DIRECTV InvestorDay Dec 12 2013 Print (1)

8/13/2019 DIRECTV InvestorDay Dec 12 2013 Print (1)

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DIRECTV Investor DayDecember 12, 2013

DIRECTV Investor DayMartin SheehanVice President,Investor Relations

All trademarks and service marks are the property of their respective owners



3

Agenda

Time Topic Speaker

8:30 AM Welcome / Logistics Martin SheehanIntroduction Mike White

DTVLA Overview Bruce Churchill

PanAmericana Jacopo Bracco

SKY Brasil Luiz Baptista

Wireless Broadband Initiatives Evan Grayer

DTVLA Financial Overview Fazal Merchant

DTVLA Q&A

10:45 AM Break – 15 Minutes

Technology Roadmap Romulo Pontual

Customer Operations Mike Palkovic

Revenue & Marketing Paul GuyardoU.S. Financial / Consolidated Financial Review & Outlook Pat Doyle

Final Remarks / Q&A Mike White

1:00 PM Lunch with DTV and DTVLA Executives

4

Cautionary Statement

This 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, statementsthat 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 differmaterially from historical results or from those expressed or implied by the relevant forward ‐lookingstatement. Such risks and uncertainties include, but are not limited to: economic conditions; productdemand and market acceptance; cost to attract and retain customers; ability to improve customer service,create new and desirable programming content and interactive features and achieving anticipatedeconomies 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 Americancountries; foreign currency exchange rates and controls; increasing competition; the outcome of legalproceedings; ability to achieve cost reductions; ability to obtain or renew programming contracts underfavorable terms or at all; technological risk; signal piracy; limitations on access to distribution channels;reliance on satellites as a significant part of our infrastructure; ability to access capital; ability to repaycorporate debt; indemnification obligations; and we may face other risks described from time to time inperiodic reports filed by DIRECTV with the SEC.



5

Non ‐GAAP Financials

This presentation includes financial measures that are not determined in accordance with GAAP, such asOperating Profit before Depreciation and Amortization, Pre ‐SAC margin, Free Cash Flow and Cash Flowbefore Interest and Taxes. These financial measures should be used in conjunction with other GAAPfinancial measures and are not presented as an alternative measure of operating results, as determinedin accordance with GAAP. DIRECTV management uses these measures to evaluate the profitabilityof DIRECTV’s subscriber base for the purpose of allocating resources to discretionary activities such asadding 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 websitewww.directv.com/investor.

DIRECTV Investor DayMike WhiteChairman, President and CEO



7

SKY Brasil (93% owned)

Subscribers: 5.4M

PanAmericana(100% owned)

Subscribers: 6.3M

SKY Mexico(41% owned)

Subscribers: 6.1M (Not consolidated)

DIRECTV Overview

DIRECTV Revenues: $31.6B

EPS1: $5.15Free Cash Flow : $2.1B

DIRECTV Latin America Subscribers: 17.8M

Revenues: $6.8B OPBDA1: $1.9B

Sports Networks Subscribers: 5.9M

Net Revenues 2: $0.2BNet OPBDA2: $0.1B

Game Show Network42% owned

(Not consolidated)

DIRECTV U.S.Subscribers: 20.2MRevenues: $24.7B

OPBDA: $6.0B

1EPS & DTVLA OPBDA excludes Venezuela devaluation charge2Net of consolidated intercompany eliminationsNote: All numbers represent 2013 consensus except Sports Networks.

DIRECTV is the world’s largest pay TV provider

with over 37 million subscribers

8

Advancing the Customer Experience

Developing Talent and Expanding Corporate Social Responsibility

Recent Accomplishments

Created Customer Experience group focused on winning customer loyalty for life and making customer service a significant competitive advantageIntroduced Net Promoter Score (NPS) across the Americas as key performance metricIn the U.S., implemented several key initiatives including cross ‐functional learning lab, simplified policies, Enhanced Protection Plan and tenure ‐based upgrades – Reduced calls by 17%, service calls by 25% and

equipment failures by 40%In Latin America, invested in a new Customer Relationship Management system

Delivered on 2013 consolidated goals of $30B in revenues, 30M subscribers and $5 of EPSSuccessfully transitioned U.S. strategy to rebalance top and bottom linesProfitably expanded leadership position in Latin AmericaStrengthened Balance SheetContinued highest capital return policy in the industry

Recognized on Bloomberg’s “Civic 50” list of America’s Most Community Minded CompaniesMore than 32,000 hours volunteered across the Americas in 2013In the U.S., we’ve reached 87% employee engagement, representing the third consecutive year of increasesDIRECTV Latin America was ranked among “The Best Multinational Companies to Work For” in several countriesRecipient of the 2013 ENERGY STAR Partner of the Year AwardIn the U.S., we’ve reduced our carbon footprint by more than 10% since 2011

Delivering Operating and Financial Goals

Delivered on 2013 consolidated goals of $30B revenues, 30M subscribers and $5 EPSSuccessfully transitioned U.S. strategy to rebalance top and bottom linesProfitably expanded leadership position in Latin AmericaStrengthened Balance SheetContinued highest capital return policy in the industry

Driving Product InnovationIntroduced best in class set ‐top box technology including Whole Home DVR such as DIRECTV Genie and DIRECTV NEXUSImplemented Connected Home strategy to drive greater subscriber returnsRolled out industry leading HD UI across multiple screensCreated the Digital Entertainment Products group to ensure our product and service innovation remains at the forefront of our industrySuggested, developed and launched DIRECTV Everywhere platform, across multiple devices



9

Creating Significant Shareholder Value

Share Price AppreciationConsolidated Revenue ($B)

Diluted EPS ($)

*2013 represents consensus data and excludes Venezuela devaluation charge in EPS; Share price as of December 9, 2013.

These accomplishments have driven strong growth

and share price appreciation

$24.1 $27.2 $29.7 $31.6

2010 2011 2012 2013E

$2.30$3.47

$4.58 $5.15

2010 2011 2012 2013E

120%

100%

80%

60%

40%

20%

0%

(20%)Jan ‐10 Jan ‐11 Jan ‐12 Jan ‐13

DTV +104%

S&P +62%

10

DIRECTV has ranked higher than Cable in Customer Satisfaction for 13 consecutive yearsSKY Brasil awarded the Brazilian equivalent to the J.D. Power for 11th consecutive year and “Best Service Company in any industry”; DIRECTV Chile and DIRECTV Colombia also received accoladesSource: 2013 American Customer Satisfaction Index; Anatel , ANTV and Subtel regulators

Outstanding Customer Service

Unique Position of Strength Creates Sustainable Competitive Advantages

Lowest cost delivery and service platform for video

Scalable/National and PanRegional coverage

Negotiating scaleContent / Equipment / Services

Best Practices

Cost Efficiencies Proven Strategies & Mgmt. Team

Strong Brand

Distinctive Content

Advanced Technology

First quartile financial performance

Track record of strong execution

Experienced leadership team

96% of US Consumers recognize brand

11 Emmy Awards

Distinctive, industry ‐leading ad campaigns

16 Gold Lions at Cannes



11

Our Key Challenges

Increasingly competitive Pay TV marketplace

More volatile macroeconomic, political and regulatory environment

Delivering attractive returns while completing infrastructure build ‐out and mass market expansion

Mature, hyper ‐competitive Pay TV marketplace

Accelerating pace of technological change

Programmers seeking even higher rates for their content as

well as

digital

rights

DIRECTV Latin AmericaDIRECTV U.S.

12

DIRECTV Latin America Strategic Imperatives

Extend DIRECTV and SKY’s leadership position in the higher end markets with emphasis on HD and DVR excellence

Launch new satellites to extend HD channel capacityLeverage best in class set ‐top box technology from DIRECTV U.S. including advanced whole home DVR

Profitably increase penetration in the mass market segment Optimize programming and packaging strategy to better align offers with consumer income levels, behavioral patterns and macro ‐economic factorsLaunch lower cost HD box and our building block DVR architecture

Enhance focus on improving marginsSmart pricing and rigorous cost management leveraging regional scale

Modify tactics and strategies to adjust to new economic, political and regulatory volatilityContinue upgrade of region ‐wide world ‐class infrastructure build ‐out

Leverage brand and customer base to opportunistically drive fixed wireless broadband growth

Ensure Latin America is self ‐funded in 2014; generate significant cash flow by 2016



13

DIRECTV U.S. Strategic Imperatives

Accelerate innovation to advance the entertainment experienceExpand HD and UHD capacity with new SatellitesEnhance hybrid Satellite/cloud platform, Connected Home and DIRECTV Everywhere Continue to enhance HD UI (voice, contextual search)Support incremental revenue streams and productivity initiatives

Make customer service a true competitive differentiatorEmpower front line employees to go above and beyond customer expectationsHeighten focus on getting it right the first timeContinue to streamline and simplify policies, practices and processesExtend self care capability

Attract and retain profitable subscribers by expanding DIRECTV’s brand leadership Capitalize on DIRECTV’s world class direct marketing, branding and sophisticated retention tools

Sustain top line growth through positive net additions, smart pricing and new ancillary and non ‐residential revenue streams

Enhance enterprise wide productivity improvements and cost containment to maintain strong margins

14

Formula for Increasing Shareholder Value

DIRECTV U.S.Deliver positive net subscriber additionsDrive mid‐single ‐digit Revenue/OPBDA and high‐single ‐digit CFBIT growth

DIRECTV Latin AmericaDeliver strong net subscriber additionsDrive double ‐digit constant currency Revenue/OPBDA growth and 30% marginsBecome self funding in 2014 and generate strong cash flow in 2016

CorporateMaintain Investment Grade ratingReturn excess capital to shareholdersEnsure best ‐in‐class corporate governance

2016 Vision 1

15%+ EPS CAGR or $8/share

25%+ FCF/Share CAGR

or $8/share

12016 Vision for EPS & FCF/Share excludes Venezuela results.



DIRECTV Latin America Investor DayBruce ChurchillPresident, DIRECTV Latin America

16

Agenda

DTVLA Investor Day Agenda

Market Overview and Update Bruce Churchill

DIRECTV PanAmericana Jacopo Bracco

SKY Brasil Luiz E. Baptista da Rocha

Broadband Evan Grayer

Financial Overview Fazal Merchant

DTVLA Q&A Executive Team

16



17

Platform Overview

17

18

PanAmericana

PanAmericana Dec 2010 Dec 2013 CAGR

Total Households 50.8 million ~55 million 3%

Pay‐TV Households 17.9 million ~24 million 10%

Pay‐TV Penetration 35% ~44% 8%

DTV Subscribers 3.3 million ~6.2 million 23%

DTV Market Share 19% ~26% 11%

DTV Ownership 100% 100% n/a

Key Attributes

DTVLA’s largest platform with over 6M subscribers

Strong diversification across the continent

2013 Estimate (US$)

Revenue ~$3.1B

OPBDA ~$0.7B

Source: Business Bureau and Internal Estimates 18



19

Brazil

Brazil Dec 2010 Dec 2013 CAGR




SKY Subscribers 2.5 million ~5.4 million 29%SKY Market Share 25% ~30% 6%


Key Attributes Premier Pay‐TV brand in Brazil

Favorable long ‐term fundamentals

Growing mass ‐market opportunity

2013 Estimate (US$)

Revenue ~$3.7B

OPBDA ~$1.2B

Source: Anatel 19

20

SKY Mexico Dec 2010 Dec 2013 CAGR




SKY Subscribers* 3.0 million ~6.0 million 26%

SKY Market Share* 27% ~40% 14%


Mexico

Key AttributesMajority owned by our partner Grupo Televisa

#1 Pay‐TV provider in Mexico

*Household and market share data is for Mexico only; SKY subscribers include Central America and Dominican Republic

2013 Estimate (US$)

Revenue ~$1.2B

OPBDA ~$0.5B

Source: IFETEL 20



21

‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

Foreign Currencies vs. U.S. Dollar

ARG BRA CHI COL MEX

% change vs. 1 year ago

MEX

COL

CHI

ARG

BRA

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2010 2011 2012 2013 2014 2015China Brazil Chile Colombia Mexico

Moderating Global Growth and FX HeadwindsModerating Growth

Slower growth

in

China

having

region ‐wide effect

Heading into period of more “normal” growth

But, still respectable

Source: IMF

G D P G r o w t h R a t e s

( % )

F X A p p r e c i a t i o n

/ D e p r e c i a t i o n

Source: Oanda

Weaker Currencies, Higher Volatility

Every major currency weaker vs. USD compared to one year ago

Makes year ‐over ‐year comparisons

challenging

21

22

But DTVLA Remains the Market Leader Across Latin America

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

DIRECTV America Movil Cablevisión(ARG + URU)

Telefónica -Movistar

VTR (Chile) UNE(Colombia)

Intercable(Venezuela)

17.2

12.7

3.72.3

1.1 1.0 0.8

We Remain

#1

Paying Subscribers: September 2013

S u b s c r i b e r s

( M M )

Source: Business Bureau September 2013

22



23

Leadership and share gains in virtually every marketPositioned to capitalize on growth

Still Significant Room for Growth

Large Market

Low Penetration

DTV/SKY Leadership

TotalHouseholds

55M

62M

117M

31M

148M

Markets

PanAmericana

Brazil

DTVLA

Mexico

Region

Penetration Rate

44%

29%

36%

47%

39%

DTVLAMarket Share

DTVLA Subs

26% 6.2M

30% 5.4M

28% 11.6M

40% 6.0M

31% 17.6M

Household formation at a modest 2% CAGR since 2010 has added 10M+ HH’s

Double ‐digit CAGR in Pay‐TV penetration during the same period, with room for further growth

Source: Business Bureau, ANATEL, IFETEL and Internal Estimates 23

24

Content Update – Challenging, but not like the U.S.

Local players still dominate in their markets, especially Globo (Brazil) and Televisa (Mexico)

Consolidation of pay channels leave five key international suppliers, all of whom operate regionally; Fox, Turner, HBO, Disney ‐ESPN and Discovery

Market for sports content is in transitionDIRECTV/SKY emerging as significant regional playerFox buy ‐out of partner (Hicks Muse) moving aggressively on regional level

America Movil

acquired

2016

Olympics

rights

New laws regulating local content requirements and cross ‐ownership in Brazil, Mexico, Argentina and Uruguay

DTVLA/SKY proven ability to navigate market complexity

24



25

OTT Update – Not a Major Threat but Bears Watching

Broadband penetration increasing, but infrastructure still challenged to support large volumes of streaming

Netflix launch seemingly not successful, but little hard data available

Content owners starting to experiment, mostly with authenticated models

Fox PlayTelecineHBO GoESPN PlayMovieCity Play

25

26

Strategic Priorities and Initiatives

Consistently deliver the best technology

Segment product to serve all socio ‐demographic groups profitably

Out ‐perform on service

Secure privileged position in content

Build on our leadership position in Pay‐TV

Build on our leadership position in Pay‐TV

Build‐out fixed wireless broadband network at a

measured paceManage modest investments in OTT, while monitoring the need to “up the ante”

Invest in

success

‐based

expansion into

Broadband and OTT

Invest in

success

‐based

expansion into

Broadband and OTT

26



27

Future Capacity80 Transponders

800+ Channels~275 HD Channels

Consistently Deliver the Best Technology

Current Capacity28 Transponders


DTVLA is currently in the middle of a satellite and ground station investment

cycle to

expand

capacity

for

the

growth

of

HD

and

provide

for

redundancy

Current Capacity18 Transponders


Future Capacity60 Transponders


Q3 2016

PanAmericana SKY Brasil

27

Q4 2014Q4 2015

28

Consistently Deliver the Best Technology

DTV U.S.

DTVLA HDMRV Genie

HD Product Roadmap

20102005 2012 2013 20142008

HD

MRV Genie

Leveraging superior technology developed for the U.S. market

Enables DTVLA to deliver advanced features, functionality and reliability

Global scale enables cost efficiencies

28MRV = Multi Room Viewing



29

86%

54%

28%

9%12%

35% 36%

17%0%

20%

40%

60%

80%

100%

A B C D/E% Pay‐TV Penetration % of Total Pay‐TV HH's

95%

54% 58%

30%

2% 11%

27%

60%

0%

20%

40%

60%

80%

100%

A B C D/E% Pay‐TV Penetra tion % of Total Pay‐TV HH's

P a y ‐ T V P e n e t r a t i o n B y

S o c i a l C

l a s s

Leverage Brand, Scale, and Leadership in Growing Segments

SKY Brasil

PanAmericana

The largest growth opportunity continues to be in the lower social classes, or “mass market.” Additional growth opportunity in advanced products

Source: Business Bureau through September 2013

Almost 70% of sales in 2013 will be mass market

Traditional SD customers migrating to HD

SD(18%)AP

(14%)

Consolidated Gross Adds by Segment

29

30

With a Segmented Product Offering

DIRECTV Colombia

*Available in both Pre ‐Paid and Post ‐Paid entry level, with identical pricing

$47HUF $32 ‐$42109 SD + 19 HD

Oro Max

$21 HUF $26

58 SD

Familia $26HUF $26

58 SD

Familia 2 STB $32

HUF $2670 SD

Bronce*

$45HUF $32 ‐$4285 SD + 19 HD

Plata Max/HD

$100HUF $50

109 SD + 21 HD + 18 Premium

Platino

Pre ‐Paid

Post ‐Paid (HD Optional)

Post ‐Paid (HD)

$39HUF $21 (2 SD)

85 SD

Plata Max

$37HUF $32

70 SD + 5 HD

Bronce Max/HD

HUF = Hook Up Fee

30



31

PanAmericanaARPU ~$48

Variable Margin ~49%

Net SAC ~$480

Payback (Months) ~21

IRR ~40%

PanAmericanaARPU ~$23


Net SAC ~$132


IRR ~45%

All Segments Offer Attractive Returns

Note: All figures for PanAmericana exclude Venezuela

SKY BrasilARPU ~$60


Net SAC ~$475


IRR ~35%

SKY Brasil

Expanding Pre ‐Paid Offering to Capitalize on the Mass Market

Opportunity

Post ‐Paid Pre ‐Paid

31

32

0%

20%

40%

60%

80%

100%

UnitedStates

Brazil Chile Ecuador Colombia Mexico Peru Uruguay

92%

61%

43% 40%36%

31%23% 23%

Source: Americas Quarterly “Social Inclusion Index 2013”

Financial Inclusion by Country % of Males using Financial Institutions

Many Latin American consumers do not participate in the formal banking system

Our Pre ‐Paid product enables us to service these markets while offering flexible payment options to our customers

Pre ‐Paid Product Meets the Needs of the Mass Market

32



33

Out ‐Perform on Service

Investment in customer related systems and processesBilling system upgrade completedCall center systems upgraded and optimized (CSR and IVR)

Continue deployment of customer management softwareCRM system being deployed throughout multiple business areas

Expansion of call center operations and capacity in Colombia

Continued expansion of shared service centers in Argentina and Venezuela to opportunistically utilize local currency (IT, Datacenter, and Broadcast Operations)

New billing and support systems nearing completion

New call center sites added outside of São Paulo

PanAmericana

SKY Brasil

33

34

REGIONAL PROPERTIES

• FIFA ‐ World Cup

• La Liga

• English Premier League

• Other European Leagues• (French, German, Portuguese)

• Copa America

• Euro Cup 2016

• European Qualifiers• Euro & 2018 World Cup

LOCAL PROPERTIES

• Colombian Soccer

• Ecuadorian Soccer

• Venezuelan Baseball

Secure Privileged Position in Content CHANNELS WITH EQUITY INVESTMENTS

34





37

During our 2012 Investor Day we discussed three main objectives:

Expand our business in Colombia as PanAmericana’s next major marketCapture mass ‐market opportunity by enhancing customer segmentationLeverage operating scale advantages from regional platform synergies

Where we are today:We have more than doubled our subscriber base in ColombiaWe have increased our Gross Additions by ~45% and rolled out Pre ‐Paid in all markets We have improved the customer experience resulting in a 20%+ reduction in Calls per Subscriber and lower Post ‐Paid churn

And also:We have sustained our undisputed brand leadershipNew differentiated content has been addedWe have maintained our technology leadership with new product launches

PanAmericana Update

PanAmericana 37

38

Competition is evolvingCompetitors ramping up HD, with offers up to 50 channels35% of regional cable HH’s are digitalInexpensive triple plays are increasingA number of OTT platforms are coming online (e.g. Movistar Play, Claro Video)

A Strong Competitor Exists in Most Local Markets

PanAmericana 38



39

19.7

23.6

We are Still Ahead of the Competition

2011 2013E* Subscribers in millions

Since Last Investor Day…Size of Pay ‐TV Market, 2011 ‐2013E

+3.9M Pay‐TV Subs in

the Region

4.1

6.2

2011 2013E

PanAmericana Subscribers

+2.1M Subs

PanAmericana 39

40

HD leadership secured for years to come

Introduce low cost HD equipment broadening reach of HD services

New Satellite, Product Leap ForwardTechnologySatellite/Transponder Capacity

Developed interactive app showing Pre ‐Paid balance on TVEnhanced Pre ‐Paid self installation processLaunched “DIRECTV NEXUS”

MRV; iPad app

Launched “Call Me,” a TV app for premium customers to access customer serviceIntroduced DIRECTV Play, on ‐line library to stream content with 5K titles (live and on ‐demand)

Created new

HD

user

interface

(Black

UI)

2 8 T r a n sp o n d e r s 8 0 T r a n sp o n d e r s

FutureCurrent

2011 2013E

0.5

1.1

HD Subscribers (EOP)

16%

26%

% ‐ Post ‐Paid base

45% CAGR

* Subscribers in millions PanAmericana 40



41

Segmentation is Still a Priority

Pre ‐Paid growth not cannibalizing Post ‐Paid business2/3 of our base is still Post ‐PaidHigher credit filters and up front fees to ensure higher quality of Post ‐PaidAdvanced product take rate 30%‐40% of total Post ‐Paid

2010 2011 2012 2013E

0.5 0.4 0.4 0.3

0.4 0.60.8

0.6

0.40.6

1.21.3

Adv anced Prod uct s Tradit ion al SD Pre-Paid

Gross Additions (M)

* Subscribers in millions PanAmericana 41

42PanAmericana

Variable Costs

Tailored offer with fewer channelsLow cost of serviceNo bad debtHigh Variable Margin Low Net ‐SACHigh IRR

We Have a Strong Pre ‐Paid Business

~0.8M

~2.9M Active base

Actively goingON and OFF the platform

~2.1M Reportedsubs

ProfitabilityProfitability

FinancialsFinancials

Revenue(Excl.

Hook up)

~$575M ~$270M

~$190M

Net SAC

Cash~$115M

Including 38% subscriber growth in 2013, the Pre ‐Paid business generated over $100M of cash

FlexibilityFlexibility

Retail Stand

Packages structured to fit

different realities

Self or professional installation optionsVacation vs. residential offerOne or two box solutionAvailable in retail store and door ‐to ‐door

7 Years of Experience7 Years of ExperienceConstantly revising promotional action to increase recharging frequency and number of connected days

Significant opportunity for additional economies of scale, mainly in recharge commissions

High customer satisfaction

42





45

Accelerating Growth Outside Argentina and Venezuela

EOP Subscribers

2010Actual

2011Actual

2012Actual

2013Estimate

CAGR 11 ‐ 13

Argentina 1.2M 1.6M 2.1M 2.3M 22%

Venezuela 1.1M 1.2M 1.5M 1.7M 16%

Other Markets 1.0M 1.3M 1.7M 2.2M 32%

PanAmericana 3.3M 4.1M 5.3M 6.2M 24%

PanAmericana

Significant growth in Other MarketsChile, Ecuador, Peru and Colombia all grew more than 30%Uruguay led the way with ~50% growth in 2013

Other Markets represent more than 1/3 of PanAmericana

45

46

Size of the Opportunity Remains Large

2013 PanAm. Other Markets (1)

Total Households 55M 34M

Pay‐TV Households 24M 11M

Pay‐TV Penetration 44% 32%

DTV Market Share 26% 20%

DTV Subscribers 6.2M 2.2M

Low Pay‐TV penetration

Large territory representing ~60% of PanAmericana Households

Favorable GDP growth expectations in Peru, Chile, Colombia, Ecuador

Recent growth drove DTV to improve its market position in Ecuador and Uruguay to #1 and #2

High ARPUs

in

Chile,

Caribbean,

and

Puerto Rico

Colombia size and broadband opportunity

Other Markets (1) ProfileOther Markets (1) Profile1

1‐ Other Markets exclude Argentina and Venezuela

VenezuelaVenezuela

Solid #1 with 43% share

Growth using local funds

Increase shared services to export to other markets

PanAmericana46



47

Conclusion

We are adapting the business to the changing macro environment

Growth

Delivering Results

Market

We continue to be in the best position to capitalize on the Pay‐TV growth opportunity in the region

At our Investor Day in 2012, our 5 year vision was to double our subscriber base to 8M+ by the end of 2016

PanAmericana

We are confident we will meet or exceed this vision

47

Luiz E. Baptista da RochaGeneral Manager, SKY Brasil

SKY Brasil



49

Moderating growth and increased political uncertaintyInflationary pressure and depreciation versus dollar

Accelerating growth in mass marketConverging competition on mass marketA/B segments still offer potential penetration gainsDTH is advantaged and consumers aspire to SKY

On track to profitably deliver subscriber base of ~8M in 2016

Key MessagesFrom 2012 Investor Day

Evolving Market Conditions

EconomicEconomic

VisionVision

MarketMarket

Present View

Strong economic growth

Competition focused on low ‐end Emerging middle classOnly provider with pricing options for 100% of marketPenetration gains available in A/B householdsDTH is advantaged and consumers aspire to SKY

Profitably double subscribers from ~4M in 2011 to ~8M in 2016

Brasil

Mid‐teen revenue growth with ~30% OPBDA margin in 2013

Mid‐teen revenue growth with ~30% OPBDA margin in 2013

49 All figures exclude ECAD settlement in 2013

50

Competition most intense at lower price points. Every competitor sells bundles including quad ‐plays

America Movil‐owned Net Serviços is the largest cable company and also markets DTH under the Claro brand

Oi, majority owned by Portugal Telecom, sells DTH and mostly DSL broadband

Does not sell video and data in São Paulo state, but has nationwide mobile

Telefonica losing video market share yet strong in mobileFocused on the growth around Rio de Janeiro and São Paulo Expanding fiber footprint in majority of São Paulo, Rio De Janeiro, Brasilia,

Curitiba, Porto

Alegre,

Recife

and

Salvador

GVT expanding fiber ‐to ‐the ‐node build outMoving into São PauloOnly offers HDPossible video JV with EchoStar

Competitive Overview

Brasil 50



51

SKY is the market leader or second strongest competitor in all states

Market Leader Sep 2013

14

7

6

SKY’s Strong Market Position

Overall Market Share

Mar 2012

Sep 2013 YoY

30% 30% ‐

36% 33% ‐3pp

19% 20% +1pp

3% 5% +2pp

1% 3% +2pp

5% 3% ‐2pp

12

8

7

National State Level

Grey figures represent market share as of March 2012.

Brasil 51Source: ANATEL

52

• HD Content Leadership• Interactive Mosaics

• La Liga• UEFA Champions League• Premiere FC

• FIFA World Cup South American Qualifiers• ATP 500 Tennis – 11 Tournaments, ~77 games per season• NBA – League Pass and Basic Games

RUGBY

Exclusive and Differentiated Content Initiatives

Exclusive Sports Content

Enhanced Viewing Features

Strategic and Original Content

Brasil 52



53

Continued Leadership in Service2012

Highest brand awareness in

Pay‐TV services (‘11)

“Sales Machine” – 1st place / case of the year

Customer service training – 1st place

Customer Service Executive of the year

2003 ‐ 2011

Best Customer Service incommunication industry (‘03‐’11)

Best Service Company of theDecade (‘11)

Company Most Respectful of Consumer – Pay‐TV category (‘11)

2013

Best Service Company of the Year

Company Most Respectful of Consumer in Brazil

Highest brand awareness

in Pay‐TV services

Highest brand awareness

in Pay‐TV services

Best Customer Service incommunication industry

Best Service Company of the Year

Social Network – 1st place and case of the year

Innovation – 1st place

Loyalty Program – 2nd place

Social Network – 2st place

Segmented Communication – 3rd place

Brasil 53

54

Over the next decade the Brazilian upper and middle classes are expected to grow by 40M+ consumers

Source: World Bank / Data Popular Institute / Boston Consulting Group / Exame magazine, ed 1055, Dec 2013

Social Mobility Will Continue in the Next Decade

49%

24%9%

38%

54%

58%

13%22%

33%

2003 2013 2023

Class D/E Class C Class A/B

86M

48M20M

125M

109M

67M

23M 44M71M

Numbers represent millions of people

Brasil

2013 2023

Class A/B 44M 71M

Class C 109M 125M

Total Upper/Middle Class 153M 196M

Growth Over Next Decade 40M+

54



55

Continued Subscriber Growth

Gross additions remain strong, reflecting SKY’s market leadership

Advanced Products grew more than 10% YoY

2.5

3.8

5.0

2010 2011 2012 2013

5.4

Gross Additions

Brasil

Ending Subscribers2013 churn trends improving

Churn reductions led by improvements in segmentation and changes to sales filters

Launching new

products

to

target

cash

‐paying

mass

market customers

28% CAGR

1.0

1.92.1 2.1

2010 2011 2012 2013

55

E

E

56

Leading the Migration to HD

18 Transponders

2 0 1 3

HD Channels*

Player 2011 2013

39 55

34 53

‐ 50

32 50

23 43

34 41

*Paid + FTA

60 Transponders

2 0 1 6

Satellite launch in 2016 will increase our HD capacity ~10x

We have the premier HD‐DVR box in the market today Low‐cost HD box introduced in 2013 Brasil 56



57Brasil

What’s Next – Mass Market Opportunity

SD regular price HD regular pricePromotional offers

Historically competed in mass market with traditional Post ‐Paid product

Segmentation to address growing mass market with dual sales model

Post ‐Paid (lease model): Build on existing leadership

Pre ‐Paid (sales model)Better serve growing C/D segmentsReduced financial risk and commitment

Leverage Pre ‐Paid success in PanAmericana and Live experience

Opportunity to complement existing packages with Pre ‐Paid model

57

58

Key Features

Mass Market Options

Consumer owns equipmentFTA channels onlyNo monthly payment required~1.5M users today*

Consumer owns equipmentFTA channels + FIT or LIGHT programming packagesDiscounted pricing offered in return for 12 month pre ‐pay (“Turbo”)

Consumer must be a SKY LIVRE userPre ‐pay intervals from 15 days to 12 monthsOver 12,000 recharge locations, or on ‐line (credit, debit card or cash)

Brasil

Objective

Originally designed to address the large C‐Band

market

Target the mass market with access to credit

Provides LIVRE users the ability to access Pay ‐TV on

their schedule

* Not reported as Pay ‐TV subscribers 58



59

What’s Next – Product Segmentation

• Streamline Post ‐Paid product offers

• De‐emphasize cash offers for Post ‐Paid

Sales (Post ‐Paid)

• Create new offers for SKY LIVRE users (e.g. LIVRE TURBO)

• Expand recharge network across the country

Pre ‐Paid Products(SKY LIVRE)

• Maintain current churn rates for credit/debit card subscribers

• Upgrade qualified SD subscribers to lower priced HD offers

• Encourage cash paying Post ‐Paid to migrate to SKY LIVRE (Pre ‐Paid)

Churn

Today December 2014

Brasil 59

60

• Even better positioned to lead in the advanced products market with a more diversified offering for the growing segments

• Broadening offers across price points and products• Expanding customer service to enhance customer experience

• Potential short ‐term challenges but fundamentals remain attractive over the long term

• Meaningful opportunity, including growing mass market

AttractiveMarket

Evolving to

Market

Conditions

Summary

Brasil

• Premier Pay‐TV Brand• Extend leadership in distribution, capacity, HD, technology and service• Strong financial performance in 2013

Pay‐TVLeadership

On track to profitably deliver subscriber base of ~8M in 201660





63

Learnings So Far

Subscribers with DIRECTV Net vs. Pay‐TV Only in Argentina

Advanced Products + 15.0%

Pay by Credit Card + 14.0%

Late Payments ‐ 8.0%

Client Churn (2013 average) ‐ 0.4%

ARPU + $32.0

There is substantial room for growth in the

residential broadband market in Latin AmericaFixed Internet Household Penetration Rates (above 2 Mbps): ─ Colombia: 17% ─ Brazil: 20% ─ Argentina: 28%

Many areas with DIRECTV/SKY subscribers served by none or just one broadband providerCustomers dissatisfied with current service providers based on NPS studies

Customer demand for DIRECTV’s broadband service is strong

Service competes effectively against cable, DSL and other wireless offeringsObtained 20%+ Internet market share and ~30% penetration of DIRECTV Post ‐Paid base in initial market in 3 years

Source: Cisco Broadband Barometer as of June 2013

Broadband Customers

are

Quality

Subscribers

63

64

Two Pay‐As‐You‐Go Deployment StrategiesLTE• LTE Market Characteristics

• Underserved by existing fixed broadband operators

• Strong DTV/SKY presence• Typically on city outskirts

• Supports speeds of ~10 Mbps

LTE• LTE Market Characteristics

• Underserved by existing fixed broadband operators

• Strong DTV/SKY presence• Typically on city outskirts

• Supports speeds of ~10 Mbps

Broadband to the Building• Deploy to “clusters” of apartment buildings using

a combination of technologies• Supports speeds competitive with fiber

(50+Mbps)

Broadband to the Building• Deploy to “clusters” of apartment buildings using

a combination of technologies• Supports speeds competitive with fiber

(50+Mbps)

64



65

Recent/Upcoming Launches2.5 million H.H. covered in Brazil by Q1 2014

5‐8 million homes in

Argentina, Brazil, Colombia and

Peru

Source: IBGE 2010 and SKY DataCare 65

Projected YE 2014 Latin America

coverage :

66

Broadband Plan Highlights

2016

Subscribers~1M

Revenue~$250M

Cumulative Network Investment: (2)

~$300M

2019

Subscribers~2M

Revenue~$600M

Cumulative Network Investment: (2)

~$500M

Note: Includes Brazil, Argentina, Colombia and Peru(1) Excludes benefit to Pay ‐TV business(2) Excludes spectrum costs

ARPU

~US$25

ARPU

~US$25

OPBDA Margin

45% – 50%

OPBDA Margin

45% – 50%

IRR (1)

Mid 20%

IRR (1)

Mid 20%

66



DIRECTV Latin AmericaFinancial OutlookFazal MerchantChief Financial OfficerDIRECTV Latin America

68

Market leader in the regionFull range of offeringsTrack record of strong executionExperienced leadership team

DTVLA Competitive Advantages

Lowest cost delivery platform for videoScalable/National and PanRegional coverageNegotiating strengthLower equipment costSignificant time to market advantageProgramming leverage/shared content

Scale & Synergies

Advanced Technology

SKY Brasil awarded the Brazilian equivalent to the J.D. Power for 11th consecutive year and “Best Service Company in any industry.”

DIRECTV Chile and DIRECTV Colombia also received accolades

Source: Anatel , ANTV and Subtel regulators

Outstanding Customer Service

Proven Strategies & Management TeamDistinctive ContentPrivileged Content

Strong Brands

68



69

Households ~117M

Pay ‐TV Penetration 36%

Pay ‐TV Subs 42M

DTVLA Subs 11.6M

DTVLA Share 28%86%

54%

28%

9%12%

35% 36%

17%

A B C D/E% Pay‐TV Penetration % of Pay‐TV HH's

95%

54%58%

30%

2% 11%

27%

60%

A B C D/E

% Pay‐TV Penetration % Pay‐TV HH's

Fundamentals Support

Further Growth

Latin America is an Attractive Market

Low Penetration Mass Market

OpportunityBalanced Growth

(A/B HH’s)

69

SD28%

AP31%

Mass Market41%

Note: All figures exclude Mexico

2013 EOP Subscribers

PanAmericana

SKY Brasil

70

Partnership in Mexico is an Important Component of DTVLA

SKY Mexico

Key Metrics 2012 2013E

Revenue $1.1B ~$1.2B

OPBDA $0.5B ~$0.5B

OPBDA Margin 46% ~46%

Gross Additions 2.0M ~2.0M

EOP Subscribers 5.1M ~6.0M

41% unconsolidated stake in SKY Mexico

Strong partnership with Televisa

Significant subscriber growth with Pre ‐Paid VeTV offering (~70% of base)

Growth in Post ‐Paid with introduction of low ‐end HD offer

Attractive programming and operating margins

Low Pay ‐TV penetration and attractive growth

70



71

Key Financial Priorities

71

Continued improvement in ROIC and cash flow while preserving marginAggressive pricing to balance inflation with local competitive realitiesEnsure profitable subscriber model (strong IRRs)DTVLA largely self ‐funded in 2014Generate significant accessible cash flow in 2016

Invest in Accretive Growth

Rigorous Cost & Risk

Management

Financial Discipline &

Focus on Returns

Profitably expand

across

all

demographic

segmentsUpgrade and retention efforts focused on profitable subs

Success ‐based investment in broadbandOpportunistic use of illiquid currencies

Leverage ScaleContain programming and technology costsIncrease focus on harvesting efficiencies across cost categories (G&A, Subscriber Services, other) to drive strong OPBDA and Pre ‐SAC MarginsMigration of select shared costs to Argentina and Venezuela, paid in local currency

72

24%

32% 33%30%

27%

17% 17%

21% 22%

19%

14%12%

2009 2010 2011 2012 2013 2014 2015 2016

CapEx % of Revenue

OPBDA Margin

ROIC

ROIC ex

Venezuela

DTVLA ROIC Trends Expected to ImproveOPBDA growth and moderating CapEx are projected to lead to improving ROIC as DTVLA

begins to exit the investment cycle necessary to sustain long ‐term growth

Latin America business is at a similar stage in its investment cycle as DIRECTV U.S. several years agoRecent heightened capital spending due in part to satellite ‐related infrastructure investments

Adjusted for differences in accounting treatment of SAC (CapEx vs. expense), DTVLA exhibits a ROIC profile similar to that of the U.S. business a decade earlier

72

25% Range

30% Range

All figures exclude Mexico, as well as Venezuela Devaluation and ECAD settlement in 2013



73

Revenue OPBDA CFBIT

2010 2013E

End of PeriodSubscribers

Strong Performance Despite Challenging Macro Conditions

Financial Summary

~24% CAGR

In US$ Billions, except subscriber data


~20% CAGR

~‐9% CAGR

~26% CAGR

5.8M

~11.5M

Investment in Growth

(~75% of CapExis Sub‐Related)

73

Revenue OPBDA CFBIT EOP Subscribers

$0.5B ~$0.9B $0.2B ~$0.5B $0.2B ~$0.3B 1.1M ~1.6M

~6.8B

~2.0B

3.6B

1.2B 0.4B ~0.3B

Memo: Venezuela

74

Revenue OPBDA CFBIT2010 2013E

Strong Local Performance Helps Offset Challenging FX Assumptions

74

PanAmericana (excluding Venezuela)

~8.5B

~2.7B

3.6B

1.2B

SKY BrasilDTVLA Consolidated – Excluding FX

2010 ‐ 2013

~0.8B0.4B

2013 ‐ 2016 Outlook (Excluding FX)

Targeting ~8M subscribersRevenue

Low double ‐digit revenue growthManaging churn remains criticalModestly lower ARPU from mix offset by price increases and upgrades

OPBDAMargins stable as operating efficiencies offset higher programming costs

CFBITCapEx to remain relatively flat and CFBIT to increase significantly

Targeting 6M+ subscribersRevenue

20%+ growth due to continued subscriber growthModestly lower ARPU from mix offset by price increases and upgrades

OPBDASignificant margin expansion from increased scale and operating efficiencies

CFBITCapEx to remain relatively flat but significant improvement in accessible cash flow

~33% CAGR

~35% CAGR

~26% CAGR




75

Currency Headwinds Have Impacted Prior Vision

75

Prior 2016 Vision

DTVLA Excl. FX ImpactTotal Subscribers 16M+ Exceed

Revenue $10B+ Exceed

OPBDA/Margin $3B+ Exceed

Annual CapEx $1.6B In‐Line

New 2016 Vision

DTVLA Excl. Ven Consensus (Incl. Ven)

16M+ 14M+ 15.3M

$8B ‐ $9B $7B ‐ $8B $8.6B

~30% ~30% 30%

~$1.6B ~1.5B $1.6B

Brazilian Real, Venezuelan Bolivar Fuerte and Argentine Peso assumed to depreciate ~20%, 75% and 100%+ by the end of 2016, respectively*While our long term outlook remains strong, 2014 will be pressured by:

Currency Assumptions2013 ECAD SettlementWorld CupLaunch of Pre ‐Paid in BrazilBroadband ExpansionCapacity Expansion

However, we expect significant improvement in Cash Flow starting in 2014 and accelerating through 2016

*Based on October 2013 spot rate per Bloomberg vs. Goldman Sachs and Citibank October Forecast for 2016

76

Positioned for Long Term Success

Extend Technology Leadership

Leverage infrastructure Investments to Deliver the Best Customer Experience

Differentiated, Exclusive Content and Readiness in OTT

Success ‐Based Investment in Deployment of Broadband

Grow Profitably in Mass Market and Advanced Products with Best Offering Across Segments

76



Q&A

Technology RoadmapRômulo PontualExecutive Vice President& Chief Technology Officer




79

Strategic Imperatives

Leverage our hybrid satellite / cloud technology platform

Offer the most compelling entertainment experience inside and outside the home

Enable incremental sources of revenue

Preserve low cost structure and drive efficiencies

80

Leverage Hybrid Technology to Enhance Experience

Hybrid satellite / cloud delivery Dramatically increase content variety from TV & Web

Today: Future:

Efficient delivery of SD / HD content Ultra HD with more immersive experience

TV in home via set ‐top ‐box Wireless TV and ubiquitous distribution on mobile devices

Best user experience Dynamic and personalized user experience



81

Hybrid Delivery Network is Competitive Differentiator

High quality video and audio

Efficiently delivering live‐TV

Pre ‐load DVR (cache)

Most viewed PPV movies

Recommended shows for on ‐demand viewing

Agile national software updates

Rely on four CDN providers with fail safe technology

Expanded content variety

Providing in and out ‐of ‐home streaming

90% of usage is for VOD on the big screen

Two screen experience reliant on synchronous satellite and cloud experience

Satellite Cloud

82

Continuing to Innovate our Technology

Increase satellite capacity to further differentiate our service

2 satellites under construction(2014 / 2015 launch)New capacity significantly increases HD channel capacity and we are well positioned for UHD

Innovate with personal recommendations to increase in‐home caching efficiency

Leverage cloud to dynamically update the user interface

101

103

Optimal Orbital Slots



83

Consumer’s Video Viewing Trends Evolving

The TV is King Connected Device Penetration Growing Mobile is Here

94% of video consumption on the TV

500M connected devices

41M consumers watching mobile video

84

Advancing the Consumer Experience

Enhance video & audio

Extend support to larger screens

Explore viewing enhancements

Personalize the interactive experience

Increase content availability

Extend coverage to most mobile devices

Integrated User Experience

Big Screen Multi ‐screen Mobile



85

Built a Premiere Experience on the Big Screen

Our most advanced HD DVR ever

User Interface is second to none

Unique search & recommendations

Quadrupled connected homes since

2010 (increasing ARPU)

86

Embracing the extension of our service to all screens

Launched DIRECTV Everywhere

20M+ app downloads

95% mobile device coverage (Android, iOS, Kindle)

Feature rich(streaming, flip to TV, social, discovery)

Robust streaming infrastructure

with dynamic

ad

insertion

Full second screen experience with increased social engagement and commerce capabilities

To (Today):

3M app downloads

3 devices supported

Basic features(DVR scheduler)

Nascent infrastructure

From (Dec. 2010):





89

Streaming technology is ready to support large expansion, including individuals that cannot subscribe to DIRECTV

The Ultimate Multi ‐screen Experience

Highest quality

live

streaming

Instant highlights and alerts

Fantasy integration

Play ‐by‐play statistics

Moments for social interactivity, including

real time

polls

90

Future of DIRECTV Everywhere

Secure more content anddeliver anytime, anywhere

Ubiquitous authentication on consumer devices

Launch Startover / Lookback

Leverage technology to enable new services (Digital Locker, SVOD, EST, OTT)



91

Enhanced User Experience Across Screens

New STB UI

Personal experience

Smart search

Social integration

We Promised We Delivered

Benchmark UI for Pay TV

Unified look and feel across TV and mobile

Leading TV search & recommendation engine(most robust sports discovery portal)

Social integration across major social networks

92

Integrated and Unified UI Across Devices

TraditionalChannel based UI

ModernShow based UI

PersonalYour data based UI

Targeted PPV

Dynamic row ads

Predictive viewing

Discovery habit

Social

Based on individual experience

Three ‐prong solution enhances consumer experience



93

Leader in Discovery of Sports Content

All sports in one convenient location

“My Teams”

Record season

Statistics

Personalized experiences for sports discovery

94

Embracing and Extending Consumer Home Ecosystem

Contextual search

Enhance personalization & social integration

Natural user interactions:Voice as integral part of experienceNew devices: Glasses and watch

Flip viewing between devices

Great opportunity to continue to build upon the user experience



95

TV “Incremental” Share of Wallet New Segments

Enable Incremental Sources of Revenue

Advertising Home Security Lodging & Institutions, Restaurants, MDU

Dynamic ad insertion

Monetize viewership data

Adjacent to core businesscreating synergiesExpansion opportunity to home automation

Compelling features for commercial useCost effective distribution system

96

Reducing SAC Costs Reducing Upgrade Costs Reducing Service Costs

Drive Cost Efficiencies with Reliable Infrastructure

STB cost reductions

Wireless distribution

Broadband connectivity

More efficient installations

STB cost reductions

Lego architecture

Reducing truck rolls

Self ‐service web platform

Proactive maintenance



97

Synergies: Competitive Advantages Extend to DTVLA

DIRECTV U.S. and DTVLA combine to be the largest pay TV platform in the world providing unmatched scale in technology, content and management

Significant tangible benefits:Lower equipment costs (HD, HD DVR)

Differentiated products and services

Significant time ‐to ‐market advantages

Broadcast centers, satellite procurement and operations

Shared IP and services

Uniquely positioned to leverage shared learnings and technologies

98

In Summary

Satellite / cloud hybrid delivery

Integration with mobile lifestyle

Robust solutions for new

revenue streams

and

product efficiencies

World class customer experience

1) World class Whole Home DVR2) Personal Anytime, Anywhere experience3) Advanced user interactivity

1) ‘Beach front’ orbital slots designed to support full transition to HD and UHD

2) Distribution technology with proven ROIC3) Leverages satellite delivery, connected devices & cloud

Efficient in‐home / out ‐of ‐home streaming to 95% of consumer connected mobile devices

1) Advertising, home security, commercial

2) Provide

reliable

infrastructure

to

reduce

SAC,

Upgradeand Service costs



Transforming the Customer ExperienceMike PalkovicExecutive Vice President, Customer Operations


100

Customer Service Strategy

EnablersIntegrated Customer Data Analytics | Rapid Test & Learn Lab | Empowered workforce

Winning customerloyalty for life and making customer service a

competitive advantage

Significant care and field capability to efficiently service 20m customersBest customer service in industry beating cable competitors 13 years

running

Consistent Service Delivery

Invest in our best customersOptimize end ‐to ‐end customer journeys Empower customers through self ‐service Engage and empower our frontline through lean management methods

Increase Customer Loyalty

Eliminate unnecessary call volume and truck rollsLeverage technology to drive improvements in productivity

Improve Productivity and Efficiency



101

Call Center

Operations

Field Service Operations

Consistently Delivering a High Level of Service Today

Answer > 80% of calls within 30 seconds

Post call agent CSAT of 77

Rated higher than cable on ACSI Overall Satisfaction for 13 years in a row

Capacity to complete installs in < 4 days and service calls in < 2.5 days

95% appointment on ‐time arrival rate

Post visit satisfaction level of 96

16k Agents117M Calls38 Locations

15k Technicians110M Work Orders250 Locations

102

Optimized national footprint between Owned & Operated and Strategic PartnersInsourced 40% of field operations in order to improve customer service levelsBrought in‐house critical call types (e.g., retention, technical)

Heightened focus on ‘First Time Right’ mindsetDedicated service technicians program to reduce repeat service callsImproved call routing and diagnostic tools to optimize our first call resolutionEstablished quality control program to improve equipment reliabilityDeployed Install Verification technology to ensure quality thresholds are met at point of service delivery

Increased employee and management engagement Reduced frontline employee turnover by 50%Realigned internal and partner incentives to align with service and quality goals

Foundational Strategies to Improve Service and Productivity



103

Call Volume/Contact

Rate

Agent/Tech Churn, %

Service Truck Roll Volume/% of Base

Engagement Scores

1.51%1.38% 1.38%

1.0

1.5

2.0

0

1,000

2,000

3,000

4,000

Reducing Customer Contacts and Improving Employee Engagement

0.59 0.57 0.54 0.52

00.10.20.30.40.50.60.7

0

50,000

100,000

150,000

1211102009 2013E

0.63Contact rateCall volume

1110

1.59%

2009

1.83%

2013E12

Service % to baseService call volume

6154

4436 33

1211102009 2013E

82 76 82 83 86

2013E1211102009

Our focus on quality has reduced customer contacts…

And our employee focus has resulted in a more tenured, engaged workforce

2.0%

1.5%

1.0%

104

Supply Chain & Logistics

Service & Repair

Supply Chain Improvements

Service & Repair Improvements

8M boxes refurbished / repaired annually5k vendor employees in 5 locations in U.S. and near shore

Warranty Plan >9M customers with ~$900M in Annual Revenue

Recover >9M boxes annually, 84% Recovery of disconnects

Purchase 10M new boxes annually

Total inventory purchased is ~125M pieces and $1.9B in value

Improved Equipment Reliability at Reduced Costs

40% reduction in equipment failure rates

Expanded Warranty Plan with launch of Premier Protection Plan

Reduced OEM equipment pricing

Reduced warehousing and freight spend

> $120M reduction in inventory working capital



105

Technology Investments Will Further Drive Effectiveness & Efficiency

Call Center ‐ Active Decision Engine:Targeted customer treatments based on call intent and customer historySimplified agent experience, call type consolidation, increased first call resolutionIncreased customer value , close rate, upsell

0.24%

0.15%

0.91%

$85M/yr. AdditionalUpgrade Customer

Value

$27M/yr. ChurnReduction

$16M/yr. PremiumUpsell

Field Service ‐ Dynamic dispatch:Improved flexibility through convenient schedule windowsImproved on time arrival through dynamic routing based on traffic, weather etc.Targeted prioritization of work based on competitive markets, high value and high risk customers

9%Improvement in Tech Productivity (Work Order/Day)

Reduction in fuel consumption/

work order18%

106

Our Service Strategy Has Resulted in Significant Savings Being Realized

$400M care costs$300M tech costs$60M fuel costs

$25M lower insurance spend$20M employee costs

$1.5B cash savings$400M equipment spend reduction$60M replacement costs

18% reduction in contact rates 25% reduction in service call rates Improved routing and investment in alternative fuel vehicles Investments in technician safetyEmployee churn reduction

On‐going recovery and repair of STBs Reduced equipment pricing and improved product design Improved quality of equipment

SavingsArea

Call Center & Field Service

Operations

Logistics & Repair





109

Improved Self ‐care Drives Productivity

Simplify Offers

and

Billing Increase

Loyalty

Through

Targeted

Upgrades

Impact

5% reduction in YOY contact rate

20% reduction in YOY escalations

58% take rate for Enhanced Protection Plan

Increased product engagement ‐ 40% of base on Whole Home DVR platform

Streamlining Policies to Become Easier to Do Business With2

110

Continuous Improvement System

Behavioral Thematics New Normal Tactics

Supporting Environment

Empowering and Enabling the Frontline

5 6 87

1 2 3 4 Focus on workforce engagementPerformance based incentives

Lean ‐based Continuous Improvement Management System

3



111

Frontline Video3

112

New Foundation for Enhancing Customer Experience and Driving Productivity

Source: SATMETRIX Net Promoter Industry Report 2011 ‐2013Care / Field NPS vs. 2012

Net Promoter Score

11.8m Fewer Calls

+12pts NPS

+7pts Care Service NPS

2 bps

+9pts Field Service NPS

Productivity

Churn

20% Reduction in Customer Escalations

Contribution to Churn Reduction



Revenue & MarketingPaul GuyardoExecutive Vice PresidentChief Revenue & Marketing Officer


114

Drivers of Pricing Power and Subscriber Growth

Differentiated Technology, Content and Service

World ‐ClassAdvertising & Marketing

TargetHigh‐Value Customers



115

Escalating Programming Costs

Aggressive Competitors

Challenging Environment

Increasing Customer Expectations

Emerging Disruptors

116

Market Performance

0.0

1.0

2.0

3.0

4.0

2008 2009 2010 2011 2012 2013E

C u m e N e t A d d s

DIRECTV continues to add share despite the emergence of Telco TV and heightened cable triple play value proposition

DTV Churn 1.47% 1.53% 1.53% 1.56% 1.53% 1.51%

3.5M

0.4M

DIRECTV

All Other Pay TVCombined







121

Investing in High‐Value Customers

Continually optimizing

credit

scoring

drives

a better

demographic

profile

1 out of 3 callers interested in DIRECTV does not pass our credit requirement

PassedCredit

FailedCredit

Head of House – Age 52 42

Head of House – Male 50% 36%

Married 66% 38%

Home Owner 58% 15%

Years at Residence 11 5Income $73K $41K

122

Improved Segmented Offers

Upfront fee varies by credit risk Offsets SAC investment Requires “skin in the game”Filters out lowest value prospects

Passed Credit

Low Risk Medium Risk High Risk

Failed Credit

Upfront Fee $0 $99 $199

Hardware Genie + 3 Rooms

Promotional Price $29



123

Strategic Shift

Acquisition Retention

2011

3X ROI

Upgrades

Lower Value

Higher Value

Other Retention

Shifted investments from lower ROI Gross Adds to higher ROI upgradesChurn down 5 bps from 2011 to 2013

2013

2011

2013

+$300M

‐$300M

124

2010 2011 2012 2013E

100

110115 115

Quality vs. Quantity

15% higher total new customer value with 7% fewer gross adds

Total NEW Customer Value (Indexed)

Lifetime Value per Gross Add(Indexed)

100 105123 125

4.1 4.33.9 3.8Gross Adds (M)



125

Improved Subscriber Base

Superior advanced ‐service penetration (DIRECTV 80% vs. Comcast 56%)

2010 2013

Advanced Products 67% 80%

Whole ‐Home DVR 5% 40%

Connected Home 5% 25%

Auto Bill Pay 22% 37%

On Commitment 52% 59%

EXISTING Customer Value

(Indexed to 2010)

100 112

126

Voluntary Churn by ARPU

Note: Excludes first year subscribers on promotional offer.

10% 10%

20% 20%

15%

25%

‐

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

<$50 $50 ‐$70 $70 ‐$90 $90 ‐$110 $110 ‐$130 >$130

80% of BaseVoluntary Churn

Sub Base by ARPU



127

Ad Sales

Commercial

Home Security

Incremental Revenue Streams

128

Addressable Business Has Momentum

DIRECTV Ad Sales ARPU has historically trailed the competition due to inability to sell locally

Our addressable platform closes that gap



129

130

Addressable Platform

4 of the 5 top advertisers in the U.S. are DIRECTV addressable clients



131

Traditional Ad BuyBuying Target: M25 ‐54 reach 114M M25 ‐54, but only deliver 14M impressions against the true target of $150K

True Target Reach: 14MBuy Efficiency: 12.3%

DIRECTV Addressable Buy Buying Target: M25 ‐54, $150K+ , All impressions are within the true target

Same Investment reaches more than 2x the true target audience

True Target Reach : 28.6MBuy Efficiency: 100%

M25 ‐54 M25 ‐54, $150K+

Eliminate the Waste

132

New Sales Approach

TV AgencyBuyers

TV AgencyBuyers

Direct to Client

Direct to Client

We have broadened our sales approach to grow the business



133

Data Expansion

Our capabilitiesData scientists dedicated to audience targeting and analytics for advertisers

Our offeringHousehold targeting through STB demos, behavioral attributes and external data partnersTrue incremental lift and ROI reporting Closed ‐loop feedback process for campaign

Our delivery

Reporting using Kantar/DIRECTView, Rentrak, Nielsen, and comScore dataCustom analytics for every client

134

Ad Sales Growth

2013 2014 2015 2016

~$550M

Revenue

~$750M



135

Ad Sales

Commercial

Home Security


136

Bars & Restaurants

Lodging &Institutions

Business/Private

Total Universe 750K 105K 3.5M (video relevant)

Location Share 15% 24% 2.7%

ARPU

$277 $1,001 $101LTV $3,814 $10,540 $1,046

Churn 1.31% 0.47% 1.50%

Commercial Segments



137

Hardware & Technology

Commercial Initiatives

Grow Market Share

Improve Revenue/Margin Higher mix of Bars & Restaurants and L&IReduced programming costs

Higher sports penetration (NFL, MLB, NHL)

Partnerships

DIRECTV Residential Experience

Commercial iPad App

COM2000Formerly LodgeNet

138

Commercial Growth

2016201520142013

$1B

Revenue

$1.2B



139

Ad Sales

Commercial

Home Security


140

US HH Penetration Rising from 20% to 26%

HighlyFragmented Market

LifeShield: Opportunity To Disrupt Security Market

Professionally Monitored U.S. HH

Traditional

34.4M

2013E

Interactive

2018E

3.6M

21.7M

14.2M

20.1M

25.3M

Source: Strategy Analytics

Growth driven by interactive features – web, mobile, video and home automation



141

Security Leverages and Complements Our Core

Elevated Experience and Bundled Savings

InstallationNetwork

National Brand20M Customers

Multiple SalesChannels

Advanced UI + System Features

Patented Technology

ProprietaryIP Platform

142

Home Security Growth

2016201520142013

$4M

2018

$300M

2017

Subs 17K 600K

*Does not include Latin America or Commercial opportunities

Revenue



143

Our Path Forward

Continue to innovate and execute core business with excellence

Further develop pricing & packaging for price ‐conscious segment

Generate significant incremental annual revenue within 3 to 5 years through Ad Sales, Commercial and Home Security

Develop additional revenue streams (SVOD, EST)

Explore alternative business models and lower ‐SAC solutions to expand beyond existing traditional subscriber base (OTT)

Play TV Commercials



DIRECTV U.S.Driving Sustainable Profitable GrowthPat DoyleExecutive Vice President and CFO


146

Driving Sustainable Profitable Growth

Our Consistent Track RecordDrive Value in the Core Video Business

Attaining Mid‐Single Digit Revenue GrowthFocusing on Higher Quality and High LTV Gross AdditionsTargeting High Return Upgrade and Retention OffersEffectively Manage ChurnDriving Average Margin per User GrowthAggressively Manage Costs

Generate Incremental Ancillary Revenue StreamsCommercial

Ad‐SalesHome Security Monitoring

SVOD/EST/OTTEfficient Capital Allocation

Driving strong ROICHow we measure Financial Success



147

(1) Operating Profit Before Depreciation and AmortizationNote: DISH excludes Blockbuster; DISH OPBDA excludes litigation expense, settlements and impairment charges; CMCSA growth rates include only the cable segment ; 2013E reflects Wall Street Consensus estimates

DIRECTV U.S. – A Consistent Track Record

Year ‐over ‐Year Revenue Growth2010 2011 2012 2013E CAGR

DTV U.S. 8.6% 7.9% 6.2% 5.8% 7.1%

DISH 8.4% 3.4% 0.8% 3.4% 4.0%

CMCSA 4.4% 5.3% 6.4% 5.6% 5.4%

TWC 5.6% 3.7% 4.0% 2.5% 4.0%

CHTR 4.3% 3.5% 4.2% 4.0% 4.0%

Year ‐over ‐Year OPBDA(1) Growth2010 2011 2012 2013E CAGR

DTV U.S. 11.3% 1.4% 6.9% 7.1% 6.6%

DISH 17.2% 11.9% ‐16.3% ‐3.9% 2.2%

CMCSA 4.5% 6.9% 6.3% 5.7% 5.8%

TWC 5.9% 4.7% 3.7% 1.0% 3.8%

CHTR 4.1% 4.9% 1.3% 2.8% 3.3%

With a Proven Strategy and Strong Execution, DIRECTV U.S. has

Consistently Generated

Industry

Leading

Revenue

and

OPBDA

Growth

First Quartile

Performance

Brand

ProvenStrategies

Operational Discipline

Strong BalanceSheet

SolidManagement

Team

148

Key Factors and Trends Impacting Revenue Growth

DIRECTV’s Base Skews Toward Higher Valued Subs

Attaining Mid ‐Single Digit Revenue Growth

Increasing TrendsTargeted/responsible price increasesReduced credits and discountingHigher Genie/HD DVR penetrationGrowing ancillary revenuesModest subscriber growth

Decreasing TrendsMacro ‐economic factors“Good Enough” TV (cord cutting/shaving)Aggressive bundle offersStand alone broadband pricing

Pricing Power From Premium Value Service and Ancillary Revenue Streams Will Generate Sustainable Revenue Growth

ARS = Advanced Receiver Fee; EPP = Enhanced Protection Plan

ARPU Growth Driven From Many Sources

Credits

AncillaryOther/EPP

Base PackagesARS / Lease Fees

2010 2011 2012 2013E 14E ‐ '16EAvg

20% 20%

35%25%

0%

10%

20%

30%

40%

< $70 $70 ‐ $90 $90 ‐ $130 $130+

Excludes subscribers on first year promotions

ARPU

~5%



149

Focus on Higher Quality Gross Additions Advanced Product Penetration

Benefits of Higher Quality SubscribersDIRECTV U.S. Subscriber Highlights

Higher Quality Gross Adds

Over index in key areasIncome >$60K College EducationHome Ownership

Geographically diverseBroadband penetration consistent with national averages

Higher Quality Subscribers Drive Greater Value

and More

Sustainable

Growth

Purchase more programmingHigher end packagesPremiums/PPV/Sports

Less price sensitiveLower propensity to churnDemand premium experience in/out of home

20M+ Total Subs

(2013E)Commercial

SD

SD DVRHD DVR

HD

93% 93% 95% 97%

7% 7% 5% 3%

2010 2011 2012 2013E

Lower Risk

Higher Risk

150

Higher Cumulative Value Generation With Lower Gross Additions and Higher SAC

HD DVR Provides Best Experience Driving Highest ARPUs and Lowest Churn

Key Factors and Trends Driving SAC

Increasing Lifetime Values (LTVs) on SAC Investment

Increasing TrendsHigher demand for advanced servicesHigher commissions targeting higher quality subsCompetitive environment/economyStrategic initiatives

Connected HomeLifeShield® (Home Security Monitoring)

Lower Gross Additions

Decreasing TrendsSet ‐top ‐box/dish cost reductionsHigher box recycling/refurbishmentLower SAC solution/OTTNew technologies

RVU/built‐in WiFiWireless modem/video

Relative LTV

U.S. Gross Additions (M)

Relative Value Creation (LTV x Gross Adds)

Churn is ~40 bps lower than non ‐HD DVR Sub ARPU is nearly $30 higher than non ‐HD DVR Sub 67% of gross additions and 2M existing subs upgraded to an HD DVR in ‘13

Prioritizing Investment on Higher Valued Subscribers Drives Greater Financial Returns While Focusing on Lowering SAC per Gross Addition

100 110 115 115

4.1 4.3 3.9 3.8 100 105 123 125

2010 2011 2012 2013E



151

Upgrades Yield Stronger Returns and Value

Increase in Cash Upgrade Spend Driven by HD DVR Upgrades and EPP Program ($B)

Key Factors and Trends Impacting Upgrade and Retention Spend

Increasing Value Through Upgrade Investments

Increasing TrendsHigher demand for advanced servicesStrategic initiatives

Enhanced Protection Plan (EPP) and Loyalty ProgramsConnected HomeLifeShield® (Home Security Monitoring)

Timing of switch to all HDCompetitive environment/economy

Decreasing TrendsSet ‐top box/dish cost reductionsHigher box recycling/refurbishmentGreater penetrations of advanced gross addsReduced offers for lower quality customersNew technologies

Other RetentionMovers

HD DVR UpgradesOther Upgrades

Gross AddCut‐off

Average Upgrade

Experience Upgrade*

Investment $850 $300 $400

Relative LTV 100 300 600

* Experience Upgrade Constitutes an HD or higher Upgrade from SD

Focusing on Most Tenured Customers through Upgrades

and Segmented

Offers

While

Maintaining

Overall

Spend

Levels

2010 2011 2012 2013E

$1.9

$0.4

152*Rating in response to the question: “Would you refer a friend or family member to the DIRECTV service?” A 10 is the highest willingness to refer, with a 1 being unwilling to refer.

Subscribers On Commitment, Auto Bill Pay and with HD DVRs Continues to Climb Key Factors/Trends Impacting Churn Rates

Effectively Managing Churn

Increasing TrendsCompetitive environment

Aggressive Bundle OffersAffordable Alternative Options (Cord cutting)Increasing importance of broadband offersDeclining DSL Subscribers

Macroeconomic factors

Decreasing TrendsHigher quality gross additionsIncreasing HD and Advanced Service PenetrationsTelco Fiber Rollouts SlowingFocus on NPS

Industry Leading – and Improving – Churn Rates Driven by Advancing the Customer and Entertainment Experience

Along with Investing in Higher Quality Subscribers

Average Voluntary Churn by Willingness to Refer*

On Commitment

On Auto Bill Pay

With HD DVRs52%59%

22%

37%32%

58%

2010 2011 2012 2013E

1 2 3 4 5 6 7 8 9 10

2.6%

1.5%

0.6%



153

Total Programming Costs

Programming Margin Dollar Growth Continues to Contribute to OPBDA Growth

Key Factors for Growing Programming Margin Dollars

Growing Programming Margin Dollars

Generate mid ‐single ‐digit revenue growthTargeted/Responsible price increasesReduce credits and discountingHigher advanced services penetrationAncillary revenues

Mitigate programming cost growthSecure greater flexibility for tiering and packaging of contentLeverage DIRECTV’s size and attractive demographics

Obtain mobile and streaming rightsPrune/drop less popular channels when necessary Use set ‐top box viewing data to determine cost/value tradeoffs

Note: AMPU = Average Programming Margin per Subscriber

Although Programming Cost Growth Remains Challenging,

Programming Margin

Dollars

Continue

to

Contribute

to

OPBDA

Growth

12.3 12.9 13.3 14.0 $54 $55 $56 $58

$45

$50

$55

10.0

15.0

2010 2011 2012 2013

ProgrammingMargin ($B)

AMPU ($)

2013E

~$11B(2013E)

Other/Original Content

Sports &

RSNs

Premium & PPV

Basic Packages

154

Enhance Productivity and Effectively Manage Costs

Key Factors and Trends Impacting Other Costs

Aggressively Manage All Other Costs

Increasing TrendsInflation (pay increases/promotions)A larger and more complicated suite of offerings to sell/serviceSubscriber growth

Decreasing Trends

Simplify sales process and offersCross functional learning labs and continuous improvement capabilitiesRecent investments in IT systems, scheduling, training and decision toolsDisciplined cost containment culture

2010 2011 2012 2013E

Subscriber Services ($M) $1,340 $1,435 $1,464 $1,500

% of Revenues 6.6% 6.6% 6.3% 6.0%

Broadcast Operations ($M) $273 $300 $306 $300

% of Revenues 1.4% 1.4% 1.3% 1.2%

G&A ($M) $1,003 $1,046 $1,142 $1,200

% of Revenues 5.0% 4.8% 4.9% 4.9%

Total ($M) $2,616 $2,781 $2,912 $3,000

% of Revenues 12.9% 12.7% 12.5% ~12.1%

Targeting All Other Costs to Grow <3% Annually to Maintain Strong Margins



155

Substantial New Revenue Opportunities

Commercial

SVOD/EST/OTT

Home Security

Ad Sales

Ancillary Revenue Streams Will Likely

Add $1B

to

the

Top

Line

in

3

to

5

Years

156

70% of Our CapEx is for Set ‐top Boxes

and New Satellite Capacity (success ‐based)

Our Capital Spending as a % of Revenues is Significantly Lower than Cable

Driving Industry Leading ROIC – DIRECTV U.S.

PP&E

Set ‐top Boxes

Satellites

The Hybrid Model of Satellite and Cloud Delivered Content is the Most Efficient Model Driving Industry Leading ROIC

Industry Leading ROIC (LTM)

DTV U.S. DISH CMCSA TWC

31%

12%

6% 6%

Source: Company Filings

2010 2011 2012 2013E

TWCCMCSA

DTV U.S.DISH

13%15%

9%8%

62% 59% 54% 60%

31% 33% 31% 30%

7% 8% 15% 10%

2010 2011 2012 2013E2013E cable forecast reflects consensus from ZacksResearch



157

How We Measure Financial Success – DIRECTV U.S.

2012 ‐ 2013 2014 – 2016 CAGR

2014 – 2016 Consensus

Revenues ARPU

6%4.6%

Mid ‐Single Digit 4.4%

Programming ACPU

9%7.5%

7 – 9%

Acquisition and Upgrade Costs 0% Flat

G&A/Sub Serv/ Broadcast Ops 3% < 3%

OPBDA 5% Mid‐Single Digit 2.7%

CapEx (avg) $1.85B ~$1.75B ~$1.7B

Cash Flow (before Interest & Taxes) 15% High ‐Single Digit 6.6%

First Quartile OPBDA Growth Combined with Efficient CapEx Spend

is expected

to

Drive

High

Single

Digit

Increases

in

Cash

Flow

Before

Interest

and

Taxes

DIRECTV ConsolidatedDriving Shareholder Value



159

Agenda

DIRECTV Consolidated Strong Financial Track Record

Liquidity and Capital Management

DIRECTV’s Compelling Valuation

160

DIRECTV OPBDA Performance ($B)

2010 2011 2012 2013E

Consolidated Cumulative Subs (M) DIRECTV Revenue Performance ($B)

Diluted EPS ($)

DIRECTV Strong Financial Track Record

25.0 27.8

30.4 31.9

2010 2011 2012 2013E

$24.1 $27.2 $29.7 $31.6

2010 2011 2012 2013E

$2.30$3.47

$4.58 $5.15

2010 2011 2012 2013E

Over the Last Three Years, DIRECTV’s Performance Driven Culture has Delivered on Long Term Growth Targets and Generated Industry Leading Results…

$6.4$7.0 $7.5

$8.0

2013E Data reflects consensus estimates and excludes Venezuela devaluation charge for OPBDA and EPS



161

Share Price AppreciationCumulative Share Repurchase

Creating Significant Shareholder Value

810690

590530

$15.1$20.5

$25.7$28.9

2010 2011 2012 2013 Sept YTD

Since we began share repurchases in 2006, we’ve bought back 65% of the float

… And We Continue to Return Excess Capital to Shareholders

and Drive

Share

Price

Appreciation

Cumulative Shares Repurchased ($B) Shares Outstanding (M)

DTV +104%

S&P +62%

120%

100%

80%

60%

40%

20%

0%

(20%)Jan‐10 Jan‐11 Jan ‐12 Jan ‐13

162

Leverage Metrics and Liquidity Capital Deployment Considerations

Liquidity and Capital Management

DIRECTV Latin America investment and cash flow

Continue to evaluate strategic opportunities that could strengthen the core business

Invest in organic growthStrategic M&A

Continue returning excess capital to shareholders

Absent major strategic initiatives, expect $3.5 ‐4B of capital returned in 2014

Stable investment grade ratingsSignificant DIRECTV U.S. free cash flow generationLimited near term maturitiesBroad access to capital

Diversified global funding, including USD, GBP, and EUR capital marketsEstablished Commercial Paper program$2.5B undrawn revolver

2010 2011 2012 2013ETotal Debt ($B) $10.5 $13.5 $17.5 $19.3Consolidated OPBDA ($B) $6.4 $7.0 $7.5 $8.0Total Debt / Cons. OPBDA 1.6x 1.9x 2.3x 2.4xFree Cash Flow ($B) $2.8 $2.0 $2.3 $2.1

2013E data reflects consensus estimates

Strong Cash Flow Generation and OPBDA Growth Plus Prudent Capital Management Provide Ample Liquidity for

Investment and Shareholder Returns



163

DIRECTV’s Compelling ValuationDIRECTV’s Value to Growth Ratios Show an Extremely Attractive

Value Investment

Based

on

Analyst

Projections

Multiples and Expected Growth RatesDTV

Consensus CMCSA TWC DISH S&P 500

EPS Multiple 11.7x 16.8x 17.1x 29.2x 14.7x

EPS Growth 13.3% 16.4% 14.9% 14.8% 10.3%

PEG Ratio 0.9x 1.0x 1.1x 2.0x 1.4xEBITDA Multiple 6.3x 7.5x 7.3x 9.7x 8.1x

EBITDA Growth 4.3% 6.5% 3.7% 5.5% 7.4%

EV/EBITDA vs. Growth 1.4x 1.2x 2.0x 1.8x 1.1xFCF/Share Multiple 14.1x 13.9x 15.1x 25.1x 17.9x

FCF/Share Growth 29.7% 11.8% 10.3% 10.2% 14.3%

P/FCF per share vs. Growth 0.5x 1.2x 1.5x 2.5x 1.3x

ROIC 22% 6% 6% 12% N/A

All Multiples are based on 2014 EBITDA, Earnings and Free Cash Flow/Share consensus estimates; Growth rates are 2013 ‐2016 3‐Year CAGRs of consensus estimates.

Final Remarks / Q&A



165

Conclusions

DIRECTV U.S. will continue to deliver on the proven strategies established to advance the entertainment experience and provide world class customer service commensurate with the DIRECTV brand

In addition, to sustain profitable growth, we will heighten our focus on generating incremental revenue streams and enhancing productivity improvements and cost containment initiatives

DIRECTV Latin America’s advantaged competitive position, operating strengths and the overall market potential continue to provide us with significant growth opportunities

DTVLA will be agile and adapt its tactics and strategies to the challenging

macro ‐economic conditions

These strategies along with the highest return of capital policy in the industry and our transparent corporate governance will continue to create significant shareholder value for years to come

DIRECTV is poised to continue delivering first quartile growth

and superior shareholder returns



Regulation GDisclosure of Non-GAAP Financial Measures



Non-GAAP Financial Measures

Operating Profit Before Depreciation and Amortization. Operating profit before depreciation and amortization, which is a financial measure that isnot determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, can be calculated by adding amountsunder the caption “Depreciation and amortization expense” to “Operating profit.” This measure should be used in conjunction with GAAP financial measuresand is not presented as an alternative measure of operating results, as determined in accordance with GAAP. DIRECTV management uses operating profit

before depreciation and amortization to evaluate the operating performance of our company and our business segments and to allocate resources and capital to business segments. This metric is also used as a measure of performance for incentive compensation purposes and to measure income generated fromoperations that could be used to fund capital expenditures, service debt or pay taxes. Depreciation and amortization expense primarily represents an allocationto current expense of the cost of historical capital expenditures and for acquired intangible assets resulting from prior business acquisitions. To compensate forthe exclusion of depreciation and amortization expense from operating profit, DIRECTV management separately measures and budgets for capital expenditures

and business acquisitions.

We believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare ouroperating performance to other communications, entertainment and media service providers. We believe that investors use current and projected operating

profit before depreciation and amortization and similar measures to estimate our current or prospective enterprise value and make investment decisions. Thismetric provides investors with a means to compare operating results exclusive of depreciation and amortization expense. DIRECTV management believes thisis useful given the significant variation in depreciation and amortization expense that can result from the timing of capital expenditures, the capitalization ofintangible assets, potential variations in expected useful lives when compared to other companies and periodic changes to estimated useful lives. Operating

profit before depreciation and amortization margin is calculated by dividing Operating profit before depreciation and amortization by Revenues.

Free Cash Flow. Free cash flow, which is a financial measure that is not determined in accordance with GAAP, is calculated by deducting amountsunder the captions “Cash paid for property and equipment”, “Cash paid for satellites”, “Cash paid for subscriber leased equipment - subscriber acquisitions”,and “Cash paid for subscriber leased equipment - upgrade and retention” from “Net cash provided by operating activities” from the Consolidated Statements ofCash Flows. This financial measure should be used in conjunction with other GAAP financial measures and is not presented as an alternative measure of cashflows from operating activities, as determined in accordance with GAAP. DIRECTV management uses free cash flow to evaluate the cash generated by ourcurrent subscriber base, net of capital expenditures, for the purpose of allocating resources to activities such as adding new subscribers, retaining and upgrading

existing subscribers, for additional capital expenditures and as a measure of performance for incentive compensation purposes. We believe this measure isuseful to investors, along with other GAAP measures (such as cash flows from operating and investing activities), to compare our operating performance toother communications, entertainment and media companies. We believe that investors also use current and projected free cash flow to determine the ability ofour current and projected subscriber base to fund required and discretionary spending and to help determine the financial value of the company.

Pre-SAC Margin. Pre-SAC Margin, which is a financial measure that is not determined in accordance with accounting principles generally acceptedin the United States of America, or GAAP, is calculated for DIRECTV U.S. by adding amounts under the captions “Subscriber acquisition costs” and“Depreciation and amortization expense” to “Operating Profit” from the Consolidated Statements of Operations and subtracting "Cash paid for subscriberleased equipment - upgrade and retention" from the Consolidated Statements of Cash Flows. This financial measure should be used in conjunction with GAAPfinancial measures and is not presented as an alternative measure of operating results, as determined in accordance with GAAP. DIRECTV management usePre-SAC Margin to evaluate the profitability of DIRECTV U.S.' current subscriber base for the purpose of allocating resources to discretionary activities suchas adding new subscribers, upgrading and retaining existing subscribers and for capital expenditures. To compensate for the exclusion of “Subscriberacquisition costs,” management also uses operating profit and operating profit before depreciation and amortization expense to measure profitability.DIRECTV believes this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare DIRECTVU.S.’ operating performance to other communications, entertainment and media companies. DIRECTV believes that investors also use current and projectedPre-SAC Margin to determine the ability of DIRECTV U.S.’ current and projected subscriber base to fund discretionary spending and to determine the

financial returns for subscriber additions.Cash Flow Before Interest and Taxes. Cash flow before interest and taxes, which is a financial measure that is not determined in accordance with

GAAP, is calculated by deducting amounts under the captions “Cash paid for property and equipment”, “Cash paid for satellites”, “Cash paid for subscriberleased equipment - subscriber acquisitions” and “Cash paid for subscriber leased equipment - upgrade and retention” from “Net cash provided by operatingactivities” from the Consolidated Statements of Cash Flows and adding back net interest paid and “Cash paid for income taxes”. This financial measure should

be used in conjunction with other GAAP financial measures and is not presented as an alternative measure of cash flows from operating activities, asdetermined in accordance with GAAP. DIRECTV management uses cash flow before interest and taxes to evaluate the cash generated by our current subscriber

base, net of capital expenditures, and excluding the impact of interest and taxes, for the purpose of allocating resources to activities such as adding newsubscribers, retaining and upgrading existing subscribers, for additional capital expenditures and as a measure of performance for incentive compensation

purposes. We believe this measure is useful to investors, along with other GAAP measures (such as cash flows from operating and investing activities), tocompare our operating performance to other communications, entertainment and media companies. We believe that investors also use current and projectedcash flow before interest and taxes to determine the ability of our current and projected subscriber base to fund required and discretionary spending and to helpdetermine the financial value of the company.

Excluding Foreign Exchange (FX) Results. " Excluding foreign exchange (FX) results", which are financial measures that are not determined inaccordance with GAAP, do not the impact of fluctuations in foreign currency exchange rates. We calculate "excluding FX results" by converting our current

period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to our current period reported results."Excluding FX results" should be used in conjunction with GAAP financial measures and are not presented as an alternative measure of operating results, asdetermined in accordance with GAAP. DIRECTV management evaluates our results of operations on both an as reported and an excluding FX basis. We

believe providing "excluding FX results" provides valuable supplemental information to investors regarding our results of operations, consistent with how weevaluate our performance.

Return On Invested Capital. Return on invested capital, which is a financial measure that is not determined in accordance with GAAP, is calculated by dividing operating profit after taxes by invested capital. Operating profit after taxes is computed as "Operating profit" less income taxes calculated at anaverage effective tax rate. Invested capital is computed as "Total assets" (excluding "Cash and cash equivalents") less "Total current liabilities" (excluding"Current debt"). This measure should be used in conjunction with GAAP financial measures and is not presented as an alternative measure of operating results,as determined in accordance with GAAP. We believe this measure is useful to investors, along with other GAAP measures (such as net income), to measurehow effectively we use capital to generate profits.



Non-GAAP Financial Measures Reconciliation Schedules(Unaudited)

(Dollars in Millions)

DIRECTV Consolidated 1

Reconciliation of Operating Profit Before Depreciation and Amortization to Operating ProfitYears Ended December 31,

2010 2011 2012 2013E

Operating profit before depreciation and amortization $ 6,378 $ 6,978 $ 7,522 $ 8,000

Subtract: Depreciation and amortization 2,482 2,349 2,437 2,800Operating profit $ 3,896 $ 4,629 $ 5,085 $ 5,200

Reconciliation of Free Cash Flow to Net Cash Provided by Operating ActivitiesYears Ended December 31,

2010 2011 2012 2013E

Free Cash Flow $ 2,790 $ 2,015 $ 2,285 $ 2,100Add Cash Paid For:

Property and equipment 2,303 2,924 2,9603,700

Satellites 113 246 389 Net Cash Provided by Operating Activities $ 5,206 $ 5,185 $ 5,634 $ 5,800

DIRECTV U.S. 1

Reconciliation of Operating Profit Before Depreciation and Amortization to Operating ProfitYears Ended December 31,

2010 2011 2012 2013E

Operating profit before depreciation and amortization $ 5,216 $ 5,289 $ 5,654 $ 6,000Subtract: Depreciation and amortization 1,926 1,587 1,501 1,600Operating profit $ 3,290 $ 3,702 $ 4,153 $ 4,400

DIRECTV Sports NetworksReconciliation of Operating Profit Before Depreciation and Amortization to Operating Profit

Year Ended December 31,

2013E

Operating profit before depreciation and amortization $ 80Subtract: Depreciation and amortization 20Operating profit $ 60

1DIRECTV Consolidated and DIRECTV U.S. 2013E reflect Consensus estimates.



Documents

DIRECTV InvestorDay Dec 12 2013 Print (1)