4. 4
Cautionary Statement
This 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. 5
Non-GAAP Financials
This 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. 8
Agenda
Q&A
Luiz E. Baptista da Rocha
General Manager, SKY Brasil
SKY Brasil
Lunch11:45 a.m.
Bruce Churchill
President, DIRECTV Latin America
Closing Remarks
Alex Penna
General Manager, SKY Mexico
SKY Mexico
Break
Jacopo Bracco
General Manager,
DIRECTV PanAmericana
PanAmericana
Bruce Churchill
President, DIRECTV Latin America
Overview
Chase Carey
President and CEO, DIRECTV, Inc.
Opening Remarks9:00 a.m.
9. DIRECTV Presence Throughout the Region
14
23%
Broadband Subscribers (M)
Cable modem as a % broadband
4.2
Combined SKY/DIRECTV
Subscribers (M)
21,000
20%
20%
Pay-TVHH (000’s)
Pay TV Penetration
Satellite HH as a % of Pay-TV
100+TVHH (M)
450Population (M)
MARKET OVERVIEW
The 6th largest Pay-TV
Platform outside the U.S.A.
10. 10
Ownership Structure
The DIRECTV Group
SKY Mexico
DIRECTV Latin America
100%
PanAmericanaSKY Brasil
DTVLA 74.1%
Globo 25.9%
DTVLA 100% DTVLA 41.3%
Televisa 58.7%
█▌ DTVLA
11. 11
DTVLA Profile
Video: 172
Audio: 50
Video: 276
Audio: 46
Video: 163
Audio: 41
Service
(# of channels)
2,2602,7502,341
Employees
(Including outsourced)
151Call Centers
IS 9
12
Galaxy IIIC
31
IS 6B
14
Satellites
Transponders
Mexico
California
California
Venezuela
Argentina
Brazil
Brazil
Broadcast
Centers
MexicoPanAmericanaBrazil
█▌ DTVLA
12. 12
Strategy
• Premier television experience
• Programming/Content
• Service
• Technology
• Leverage regional scale and DIRECTV US
to 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. 13
Premier Programming Offering
Argentina, Colombia, Chile, MexicoRegional Soccer
Golf Channel, Polo, Beach VolleyballNiche Programming
ExclusiveNFL Sunday Ticket
ExclusiveMLB Extra Innings
Mundial TotalWorld Cup
Exclusive local broadcastsMexican Soccer
100% of games availableBrasileirão
400 games, 250+ exclusiveLa Liga/EPL
SPORTS
Bacilos, Don Omar, UB40, Alejandro Lerner,
Chiquititas, Floricienta, Seal, Peter Pan
Concerts
Roma (HBO), 24 (Fox)Series Premiere
Exclusive extended coverageReality Shows
24 hour exclusive channelsOn DIRECTV/SKY ONE
UNIQUE PROGRAMMING
█▌ DTVLA
14. 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
17. 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. 19
4,540TOTAL
656Other (80% cable, 20% MMDS)
335Vivax (cable)
320TVA (80% cable, 20% MMDS)
1,342SKY Brasil (DTH)
1,887Net Serviços (cable)
COMPETITION 000’s
6,000
19%
Broadband Subscribers (000’s)
Cable modem as a % broadband
1,342SKY Brasil Subscribers (000’s)
4,540
9%
30%
Pay-TVHH (000’s)
Pay-TV Penetration
Satellite HH as a % of Pay-TV
50TVHH (M)
190Population (M)
MARKET OVERVIEW
█▌ BRAZIL
20. 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. 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. 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. 23
Customer Proposition
█▌ BRAZIL
Digital 2007
142 channels R$84.90 (US$42.50)
Digital Plus 2007
Digital 2007 + 24 channels R$99.90 (US$50)
38 Channels
15 Movies, 12 Sports, 6 Ethnics and 5 Adults
24. 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-$75
TeleCine
5 channels
HBO Max
10 channels
Soccer
10 channels
Ethnic
5 channels
Adult
2 channels
Extended
Warranty
a1. Family Combo :
r rrra 65
2. Soccer Combo:
a aarr r 75
a3. Adult Combo:
r rra a 80
4. Cinema Combo:
a rra a a 85
5. Total Combo:
a ra a aa 100
US$/mo.
+content–
25. 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. 26
Technology
Alignment 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. 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. 28
█▌ BRAZIL
Infrastructure: Tamboré
The 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. 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
30. Key Metrics
1,332
10
1.40%
134
1,487
155
1.25%
360
Cumulative Subscribers
Net Additions
Monthly Churn %
Gross Additions
SUBSCRIBERS KEY METRICS FY ’06 (1)
█▌ BRAZIL
Expected
FY ’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
31. Selected Financial Information
9056Total Capex
18062Cash Flow Before Interest and Taxes
80
10
250
900
48
8
Capex
SAC related
Non-SAC related
153OPBDA
417Revenues
█▌ BRAZIL
FY ’06 (1)
Expected
FY ’07
(1) SKY Brasil activity consolidated as of August 24th, 2006
$ Millions
33. 33
700Telefonica (Chile, Peru, Colombia)
9,600TOTAL
3,400Other
800Telmex (Colombia, Peru)
800VTR (Chile)
1,362DIRECTV PanAmericana
2,500Cablevision/Multicanal (Argentina)
COMPETITION 000’s
4,200
33%
Broadband Subscribers (000’s)
Cable modem as a % broadband
1,362Subscribers (000’s)
9,600
28%
14%
Pay-TVHH (000’s)
Pay TV Penetration
Satellite HH as a % of Pay-TV
34TVHH (M)
130Population (M)
MARKET OVERVIEW
█▌ PanAmericana
34. 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. 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
49. 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. 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
60. 60
Summary
• Leading premium platform
• Favorable competitive environment
• Attractive economic structure
• Poised for growth
61. 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
64. Pre-SAC Margin
Consolidated DTVLA
32.6%Adjusted Pre-SAC Margin
(9.0%)Non-Cash (Gain)/Loss
5.3%Satellite Lease Expense
36.3%Pre-SAC Margin
63.7%Total Cost as a % of Revenue
(9.0%)Non-Cash (Gain)/Loss
18.7%G&A
6.0%Subscriber Services
1.3%Upgrade and Retention
4.9%Broadcast Ops.
5.3%Satellite Lease Expense
5.9%Other Direct Costs
30.7%Programming
FY ’06Costs as a % of Revenues
NOTE: Excludes SKY Mexico
█▌ DTVLA
65. 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
