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The DIRECTV Group2005 - 2007 Financial Results
24.2%23.0%11.3%Operating Profit Before D&A Margin
$1.48B$1.31B$386MCash Flow Before Interest & Taxes
$953M$1.19B$283MFree Cash Flow
$2.02B$2.98B-Share Repurchases
$1.21$1.12$0.24Diluted EPS
$2.70B
$4.17B
$17.2B
2007
$1.99B
$3.39B
$14.8B
2006
$924M
$1.49B
$13.2B
2005
Capital Expenditures
Operating Profit Before D&A
Revenue
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DIRECTV U.S.2005 - 2007 Financial Results
24.8%23.4%12.3%Operating Profit Before D&A Margin
$1.46B
$2.33B
$3.85B
$15.5B
16.8M
0.9M
1.51%
3.8M
2007
$1.42B
$1.81B
$3.22B
$13.7B
15.9M
0.8M
1.60%
3.8M
2006
$776M
$782M
$1.50B
$12.2B
15.1M
1.2M
1.70%
4.2M
2005
Cash Flow Before Interest & Taxes
Capital Expenditures
Operating Profit Before D & A
Revenue
Financial
Cumulative, Year-end
Net Additions
Monthly Churn %
Gross Additions
Customers
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DIRECTV U.S. Subscriber Highlights
Over-indexed in key areas including:IncomeEducation Home ownership
Geographically diverse
Broadband penetration consistent with cable
Profitably growing International segment
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9
Improving Subscriber Quality
2005 2006 2007
28%
72%
15%
85%
10%
90%
Gross Additions
Higher Risk
Lower Risk
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Adding Higher Value Subscribers
3.021%
1.3
(0.2)0.6%
0.9
0.614%
2005
4.630%
1.6
(0.3)0.7%
0.9
1.028%
2006
6.641%
2.0
(0.6)0.8%
0.9
1.747%
2007
Net Advanced Additions
Cum Advanced Subscribers% of Cum Residential Subscribers
Advanced ChurnChurn Rate
Advanced Upgrades
Advanced Gross Additions% of Total Gross Additions
HD and/or DVR Subscriber Additions (M)
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Strong ARPU Growth
$69.61
5.00
8.90
$55.70
2005
$73.74
5.50
9.70
$58.50
2006
$79.05
6.60
12.20
$60.30
2007
CAGR = 6.6%Total ARPU
25% Ad Sales growth / fewer credits / Telesat /
Commercial / Protection PlanOther / Ad Sales
Advanced sub-penetration increased from 21% to 41%
Average boxes / home increased from 2.27 to 2.53
Average price increase of ~4%
Key Drivers
Advanced Services / Equipment / Lease Fees
Packages / Premiums /Sports / PPV
Monthly Subscriber Revenue (ARPU)
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0.71%
0.52%0.57%
0.99% 0.99%1.03%
1.51%1.60%1.70%
2005 2006 2007
Driving Lower Monthly Churn
Total ChurnStricter Credit Policies
Mandatory credit cards, social security numbersNew fraud management system
Longer Term CommitmentsBasic equipment: 12 18 monthsAdvanced equipment: 24 months
More Advanced Subscribers
Improved Customer Service
Voluntary
Involuntary
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Declining Set-Top Box Costs
430
210
180
$50
Q1 2007
260
130
150
$45
Q1 2008
$55$80Basic
520
260
245
Q1 2005
480HD-DVR
250HD
200DVR
Q1 2006
OEM Costs*
* Excludes security card, middleware and other fees
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Subscriber Acquisition Cost (SAC*)
$692
265
165
120
$140
2007
$85$55Advanced Equipment
$642
225
165
200
2005
235Dealer Commissions / Marketing
$642TOTAL
160Installation
160Basic Boxes
2006
Investing in Advanced Products and Targeting High Value Customers Results in Higher ARPU and Lower Churn
* Includes both acquisition expense and capitalized set-top box costs
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Major Upgrade Cycle Peaking
$1.74B$1.33B$1.10BTotal
$795M$570M$330MHD / DVR Upgrades
$370M
190M
$1.55B
235
270
250
2007
$230M
-
$1.10B
200
260
310
2005
$230MEquipment Revenues
270Movers
75MMPEG4 for MPEG2 HD Swaps
$1.25BSub-Total
200Other Marketing
210Basic Boxes / Local Upgrades
2006
Upgrade and Retention Costs*
* Includes both upgrade and retention expense and capitalized set-top box costs
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Stabilizing Programming Margins
2005 2006 2007
Programming Expense* as a % of Revenues
Older contracts /early years of newer improved contracts
Addition of many new channels, particularly sports
Fox News and NFL Network increases in 2007
End of purchase accounting treatment for Showtime contract in 2006
40.0%39.6%38.6%
Sports**
Packages/Premiums / PPV
Total
* Excludes non-programming cost of sales ** Includes a-la carte packages, RSNs and NFL Network
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7.1% 7.8% 8.1%
Recent Margin Erosion Due To:
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Other Operating Costs
Costs as a % of Revenues
1.4%
5.0%
7.3%
2007
Local-into-Local and HD build-out
Lower bad debt expense; efficiencies and cost
controls
Higher service costs related to advanced
products and new call centers offset by
efficiencies and cost controls
Key Drivers
7.7%7.7%Subscriber Services
1.2%
6.6%
2005
1.3%Broadcast Operations
5.5%General & Administrative
2006
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2005 2006 2007
HD Infrastructure Mostly Complete
Capital Expenditures ($B)
$0.8$0.7 $0.8
BasicHD and local build-out
3 satellitesGround infrastructure
Set-Top BoxesImplemented lease program
Increased advanced product penetration
Richer mix of more expensive boxes
HD Infrastructure
Sustaining
Set-top Boxes - $1.1 $1.5Total CapEx $0.8 $1.8 $2.3
Satellites
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Strong Balance Sheet
$2.3B net debt position as of YE 2007Cash and Cash Equiv. $1.1BTotal Debt 3.4BNet Debt $2.3B
.6x Net Debt to OPBDA
Comfortable with current credit rating
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Summary
Leading digital multichannel TV service providerUnique and exclusive programmingMost comprehensive HD programmingNew products / services expected to further differentiate
Strong revenue, OPBDA, and subscriber growthIncreasing margins due to cost controls and operating leverage
Strong balance sheet with substantial liquidity
DIRECTV is poised for profitable growth and increasing cash flow
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Technology Update
Rômulo PontualExecutive Vice President & Chief Technology Officer
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Technology Update and Plan
Space segment
Consumer premise equipment
Capitalize on technology leadership
Use of home network (demos)
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Space Segment
Optimum orbital slotsReduces obstructions and effect of rainAllows single-dish solution for all customers
101°103° 99°
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Space Segment
Young satellite fleet9 DIRECTV satellites plus 7 Intelsat transponders12+ years average remaining estimated life
Two satellites under constructionD11 launches March 2008D12 backup for D10 or D11
Will launch D12Growing importance of HD warrants its use to expand national capacity Launch expected late 2009
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Space Segment
Young satellite fleet9 DIRECTV satellites plus 7 Intelsat transponders12+ years average remaining estimated life
Two satellites under constructionD11 launches March 2008D12 backup for D10 or D11
Will launch D12Growing importance of HD warrants its use to expand national capacity Launch expected late 2009
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During the last two yearsAdded 92 national channels, 74 in HDLaunched 77 HD local markets (76% USHH)Added 7 local markets in SD (94% USHH)Added 31 International channels
In 2008, will continue HD leadershipCapacity for 150 HD national channelsAt least 100 HD local markets (84% USHH)
D12 will support further expansionCapacity for more than 200 HD national channels
Channel Expansion
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During the last two yearsAdded 92 national channels, 74 in HDLaunched 77 HD local markets (76% USHH)Added 7 local markets in SD (94% USHH)Added 31 International channels
In 2008, will continue HD leadershipCapacity for 150 HD national channelsAt least 100 HD local markets (84% USHH)
D12 will support further expansionCapacity for more than 200 HD national channels
Channel Expansion
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Consumer Equipment Video
Set-Top Box – Product Strategy
2004/5 2006/7 2008 2009/10
HD Basic
DVR
HD DVR
Basic BasicBasic
HD Basic
HD Basic
DVR
HD DVRHD DVR Whole Home
HD DVR
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Set-Top Box – Product Strategy
2004/5 2006/7 2008 2009/10
HD Basic
DVR
HD DVR
Basic BasicBasic
HD Basic
HD Basic
DVR
HD DVRHD DVR Whole Home
HD DVR
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Set-Top Box – Product Strategy
2004/5 2006/7 2008 2009/10
HD Basic
DVR
HD DVR
Basic BasicBasic
HD Basic
HD Basic
DVR
HD DVRHD DVR Whole Home
HD DVR
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2008 DVR convergenceMid-2008, all DVRs are MPEG4 and HD capable
Model used in SD installs has 100 hours SD storage
Model used in HD installs has 100 hours HD storage
$220$260HD DVR$95$130HD
$170$150DVR$40$45Basic
Q1 ’09EQ1 ’08A
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OEM Costs
Set-Top Box – Product Line
DIRECTV service using a single cableWire is also used for return pathIntegrated antenna to be launched Q2’08Benefits
Simpler and faster to installImproved installation reliabilityUpgrade from basic to DVR via drop shipmentEasier for consumer to relocate box within homeOne box connected to back channel connects all
Single Wire Installation
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MDU Distribution
Unique solution supports reception of all DIRECTV services including HD and International channels
Two technologies availableOne optimized for vertical MDUsAnother for garden-style MDUs
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InstallationMonitoring connected boxes and proactively correcting existing installsReduced set-top box boot timesSingle antenna with simpler installationBroadband as return channel
Set-top box softwareValidating signal strength at installImproved self-test with suggested actionsRemotely initiated resets
Efficiency Improvements
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DIRECTV serves specialized high-end segments with unique
top-of-the-line products
Capitalize on Technology Leadership
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DIRECTV® Sat-Go
Automobiles & boats
Aircraft
Recreational vehicles
Live DIRECTV Everywhere You Go
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Professional DVR
100 hours HD recordingIR remote port, RS-232 control
Rack-mountable chassisOptical fiber HDMI output
HR21 PRO
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Interactive Platform Across All Products
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Home Ecosystem Video
Review of Demonstrations
DVR Scheduler
DIRECTV on Demand
DIRECTV Media SharePersonal content on TVInternet content on TVDIRECTV content on PC
DIRECTV Latin America
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Schedule DVR recordings from directv.com
Use any browser to book programs when away from homeEnabled from mobile phones
DVR Scheduler (Web & Mobile)
Linear & On Demand
Programming
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Streaming Over IP Infrastructure
Personal Computers
Cell Phones
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DIRECTV Movies Now (Q2 Launch)
Selected moviespushed to
DIRECTV Plus®
DVRs for on demand viewing
Available to all DIRECTV Plus® DVRs
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DIRECTV On Demand (in Beta)
Relies on satellite and Internet for deliveryIntegrated with linear channels
3,000+ titles today 60+ programmer pages
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Consumers can view personal content & Internet content (photos, music and video) in the living room
DIRECTV Media Share (in Beta)
Internet
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MusicVideo
Photos
Consumers can view personal content & Internet content (photos, music and video) in the living room
and view recordingson a PC at home
DIRECTV Media Share (coming in 2008)
MusicVideo
Photos
Internet
DIRECTV on PC
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L12
DIRECTV Latin America
Synergies with DIRECTV U.S.Box costsBox featuresSoftware updates
HD service later in 2008HD DVR
LR16
LHR21
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Content Overview
Derek ChangExecutive Vice PresidentContent Strategy and Development
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Content strategy
Opportunities and challenges
Sports leadership
DIRECTV on Demand
Ad Sales
Agenda
60
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Content Strategy
Extend content leadership
Breadth of programming
HD
Differentiated content
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HD Superiority
62
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DIRECTV vs. Competition
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-----
45
9
-----
4
15
17
CablevisionNew York
1/22/08
27
-----
27
8
-----
1
-----
18
ComcastPhilly
1/23/08
265192Total HD national channels
-----2215Games-only HD RSNs
2673**107Total with Games-only RSNs
4
5
-----
15
27
Dish2/7/08
7
1
4
-----
14
Time Warner
New York1/22/08
8HD DNS / locals
15HD PPV channels
1124/7 HD RSNs
-----VOOM* channels
58National HD channels
DIRECTV2/21/08
Note: Source for channel counts is company websites, which may contain some discrepancies
*VOOM consists of 15 HD-only channels: Animania HD, Equator HD, Family Room HD, Film Fest HD, GamePlay HD, Gallery HD, HDNews, Kung Fu HD, Monsters HD, Rave HD, Rush HD, Treasure HD, Ultra HD, WorldCinema HD and WorldSport HD
**Last official full channel count was 76, however, only 73 can be accounted for on the Dish website
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Programming Opportunities
Optimize programming packagesMaximize value to customerDIRECTV® HD EXTRA PACK
Targeted segmentsLocal International
Leverage existing programming relationships to create unique content
Manage costs
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33
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Programming Challenges
Sports CostsNew networks
Retransmission consent
New distribution models
Regulatory environment
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
DIRECTV Entertainment
Eric ShanksExecutive Vice PresidentDIRECTV Entertainment
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Sports Leadership
InteractiveInteractive
Interactive
InteractiveInteractive
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69
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71
Original Entertainment on The 101
New for 2008New for 2008
Returning / Continuing in 2008Returning / Continuing in 2008
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The DIRECTV User Experience
DVR SchedulerControl DIRECTV DVR through web or mobile
Moving content around the housePhotos and music todayVideo to and from the PC by Q2 ’08 quarter
Designing new user interface for 2009
DIRECTV on DemandLaunched in Beta in October60+ programmers3,000+ titles
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Ad Sales
Leverage new technology and upscale demographic to create new revenue streams
Interactive campaigns at 20% click-through rateGuide bannersTargeted placementLocal ads placed on DVRTelescoping
100,000 Home Panel for new ratings service
Partnership with TNS Media Research
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Sales & Marketing
Paul GuyardoExecutive Vice President Sales & Chief Marketing Officer
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Overall
Continue to position DIRECTV as the best in television entertainment
Utilize this positioning to attract and retain most profitable customers
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Targeting for ProfitabilityLeverage data on existing customers to find like prospects
Attract more customers who look like the 38% who represent 63% of profit
38% of customers account for
63% of profit
29%23%4
9%
20%
33%
15%
% of Subscriber Base
1%
8%
28%
34%
% of Profit
1
2
3
5
Profit Tiers
40
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Targeting for Profitability (cont’d)
TIER 515% Customers
34% Profit
TIER 423% Customers
29% Profit
DemographicsMen 35+Married
HomeownerIncome >$70K
College/Grad School
Index 120125121130145
Most profitable customers are married, 35+, wealthier, better educated who live in single-family homes
National Advertising Video
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Brand Awareness
DIRECTV unaided brand awareness hit a new high of 50%
DIRECTV approaching near-universal total brand awareness at 93%
Total advertising awareness significantly higher than Dish (61% vs. 47%) and now equal to cable
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Local Marketing
Attack competitive weaknessesMSO buy-out / transition issuesOutages, repackaging or programming changesCustomer service issues
Maximize competitive strengthsHD local superiorityExclusive programming
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43
86
2007 Local Marketing Campaigns
Superbowl (4 Markets)
Competitive Issue (2 Markets)
Competitive ( Markets)
Turn Around Campaign (3 Markets)
St. Louis, Cardinals (7 Markets)
Tigers MLB (2 Markets)
Digital Conversion
Transition (3 Markets)
Competitive Customer Service (1 Mkt)
Users Interface Changes (1 Market)
Rural Markets (28 Markets)
Cable Consolidation (3 Markets)
Customer Service Issue (1 Market)
Cable Outage (1 Market)
Competitive (4 Markets)
Digital Tier Transition (3 Markets)
Competitor (10 Markets)
HD (10 Markets)
Digital Tier (1 Market)
Big Ten (6 Markets)
Outage (1 Market)
Outage (1 Market)Customer Over-bills (1 Market)
MASN (5 Markets)
Competitive Advantage (10 Markets)
Service Interruption (1 Market)
NFL Network (5 Markets)
Exclusive Channels (13 Markets)
HD Advantage (23 Markets)
CAMPAIGN1 8 15 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 3 10 17 24
MLK E M 4th L T C
August SeptemberJulyJuneMayAprilMarchFebruaryJanuary DecemberOctober November
Stadium Trays & Events
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87
Sales Distribution Trends
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008
Direct Sales Independent Telco CE Other
Conscientiously grow Direct Sales
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Direct Sales Composition
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354
380
476K
2006
60
403
429
732K
2007
87
364
214
367K
2005
Other
1-800-DIRECTV
directv.com
Targeted Marketing
Gross Additions
45
46
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Sales Channels
DIRECTV’s bundle play
Face-to-face saleInternational, in-language expertiseRural
Extends DIRECTV’s “share-of-voice”Pursue more entrepreneurial opportunities
(e.g. mall kiosks, door-to-door)
In-house, national direct marketingQuick to market, targeted, flexible, in-control
Reason for Being
Telco
Local Dealers
National Dealers
Direct Sales
Channel
Channels work together in a complementary fashion
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National Dealers
Extend DIRECTV’s “share-of-voice”
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93
BellSouth Recovery Plan
More aggressive Direct Sales efforts in region
Engage strongest local dealers within BellSouth region with unique offer
Sell the bundle ourselves
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Jump-start Opportunistic Businesses
Commercial
MDU
Más / WorldDirect
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95
Driving Lower Monthly Churn
InvoluntaryChurn
VoluntaryChurn
2005 2006 2007
0.71%0.57% 0.52%
0.99%1.03%
0.99%
1.51%1.60%1.70%
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2007 Churn Initiatives
Improved customer analytics
Created a “true” customer retention group (CRG) within Customer Service
Initiated proactive retention marketing
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97
2008 Churn Initiatives
ICU for “at-risk” customers
Reduce initial 30-day churn
Address customers rolling off commitment
Unique treatment in high-risk geography
Attack causes of telco channel churn
Continue to improve Hispanic churn
True CRG expansion
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Maximize Return on Retention Spending
42%
58%
% Spend
62%Bottom 3 Tiers
38%Top 2 Tiers
% CustomersCustomerValue Segment
Almost 60% of spend is focused on top two value segments
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Customer Service Operations
Mike PalkovicExecutive Vice President Operations
51
Call Centers
Field Services
Supply Chain and Logistics
Service Calls and Equipment Replacement Program (ERP)
Customer Service Operations
101
Improve the quality of the service experience for all customers, existing and new, at all points of customer interaction
Improve the cost of providing service by being more efficient, handling interactions properly the first time and making investments in places that directly impact the quality of our service
Finally, the result of this focus on the quality side of the business should and will increase customer satisfaction which in turn also improves our profitability
Major Objectives for 2008
102
52
Customer Care Call Center Network
103
Call Centers – Key Metrics
104
Average Handle Time (sec)
437
457
493
2005 2006 2007
Calls Offered (M)
124
139 138
2005 2006 2007
Cost/Customer/Month
$3.02$3.17 $3.33
2005 2006 2007
Self Care (% of Total Contacts)
34% 34%
38%
2005 2006 2007
53
Improve agent quality –tenure, training, attrition
Lower contact rate1st call resolutionTransfer rate
Increase / improve customer self care
Improve / simplify billing
Reduce agent handle time, without increasing contact rate
Call Centers –Issues / Challenges = Opportunities
105
Align call types with agent skills and tools
Improve training environment
Wage adjustment / incentives tied to tenure / attrition / performance
Launch IM for agent / supervisor interaction
Better use of analytical tools to mine data / comments
Call Centers – Initiatives
106
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Optionsdirectv.comIVR / natural language
Initiatives / AccomplishmentsCustomer email addresses >40%DVR Scheduler – online, cell phoneImprove account management, redesign dashboardImprove order process – fewer clicks“Green” focus – paperless bill, auto bill payOverall goal is more options, consistent experience
Self Care – Initiatives
107
Home Service Provider Map
108
55
Reduce repeat service callsFocus on quality vs. just quantity
Improve completion rates –without risk to quality
Simplify installation process, even with more advanced products
Automate activation process
Re-evaluate HSP economic relationship
Field Services –Issues / Challenges = Opportunities
109
110
Implement quality-based incentives / penalties for HSPs
Implement hand-held devices across the network
Redesign ODU to simplify installation
Standardize connectors, cables –centralize procurement
Owned and operated – buy vs. build
Field Services – Initiatives
110
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111
Lower cost of recovered boxesMulti-pack kitHSP pick-up
Revamp repair processImplement auto testersBuilt-in Self Test (BIST)
Remove cables from boxes
Full production of recycled cardsRamp to 400-500K cards per month
Supply Chain / Logistics – Initiatives
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112
Improve equipment qualityBoxesODUsConnectorsSwitches
Improve field technician qualityDish pointingTrouble shooting skills in the fieldRepeat visits
Unnecessary truck rollsDiagnostic capabilitySimplify complexity of the equipment / installation
Service Calls / ERP –Issues / Challenges = Opportunities
112
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113
Box specific issues – downloads
Automation – remote reset, auto cancel, BIST
Re-design ODU, simplify, new mounts
Standardize connectors, cables
Revamp repair facilities
Double / triple case management –3rd down to 2nd
Service Calls / ERP – Initiatives
113
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
DIRECTV Latin America
Bruce ChurchillPresident DIRECTV Latin America
116
First full year of consolidated operations
Executed on our key operational goalsCompleted integration of Brazilian businessesGrew PanAmericana to scale
+400k net adds in 2007+1.7 million YE subscribers
Expanded content and technology leadership Updated satellite fleet
Solidified our financial performance
2007 – A Milestone Year
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117
Exclusive programmingLa Liga, EPLConcerts, special events
Enhanced / interactive applicationsNFL SUNDAY TICKET®
NASCAR HotPass™MLB Strike Zone
Expanded coverageU.S. Open Tennis
Content Leadership
118
Leverage DTVUS’ scale and technology Speed to market
Superior product
Lower cost
Technology Leadership
60
119
Update Satellite Fleet
IS 11
Online January 2008 Expanded capacity
18 transponders~250 video channels
Replaced failing IS 6B
Same orbital slot
Improved performance
IS 16
Estimated H2 2009Shared back-up for IS 9 and IS 11 Expanded capacity for MexicoCo-locate with IS 9 at 58°24 transponders
120
Financial Results - 2007
Selected Financial Information (in US$ millions) May Outlook Actual
Revenue ~$1,600 1,719$ OPBDA ~$350 394$ Operating profit ~$120 159$
CapExSAC related ~$175 296$ Non-SAC related ~50 40 Sub-Total ~$225 336$
Cash flow before interest and taxes ~$165 140$
End of period subscribers (000's) ~3,100 3,279 Gross additions (000's) ~900 1,080 Net additions (000's) ~400 588
ARPU (US$) ~$46 48.33$ Monthly churn ~1.35% 1.38%SAC (US$) ~$380 361$
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StrategyContinue to enhance TV experience
Exclusive programmingEnhanced features
Maximize growth opportunitiesExpand Pre-paid in key marketsIncrease multiple set-top box penetration
Continue focus of delivering superior financial results
2008 and Beyond
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Enhance “TV Experience”
Enhancement in PanAmericanaGame LoungeMix channelsSMS functionalityCartelera
Expanded interactivity in BrazilEPG, games, self care
Expand local markets in Brazil
Solidify key programming contracts
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Push “whole home experience”Increase DVR penetration and mirrors
Launch HDPanAmericana – H2 2008Brazil / Mexico – H2 2009
Expand Pre-paid offerMexico BrazilPanAmericana - Colombia, Chile
Maximize Growth
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Venezuela
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Customer Proposition
Packages
# of Channels 14 ChannelsLocal content only 40 Channels 71 Channels
PricesVAT included ~$7 ~$29 ~$42
NEW
PREFERENCIAL
Pre-Pago DIRECTV - Venezuela
Buy scratch card Enjoy DIRECTVexperience
Buy kit
Self Installation
Self Installation
Enter PIN # to activate
Enter PIN # to activate
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High familiarity with pre-paid95% of cell phone market is pre-paid
Completely cash based
Favorable economicsMinimum net SAC No bad debtMinimum on-going subscriber costs
80% reactivation behavior after first 3 months
Pre-Pago DIRECTV - Venezuela
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Pre-Pago DIRECTV - Venezuela
‘Diario El Universal. Caracas. Venezuela’.
Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
SKY Mexico
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Operational Highlights - Mexico
Deliver best exclusive and non-exclusive programming content
La LigaLocal soccerReality shows (e.g. Big Brother, El Bar)
Launch SKY operations in Costa Rica and Dominican Republic
Increased multiple set-top box penetration
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Financial Highlights - Mexico
* Includes acquired subscribers of 110K in 2005 and 20K in 2007
*
Selected Financial Information (in US$ millions) Actual Actual Actual2005 2006 2007
Revenue 550$ 684$ 752$ OPBDA 231$ 326$ 364$
CapExSAC related 90$ 84$ 108$ Non-SAC related 19 7 14 Sub-Total 109$ 91$ 122$
Cash flow before interest and taxes 103$ 204$ 269$
End of period subscribers (000's) 1,250 1,430 1,585 Gross additions (000's) 447 380 408 Net additions (000's) 248 180 155
ARPU (US$) 39.50$ 40.90$ 41.90$ Monthly churn 1.2% 1.0% 1.1%SAC (US$) 350$ 370$ 423$
*
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
DIRECTV Latin America
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Financial Information
Note: Excludes Sky Mexico
(in US$ millions) Outlook 2006 Outlook Actual 2009
Revenue 1,013$ ~$1,600 1,719$ ~ $2,000OPBDA 244$ ~$350 394$ ~ $600Operating profit 79$ ~$120 159$ ~ $400
CapExSAC related 130$ ~$175 296$ Non-SAC related 49 ~50 40 Sub-Total 179$ ~$225 336$ ~ $250
Cash flow before interest and taxes 0$ ~$165 140$ ~ $400
2007
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Key Metrics
Note: Excludes Sky Mexico
Outlook 2006 Outlook Actual 2009
Subscribers (000's) 2,711 ~3,100 3,279 ~ 4,000
ARPU (US$) 41.71$ ~$46.00 48.33$ ~$48
Monthly churn 1.45% ~1.35% 1.38% ~1.3%
SAC (US$) 371$ ~$ 380 361$ ~$395
2007
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Presentation Title Slide
Speaker NameTitle (change point size to 16pt)
Chase CareyPresident and CEO
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U.S. Pay TV Market – Net Additions
Cumulative Net Adds
<(1)M(1)MCable/Other
<3M2 – 3MTelco
<5M4 – 5MSatellite
2008 Projectionfor 2006 - 2008
2006 Projection For 2006 - 2008
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DIRECTV Prior 2008 Outlook
Double-digit CAGRRevenues
$1.2BUpgrade & Retention(excluding swaps)
$3BCash Flow Before Interest & Taxes
$650 - 700SAC
5%+ CAGRARPU
Steady ImprovementChurn
~18MCum Subscribers
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HD and DVR Subscribers Yield Strong Returns
53%$7570.8%44%$95
2007Actual
48%IRR$685SAC*1.0%Churn43%Variable Margin$83ARPU
2006 Projection for
2008
New Customers
* Net of upfront revenues
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DIRECTV Prior 2008 Outlook
Double-digit CAGRRevenues
$1.2BUpgrade & Retention(excluding swaps)
$3BCash Flow Before Interest & Taxes
$650 - 700SAC
5%+ CAGRARPU
Steady ImprovementChurn
~18MCum Subscribers
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Solid Subscriber Growth
Continued focus on quality customers
Increased penetration of HD and DVR subscribers
50% penetration at year-end 2008
70% at year-end 2010
Direct Sales strength
Attack key niches
Cum net adds of 1.5-2.0M over three years
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Churn Improvement
Focused on quality customers
Limit risky subscribers
HD and DVR penetration
Improved customer service
Continued steady improvement
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Strong ARPU Growth
Increased advanced products
Modest price increases
Build emerging revenues streams
ChallengesIncreased offersReduced hardware revenues
5%+ CAGR
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Stabilize Subscriber Acquisition Costs (SAC)
Increased pressureDemand for advanced productsTechnology investments
OffsetsContinued box cost reductionsUse of refurbished boxesStreamline installation Improve sales channels’ efficienciesOptimize dealer / installer compensation structure
$700+ SAC
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Reduce Upgrade Investment Costs
Reduced pent-up demand
Box cost reductions + refurbished boxes
Technology improvementsReduce truck rolls and box replacements
Target the right customers
Incentives to upgrade at acquisition
Maintain spending below the 2007 level
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Margin Improvement for Other Key Costs
Programming Expenses2008 programming expense increases 5% / subscriber
Subscriber Services ExpensesDrive call center costs to $3 / subscriber / month
G&AContinued margin improvement
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Capital Expenditures(excluding set-top boxes)
Nearing end of satellite expansion plan
HD ground infrastructure completed in 2008
2008 spending down $200M
Sustaining CapEx target of $500M
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DIRECTV U.S. Financial Overview
Revenues of $20B in 2010
OPBDA margin approaches 30%
Cash Flow Before Interest and Taxes2008 over $1B higher than 20072010 ~$4B
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The DIRECTV GroupNon-GAAP Financial Measure Reconciliation Schedules(Unaudited)
2007 2006 2005
Operating Profit Before Depreciation and Amortization $4,170 $3,391 $1,486
Subtract: Depreciation and amortization expense 1,684 1,034 853
Operating Profit $2,486 $2,357 $633 Revenue $17,246 $14,755 $13,164 OPBDA Margin 24.2% 23.0% 11.3%
2007 2006 2005
Cash Flow Before Interest and Taxes $1,480 $1,313 $386 Adjustments: Cash paid for interest (230) (243) (240) Interest income 111 146 150 Income taxes paid (408) (30) (13)Subtotal - Free Cash Flow 953 1,186 283 Add Cash Paid For: Property and equipment 2,523 1,754 489 Satellites 169 222 400 Net Cash Provided by Operating Activities $3,645 $3,162 $1,172
Twelve Months EndedDecember 31,
(Dollars in Millions)
December 31, Twelve Months Ended
Reconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit
Reconciliation of Cash Flow Before Interest and Taxes and Free Cash Flow to Net Cash Provided by Operating Activities
(Dollars in Millions)
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DIRECTV HOLDINGS LLC (DIRECTV U.S.)
Non-GAAP Financial Measure Reconciliation(Unaudited)
2007 2006 2005
$3,850 $3,221 $1,500 expense 1,448 873 698Operating Profit $2,402 $2,348 $802 Revenue $15,527 $13,744 $12,216 OPBDA Margin 24.8% 23.4% 12.3%
2010 Outlook 2008 Outlook 2007 Actual 2006 Actual 2005 Actual
Cash Flow Before Interest and Taxes ~$4,000 over $2,455 $1,455 $1,418 $774 Adjustments: Cash paid for interest* - ~(200) (211) (215) (229) Interest income 69 69 26 Income taxes paid ~ (1,300) ~(900) (730) (728) (36)Subtotal - Free Cash Flow ~2,700 over $1,355 583 544 535
Add Cash Paid For: Property and equipment 621 504 381 Subscriber leased equipment - subscriber acquisitions 762 599 -
Subscriber leased equipment - upgrade and retention 774 473 - Satellites 169 222 367 Subtotal - Cash Paid for PP&E ~1,800 ~2,000 2,326 1,798 748
Net Cash Provided by Operating Activities ~$4,500 over $3,355 $2,909 $2,342 $1,283
Outlook for 2008 and 2010 nets interest income and interest expense as well as combines all capital into Property and Equipment
(Dollars in Millions)
Reconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit
Twelve Months EndedDecember 31,
Twelve Months EndedDecember 31,
Operating Profit Before Depreciation and Amortization
(Dollars in Millions)
Reconciliation of Cash Flow Before Interest and Taxes and Free Cash Flow to Net Cash Provided by Operating Activities
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DIRECTV Latin America
Non-GAAP Financial Measure Reconciliation(Unaudited)
2009 Outlook2007 May Outlook 2007 2006
Operating Profit Before Depreciation and Amortization $600 $350 $394 $244 Subtract: Depreciation and amortization expense 200 230 235 165Operating Profit $400 $120 $159 $79 Revenue $2,000 $1,600 $1,719 $1,013 OPBDA Margin 30.0% 21.9% 22.9% 24.1%
2009 Outlook2007 May Outlook 2007 2006
Cash Flow Before Interest and Taxes $400 $165 $140 $0 Adjustments: Cash paid for interest (27) (12) Interest income 18 16 Income taxes paid * (100) (25) (51) (14)Subtotal - Free Cash Flow 300 140 80 (10)Add Cash Paid For:
Property and equipment 250 220 336 175 Net Cash Provided by Operating Activities $550 $360 $416 $165
Reconciliation of Cash Flow Before Interest and Taxes and Free Cash Flow to Net Cash Provided by Operating Activities
DIRECTV Latin America
(Dollars in Millions)
Twelve Months EndedDecember 31,
*Outlook data combines interest received, interest paid and income taxes paid under income taxes paid
Reconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit
Twelve Months EndedDecember 31,
(Dollars in Millions)
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