4
Cautionary StatementThis presentation may include or incorporate by reference certain statements that we believe are, or may be considered to be, “forward-looking statements” within the meaning of various provisions of the Securities Act of 1933 and of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by use of statements that include phrases 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 simplify aspects of our business model; improve customer service; create new and desirable programming content and interactive features; achieve anticipated economies of scale; government action; local political or economic developments in or affecting countries where we have operations, including 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; the success and timeliness of satellite launches; in-orbit performance of satellites, including technical anomalies; loss of uninsured satellites; theft of satellite programming signals; and our ability to access capital to maintain our financial flexibility; and we may face other risks described from time to time in periodic reports filed by us with the SEC.
5
Non-GAAP FinancialsThis presentation includes financial measures that are not determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, specifically, Operating Profit before Depreciation and Amortization, Free Cash Flow, Pre-SAC margin 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.
8
Agenda
Q&A
Luiz E. Baptista da RochaGeneral Manager, SKY Brasil
SKY Brasil
Lunch11:45 a.m.
Bruce ChurchillPresident, DIRECTV Latin America
Closing Remarks
Alex PennaGeneral Manager, SKY Mexico
SKY MexicoBreak
Jacopo BraccoGeneral Manager, DIRECTV PanAmericana
PanAmericana
Bruce ChurchillPresident, DIRECTV Latin America
Overview
Chase CareyPresident and CEO, DIRECTV, Inc.
Opening Remarks9:00 a.m.
DIRECTV Presence Throughout the Region
1423%
Broadband Subscribers (M)Cable modem as a % broadband
4.2Combined SKY/DIRECTV Subscribers (M)
21,00020%20%
Pay-TVHH (000’s)Pay TV PenetrationSatellite HH as a % of Pay-TV
100+TVHH (M)450Population (M)
MARKET OVERVIEW
The 6th largest Pay-TVPlatform outside the U.S.A.
10
Ownership Structure
The DIRECTV Group
SKY Mexico
DIRECTV Latin America100%
PanAmericanaSKY Brasil
DTVLA 74.1%Globo 25.9%
DTVLA 100% DTVLA 41.3%Televisa 58.7%
█▌ DTVLA
11
DTVLA Profile
Video: 172Audio: 50
Video: 276Audio: 46
Video: 163Audio: 41
Service (# of channels)
2,2602,7502,341Employees(Including outsourced)
151Call Centers
IS 912
Galaxy IIIC31
IS 6B14
SatellitesTransponders
MexicoCalifornia
CaliforniaVenezuelaArgentina
Brazil
BrazilBroadcast Centers
MexicoPanAmericanaBrazil
█▌ DTVLA
12
Strategy
• Premier television experience• Programming/Content• Service• Technology
• Leverage regional scale and DIRECTV USto deliver superior financial performance
• Mitigate regional risk by maintaining local currency cost basis, where possible– Local currency programming contracts– In-market infrastructure and headcount
█▌ DTVLA
13
Premier Programming Offering
Argentina, Colombia, Chile, MexicoRegional Soccer
Golf Channel, Polo, Beach VolleyballNiche ProgrammingExclusiveNFL Sunday TicketExclusiveMLB Extra Innings
Mundial TotalWorld CupExclusive local broadcastsMexican Soccer100% of games availableBrasileirão400 games, 250+ exclusiveLa Liga/EPL
SPORTS
Bacilos, Don Omar, UB40, Alejandro Lerner, Chiquititas, Floricienta, Seal, Peter PanConcerts
Roma (HBO), 24 (Fox)Series PremiereExclusive extended coverageReality Shows24 hour exclusive channelsOn DIRECTV/SKY ONE
UNIQUE PROGRAMMING
█▌ DTVLA
14
Scale Economies• Programming
– Delivery to more than 4 million subs– Leverage DTVUS
• Shared services – Broadcast Operations facilities– Regional Call Center (Colombia, Argentina)– IT Networks– Creative Services and Production
• Technical development– $50+ cost savings in box price – Speed to market
█▌ DTVLA
15
Scale Economies
Box Cost Savings
$40$50$60$70$80$90
$100$110$120
Oct-04 Apr-05 Oct-05 Apr-06 Oct-06
DTVUS
DTVLA
█▌ DTVLA
16
Technology Roadmap
PANAMERICANASKY
Basic Box
Conditional Access and
DVR Box
Jun-06 Dec-06 Q1-08 Q2-09
█▌ DTVLA
17
Competitive Issues• Stabilized cable industry, largely analog
– Argentina– Brazil– Mexico
• New entrants– Telmex (Brazil, Colombia, Peru)– Telefonica (Brazil, Peru, Chile, Colombia)
• The Bundle– Development lags U.S.– Early stage alliances
• Brazil (BrasilTelecom, Telemar)• Chile (Telefonica Del Sur, Telefonica Manquehue)• Colombia (ETB/Orbitel)• Puerto Rico (PRT)• Argentina (Telecom)
█▌ DTVLA
19
4,540TOTAL656Other (80% cable, 20% MMDS)335Vivax (cable)320TVA (80% cable, 20% MMDS)
1,342SKY Brasil (DTH)1,887Net Serviços (cable)
COMPETITION 000’s
6,00019%
Broadband Subscribers (000’s)Cable modem as a % broadband
1,342SKY Brasil Subscribers (000’s)
4,5409%
30%
Pay-TVHH (000’s)Pay-TV PenetrationSatellite HH as a % of Pay-TV
50TVHH (M)190Population (M)
MARKET OVERVIEW
█▌ BRAZIL
20
Strategy• Marketing
– Positioning: “The best TV experience”• “TV experience specialist”
– Acquisition based on leasing model– Programming offer is wide-ranging, including international and
local content, sports, adult and ethnic channels– Recent broadband partnership with local Telcos
to boost sales and compete with triple-play (since March 2007)
• Service– To be recognized as a differentiated company in
terms of quality (in all customer touch-points)• Technology
– To offer enhanced and interactive entertainment experience through a digital platform
█▌ BRAZIL
21
█▌ BRAZIL
Sports Programming• Soccer
– “Brasileirão” – Brazilian Soccer Championship• Only operator with 100% of the games
– Regional Soccer Championships– “La Liga Española”
• Exclusive – Spanish Soccer Championship– European Champions League and European
Championships – ESPN/ESPN Brasil
• Other Sports– SporTV/SporTV2 (Globosat)– ESPN/ESPN Brasil– The Golf Channel Latin America (exclusive)– Premiere Combate (Fight Channel)
22
█▌ BRAZIL
Non-Sports Programming• Local Content
– GNT – GloboNews (24-hour news)– Multishow
(music video clips, live shows, variety)– Canal Brasil (Brazilian movies, interviews)– Rá-Tim-Bum (1st Brazilian kids channel)
• Big Brother Brasil – (Endemol/Globo’s reality show, 7th edition)
• Adult
23
Customer Proposition
█▌ BRAZIL
Digital 2007142 channels R$84.90 (US$42.50)
Digital Plus 2007Digital 2007 + 24 channels R$99.90 (US$50)
38 Channels15 Movies, 12 Sports, 6 Ethnics and 5 Adults
24
Customer Proposition
█▌ BRAZIL
All Combos are based on Digital Plus 2007 package
Q1/07:• 54% of total sales with Combos• 76% of total sales with 18-month contract• Hook up fee $0-$75
TeleCine5 channels
HBO Max10 channels
Soccer10 channels
Ethnic5 channels
Adult2 channels
ExtendedWarranty
a1. Family Combo : r rrra 65
2. Soccer Combo: a aarr r 75
a3. Adult Combo: r rra a 80
4. Cinema Combo: a rra a a 85
5. Total Combo: a ra a aa 100
US$/mo.
+
cont
ent
–
25
Service Infrastructure
█▌ BRAZIL
– 20 Distributors– 140 District dealers– 1,900 Local partners– Direct sales
–by phone
–by web
– 4 days to activate– 1.0 million work orders
per year
– 1 Call Center Site – 65% outsourced– 35% employees
– 140 District dealers provide field service
SALES & INSTALLATION SERVICE
26
TechnologyAlignment with DIRECTV US• DVB in SKY Brasil vs. DSS in DIRECTV US• New Standard Set-Top Box (D12 model)
– Scale gain led to 12% cost reduction– New enhanced features
• DVR (UEC version – South African temporary supplier)– New release: June 2007– Main features
• Dual recording• Live buffer• 64 MB RAM• Video component and digital audio output• 160 GB Hard Disk • 4:3 and 16:9 TV Types
█▌ BRAZIL
27
Technology Next Steps
• High definition/DVR Set-Top Box (DIRECTV US version)– Expected launch in Q3/08
• New APG (Advanced Program Guide)– Main features
• Search for events based on author, title or keywords• Channel’s logo in the grid• Ability to introduce advertisement in the grid• Push content (DVR VOD)• DVR functions accessible through interactive engine
– Expected launch in Q3/08
█▌ BRAZIL
28
█▌ BRAZIL
Infrastructure: TamboréThe largest Broadcast/Uplink Center in Latin America
• Mission Critical facility• 100% self-reliant operation• Broadcast and Uplink Center
– SKY Brasil• Satellite IS 6B• 14 Transponders
– DTV PanAmericana• Satellite GIIIC• 5 Transponders
– Conditional Access
• Latam Data Hub– SKY Brasil Data Center– SAP Server and Tech Support (Brazil & PanAmericana)
29
█▌ BRAZIL
SKY Satellite • Today
– IS 6B – 14 Transponders• 163 video channels• 41 audio channels
– Optimized footprint for Brazil
• October 2008– IS 11 – 18 Transponders
• Full capacity: 270 video channels – Replacement of IS 6B– Same orbital position– Better performance
Key Metrics
1,33210
1.40%134
1,487155
1.25%360
Cumulative SubscribersNet AdditionsMonthly Churn %Gross Additions
SUBSCRIBERS KEY METRICS FY ’06 (1)
█▌ BRAZIL
ExpectedFY ’07
36.0%
$365
$53.00
34.8%Pre-SAC Margin(Excludes non cash gains/losses and satellite lease expense)
$389SAC
$45.65ARPU
FINANCIAL KEY METRICS
(1) SKY Brasil activity consolidated as of August 24th, 2006
Selected Financial Information
9056Total Capex
18062Cash Flow Before Interest and Taxes
8010
250
900
488
Capex SAC relatedNon-SAC related
153OPBDA
417Revenues
█▌ BRAZIL
FY ’06 (1)ExpectedFY ’07
(1) SKY Brasil activity consolidated as of August 24th, 2006
$ Millions
33
700Telefonica (Chile, Peru, Colombia)
9,600TOTAL
3,400Other
800Telmex (Colombia, Peru)
800VTR (Chile)
1,362DIRECTV PanAmericana
2,500Cablevision/Multicanal (Argentina)
COMPETITION 000’s
4,20033%
Broadband Subscribers (000’s)Cable modem as a % broadband
1,362Subscribers (000’s)
9,60028%14%
Pay-TVHH (000’s)Pay TV PenetrationSatellite HH as a % of Pay-TV
34TVHH (M)
130Population (M)
MARKET OVERVIEW
█▌ PanAmericana
34
Strategy• Profitable growth
– Provide the best TV product/experience• Content• Customer service• Technology
– Leverage synergies within PanAmericana, DTVLA, DTVUS
– Incentives and accountability system– Capitalize on strong DIRECTV brand– Customer segmentation
█▌ PanAmericana
35
Sports Programming• Futbol Total – Canal 680
– World Cup 2006 (Mundial Total)– Spanish Soccer (La Liga, Copa del Rey,
Barça TV)– English Premier League– Highlights and Previews
• Other Exclusive Sports– The Golf Channel Latin America– Baseball (MLB Extra Innings, Strike Zone,
Serie del Caribe)– Boxing (DIRECTV’s “Noche de Campeones”)– NFL Sunday Ticket– NASCAR Hot Pass (’07)
█▌ PanAmericana
36
Non-Sports Programming• OnDIRECTV Channel 999
– OnStage productions– Concerts and events– Previews and marathons– Update999, OnHollywood, etc
• Audio channels and radios• D’Novela
█▌ PanAmericana
37
Flexi Plan
Preferential
VarietyMusicFamilyMovie
News
$23
$35
$45
█▌ PanAmericana
Customer Proposition• Adapted to each
market• Broad range of
choices and prices $93$21Per Month
$100$0Up-Front Fee
MaxMinPrices
$6
$17
38
DIRECTV PlusTM
• Targeting affluent demographics
• Includes premium programming
• DVR service• VIP customer service
█▌ PanAmericana
$100$45Per Month
$260$30Up-Front Fee
MaxMinPrices
39
Pre-Pago™• Pay-as-you-go product• Recharge using widely
available cards• Set-top box and kit sold• Access to PPV• Reduced customer service needs
█▌ PanAmericana
$27$5Per Month
$115$115Up-Front Fee
MaxMinPrices
40
Service Infrastructure
–900+ Dealers/ Sub-dealers–800+ Retailers
– 1,200+ POS
–In-house direct sales:– Telemarketing
– Internet
–2,500+ installers / technicians–1.1M annual work orders
–3 Local Call Centers– Venezuela
– Chile
– Caribbean
–2 Pan-Regional Call Centers– Buenos Aires, Argentina
– Bogotá, Colombia
█▌ PanAmericana
SALES SERVICE INSTALLATION
41
Best Technology• DIRECTV advantage
• Interactive
• Recent and New Developments– DVR
– Cartelera
– Game Lounge
– HD
█▌ PanAmericana
42
Subscriber Growth
█▌ PanAmericana
800,000
1,000,000
1,200,000
1,400,000
Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07
CAGR: 15%
Key Metrics
1,560280
1.48%530
1,286Cumulative Subscribers223Net Additions
1.53%Monthly Churn %438Gross Additions
SUBSCRIBERS KEY METRICS
█▌ PanAmericana
FY ’06Expected
FY ’07
40.0%
$380
$42.00
39.2%Pre-SAC Margin(Excludes non cash gains/losses and satellite lease expense)
$366SAC
$40.31ARPU
FINANCIAL KEY METRICS
Selected Financial Information
12088Total Capex
3047Cash Flow Before Interest and Taxes
9525
135
720
808
Capex SAC relatedNon-SAC related
101OPBDA
569Revenues
FY ’06
█▌ PanAmericana
ExpectedFY ’07$ Millions
515Cablevision
6,030TOTAL
1,612Others
680MVS
870Cablemas
900Megacable
1,453SKY Mexico
COMPETITION 000’s
2,79025%
Broadband Subscribers (000’s)Cable modem as a % broadband
1,453Subscribers (000’s)
6,03027%24%
Pay-TVHH (000’s)Pay TV PenetrationSatellite HH as a % of Pay-TV
22TVHH (M)
104Population (M)
MARKET OVERVIEW
█▌ MEXICO
49
█▌ MEXICO
Exclusive Sports Programming• 50% of World Cup 2006 games• Over 20% Mexican Soccer
League and exclusive local broadcasts• La Liga Espanola• The Golf Channel Latin America• MLB Extra Innings• NFL Sunday Ticket• Boxing• Other International Events
50
█▌ MEXICO
Non-Sports Exclusive Programming• Reality Shows
– Big Brother, Confianza Ciega, El Bar
• SKY ONE• Concerts, Events, Special
Weekends, Others – Pavarotti– Robbie Williams– Los Tenores– Chayanne
51
Basic23%
Premium26%
Fun51%
Customer Proposition• Aggressive promotions,
focused on hook-up fees, multiple set-top boxes andcredit cards
• Direct promotions vs. cable operators
█▌ MEXICO
• Subscribers’ base programming package choice
52
Service Infrastructure
– 9 Master Wholesalers and 17 Direct Sales Offices
– 1,600 Dealers– 3,300 points of sales– In-house direct sale:
– Telemarketing in/out
– Internet
– MDUs
– Points of Sales
– 2 days to activation– 3,300 installers /
technicians– 1.0M work orders
annually
– 1 in-house Call Center– Headcount: 1,100– 750K incoming monthly
contacts – 98% phone
– 2% e-mail
– 94% service level – 98% of e-mails
answered within 12 hours
█▌ MEXICO
SALES SERVICE INSTALLATION
53
Technology• Digital quality
• Interactive features (multi-cameras, stats, news, games)
• SKY+ DVR offering
█▌ MEXICO
54
Programming Packages Offer
█▌ MEXICO
Basic Fun MovieCity HBO UniversePs.299 Ps.399 Ps.529 Ps.579 Ps.719(US$27) (US$36) (US$48) (US$53) (US$65)
Video 77 111 119 123 137
Audio 50 50 50 50 50
PPV 26 33 33 33 33
TOTAL 153 194 202 206 220
55
Easy Access to Programming
█▌ MEXICO
12 mosaics, easy-to-find all SKY’sprogramming by genre:
• Mosaico 100• TV Nacional• Entretenimiento 1 & 2• Mundo y Cultura• Niños• Cinema 1 & 2• Deportes• Noticias• Musica• Eventos
56
█▌ MEXICO
SKY View Magazine
• Second largest monthlymagazine in Mexico
• 390K units per month
• US$10M annual revenues
• Over 50% margin
Key Metrics
1,430
180
1.0%
380
1,251Cumulative Subscribers
248Net Additions
1.2%Monthly Churn %
447Gross Additions
SUBSCRIBERS KEY METRICS FY ’05
█▌ MEXICO
FY ’06
58.0%
$370
$40.90
54.0%Pre-SAC Margin
$350SAC
$39.50ARPU
FINANCIAL KEY METRICS
Selected Financial Information
204
91
847
326
684
109Total Capex
103Cash Flow Before Interest and Taxes
9019
Capex SAC relatedNon-SAC related
231OPBDA
550Revenues
FY ’05
█▌ MEXICO
FY ’06$ Millions
60
Summary• Leading premium platform
• Favorable competitive environment
• Attractive economic structure
• Poised for growth
61
Mexico As The Model• Most developed platform to date
– Consolidation began in 2005– Clear dominant market position
• Unconsolidated value for DTV– Active partnership role– Superior financial performance
• Continued growth ahead
62
DTVLA Financial
~400
~250
~400
~600~2,000
~225179TOTAL
~12079Operating Profit
~16512Cash Flow Before Interest & Taxes
~175~50
~350~1,600
13049
Capex SAC RelatedNon-SAC Related
244OPBDA1,013Revenues
FY ’06ExpectedFY ’07$ Millions
OutlookFY ’09
NOTE: Excludes SKY Mexico
█▌ DTVLA
Drivers of Growth
~$395
~1.30%
~$48
~4,000
~1.35%1.45%Churn
~$380
~$46
~3,100
$371SAC
$41.71ARPU
2,711Subscribers (000’s)YE ’06
ExpectedFY ’07
OutlookFY ’09
NOTE: Excludes SKY Mexico
█▌ DTVLA
Pre-SAC MarginConsolidated DTVLA
32.6%Adjusted Pre-SAC Margin(9.0%)Non-Cash (Gain)/Loss5.3%Satellite Lease Expense36.3%Pre-SAC Margin63.7%Total Cost as a % of Revenue(9.0%)Non-Cash (Gain)/Loss18.7%G&A
6.0%Subscriber Services1.3%Upgrade and Retention4.9%Broadcast Ops.5.3%Satellite Lease Expense
5.9%Other Direct Costs30.7%Programming
FY ’06Costs as a % of Revenues
NOTE: Excludes SKY Mexico
█▌ DTVLA
65
A Great Opportunity to Unlock Value
$25.4B$1,9001.6%$650-700$6513.4MEchoStar
$29.2B$1,8001.6%$650-700$7516.1MDIRECTV US
––1.4%$370-390$463.0M(2)DIRECTV Latin America
$3.0B$2,0001.2%$350-370$401.5MSKY Mexico
0.9%
1.0%
Monthly Churn
$1,800
$2,900
Value/Subs (1)
$7.6B$425-450$554.2MSKY Italia
$24.4B$475-500$658.5MBSKYB
ValueSACARPUSubs
(1) Wall Street estimates and company filings(2) Attributable subs based on ownership percentages
█▌ DTVLA
66
Potential ValuationDIRECTV Latin America’s Subscriber Share
DIRECTV Latin America’s Potential Valuation(assumes 3.0M attributable subs)
3.0M4.2MTOTAL0.6M1.5M41%Mexico1.0M1.3M74%Brasil1.4M1.4M100%PanAmericana
Attributable SubsReported SubsOwnership %Region
$5.00$6.0B$2,000$3.75$4.5B$1,500$2.50$3.0B$1,000
Value/DTV ShareValueValue/Sub
█▌ DTVLA
Non-GAAP Financial Reconciliation Schedules
(Dollars in Millions) 2009 FcstSky Brazil PanAmericana DLA Corp/Other DTVLA Sky Brazil PanAmericana DLA Corp/Other DTVLA DTVLA
Operating Profit Before Depreciation and Amortization $153 $101 ($10) $244 $250 $135 ($35) $350 $600
Subtract: Depreciation and amortization expense 70 81 14 165 125 85 20 230 200
Operating Profit $83 $20 ($24) $79 $125 $50 ($55) $120 $400
(Dollars in Millions) 2009 FcstSky Brazil PanAmericana DLA Corp/Other DTVLA Sky Brazil PanAmericana DLA Corp/Other DTVLA DTVLA
Cash Flow Before Interest and Taxes $62 $47 ($97) $12 $180 $30 ($45) $165 $400Adjustments: Cash taxes and net interest received (paid) (12) (6) (4) (22) (45) 0 20 (25) (100)Subtotal - Free Cash Flow 50 41 (101) (10) 135 30 (25) 140 300 Add Cash Paid For: Property and equipment 56 88 31 175 90 120 10 220 250
Net Cash Provided by Operating Activities $106 $129 ($70) $165 $225 $150 ($15) $360 $550
2007 Outlook
DIRECTV Latin America (Excludes Mexico)
Reconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit (Unaudited)
Reconciliation of Cash Flow Before Interest and Taxes and Free Cash Flow to Net Cash Provided by Operating Activities (Unaudited)2006 Actual 2007 Outlook
2006 Actual
Non-GAAP Financial Reconciliation Schedules
(Dollars in Millions)Sky Brazil PanAmericana DLA Corp/Other DTVLA
Operating Profit $83 $20 ($24) $79
Adjustments:
Subscriber acquisition costs (expensed) 42 83 (1) 124
Depreciation and amortization expense 70 81 14 165
Adjustments for satellite lease expense and one-time gains (50) 39 (27) (38)
Pre-SAC margin* $145 $223 ($38) $330
Pre-SAC margin as a percentage of revenue* 34.8% 39.2% n/m 32.6%
Reconciliation of Pre-SAC Margin to Operating Profit (Unaudited)
DIRECTV Latin America (Excludes Mexico)
2006 Actual