| DIRECTV GROUP INC ITEM 1A RISK FACTORS You should carefully consider the following risk factors, as well as the more detailed descriptions of our business elsewhere in this Annual Report |
| The risks described below are not the only ones facing our company |
| Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business, financial condition or results of operations |
| 18 _________________________________________________________________ Our business, financial condition or results of operations could be materially and adversely affected by the following: We may not sustain profitability |
| We have sustained significant losses in the past and have significant amounts of debt |
| If we do not have sufficient income or other sources of cash, it could affect our ability to service debt and pay other obligations |
| Our subsidiaries compete with other MVPDs, some of whom have greater resources than we do and levels of competition are increasing |
| We compete in the MVPD industry against cable television, RBOCs and other land-based and satellite-based system operators with service offerings including video and audio programming, data and entertainment services and telephony service |
| Some of these competitors have greater financial, marketing and other resources than we do |
| Some cable television operators have large, established customer bases and many cable operators have significant investments in, and access to, programming |
| According to the National Cable & Telecommunications Association Mid-Year 2005 Industry Overview, 108 million of the 110 million US television households, or 99prca, are passed by cable |
| Of the 110 million US television households, approximately 73 million, or 67prca, were subscribers to cable at year end |
| Cable television operators have advantages relative to us, including or as a result of: • being the incumbent MVPD operator with an established subscriber base in the territories in which we compete; • bundling their analog video service with expanded digital video services delivered terrestrially or via satellite, or with efficient two-way high-speed Internet access or telephone service on upgraded cable systems; • having greater bandwidth capacity to deliver programming or services beyond which our satellite capacity currently allows; and • having the ability to provide certain local and other programming, including HD programming, in a larger number of geographic areas |
| In addition, cable television operators have grown their subscriber base through mergers and acquisitions |
| Moreover, mergers, joint ventures and alliances among franchise, wireless or private cable television operators, RBOCs, and others may result in providers capable of offering bundled cable television and telecommunications services in competition with our services |
| Various RBOCs have also begun deployment of fiber optic lines directly to customers &apos homes or neighborhoods and to deliver video services, which compete with the DIRECTV service |
| It is uncertain whether we will be able to increase our satellite capacity, offer a significant level of new services in existing markets in which we compete or expand to additional markets as may be necessary to compete effectively |
| Some of these RBOCs also sell the DIRECTV service as a bundle with their voice and data services |
| The existence of a new broadly-deployed network with the capability of providing video, voice and data services could present a significant competitive challenge |
| Should their deployment of fiber optic lines for video grow substantially, we may be unable to develop other distribution methods to make up for lost sales through the RBOCs |
| 19 _________________________________________________________________ AT&T recently announced an agreement to acquire BellSouth, one of the RBOCs that sells the DIRECTV service |
| AT&T has a similar arrangement with EchoStar |
| If the AT&T acquisition of BellSouth is completed, our arrangements with BellSouth might be adversely affected |
| As a result of these and other factors, we may not be able to continue to expand our subscriber base or compete effectively against cable television or other MVPD operators in the future |
| We depend on the Communications Act for access to cable-affiliated programming and changes impacting that access could materially adversely affect us |
| We purchase a substantial percentage of our programming from programmers that are affiliated with cable system operators |
| Currently, under certain provisions of the Communications Act governing access to programming, cable-affiliated programmers generally must sell and deliver their programming services to all multi-channel video programming distributors on non-discriminatory terms and conditions |
| The Communications Act and the FCC rules also prohibit certain types of exclusive programming contracts involving programming from cable-affiliated programmers |
| Any change in the Communications Act or the FCCapstas rules that would permit programmers that are affiliated with cable system operators to refuse to provide such programming or to impose discriminatory terms or conditions could materially adversely affect our ability to acquire programming on a cost-effective basis, or at all |
| The Communications Act prohibitions on certain cable industry exclusive contracting practices with cable-affiliated programmers are scheduled to expire in October 2007 and may not be renewed or extended |
| In addition, certain cable providers have denied us and other MVPDs access to a limited number of channels created by programmers with which the cable providers are affiliated |
| The cable providers have asserted that they are not required to provide such programming due to the manner in which that programming is distributed, which they argue is not covered by the program access provisions of the Communications Act |
| Challenges to this interpretation of the Communications Act have not been successful, and we may continue to be precluded from obtaining such programming, which in turn could materially adversely affect our ability to compete in regions serviced by those cable providers |
| Carriage requirements may negatively affect DIRECTV US &apos ability to deliver local broadcast stations, as well as other aspects of its business |
| In implementing SHVIA, the FCC has required satellite carriers to delete certain programming, including sports programming, from the signals of certain distant stations |
| The FCCapstas interpretation, implementation and enforcement of other provisions of SHVIA and SHVERA, as well as judicial decisions interpreting and enforcing these laws, could hamper DIRECTV US &apos ability to retransmit distant network and superstation signals, reduce the number of DIRECTV US &apos existing or future subscribers that can qualify for receipt of these signals, impose costs on DIRECTV US in connection with the process of complying with the rules, or subject DIRECTV US to fines, monetary damages or injunctions |
| Also, the FCCapstas sport blackout requirements, which apply to all distant network signals, may require costly upgrades to DIRECTV US &apos system |
| Further, a recent FCC order interpreting the requirement that satellite carriers retransmit local digital signals with "e equivalent bandwidth "e of significantly viewed digital signals may constrain DIRECTV US &apos ability to deliver such significantly viewed digital signals |
| DIRECTV US has limited capacity, and the projected number of markets in which it can deliver local broadcast programming will continue to be constrained because of the must carry requirement and may be reduced depending on the FCCapstas interpretation of its rules in pending and future rulemaking and complaint proceedings, as well as judicial decisions interpreting must carry 20 _________________________________________________________________ requirements |
| DIRECTV US may not be able to comply with these must carry rules, or compliance may mean that it is not be able to use capacity that could otherwise be used for new or additional local or national programming services |
| Our subsidiaries depend on others to produce programming and programming costs are increasing |
| We depend on third parties to provide us with programming services, including third parties who are our affiliates and third parties controlled by competitors |
| Our ability to compete successfully will depend on our ability to continue to obtain desirable programming and deliver it to our subscribers at competitive prices |
| Our programming agreements generally have remaining terms ranging from less than one to up to ten years and contain various renewal and cancellation provisions |
| We may not be able to renew these agreements on favorable terms, or at all, or these agreements may be cancelled prior to expiration of their original terms |
| If we are unable to renew any of these agreements or the other parties cancel the agreements, we may not be able to obtain substitute programming, or if we are able to obtain such substitute programming, it may not be comparable in quality or cost to our existing programming |
| In addition, many of our programming agreements contain annual price increases |
| When offering new programming, or upon expiration of existing contracts, programming suppliers have historically increased the rates they charge us for programming, increasing our costs |
| Increases in programming costs could cause us to increase the rates that we charge our subscribers, which could in turn cause subscribers to terminate their subscriptions or potential new subscribers to refrain from subscribing to our service |
| Furthermore, we may be unable to pass programming cost increases on to our subscribers, which could have a material adverse effect on our earnings or cash flow |
| The FCC recently adopted rules requiring us to negotiate in good faith with broadcast stations seeking carriage outside of the mandatory carriage regime described above |
| The rules for "e retransmission consent "e negotiations, which are similar to those that have applied to broadcast stations for years, require us to comply with certain indicia of good faith negotiation, as well as to demonstrate good faith under a "e totality of the circumstances "e test |
| Failure to comply with these rules could subject us to administrative sanctions and other penalties |
| We incur costs relating to subscribers acquired by us and subscribers acquired through third-parties |
| These costs are known as subscriber acquisition costs |
| For instance, we provide installation incentives to our retailers to enable them to offer standard professional installation as part of the subscriberapstas purchase or lease of a DIRECTV System |
| In addition, we pay commissions to retailers for their efforts in offering a DIRECTV System to consumers |
| Our subscriber acquisition costs may materially increase to the extent we continue or expand current sales promotion activities or introduce other more aggressive promotions, or due to increased competition |
| Any material increase in subscriber acquisition costs from current levels would negatively impact our earnings and could materially adversely affect our financial performance |
| Increased subscriber churn or subscriber upgrade and retention costs could materially adversely affect our financial performance |
| Turnover of subscribers in the form of subscriber service cancellations, or churn, has a significant financial impact on the results of operations of any subscription television provider, including us, as does the cost of upgrading and retaining subscribers |
| Any increase in our upgrade and retention costs 21 _________________________________________________________________ for our existing subscribers may adversely affect our financial performance or cause us to increase our subscription rates, which could increase churn |
| Churn may also increase due to factors beyond our control, including involuntary churn by subscribers who are unable to pay their monthly subscription fees, a slowing economy, significant signal theft, a maturing subscriber base and competitive offers |
| Any of the risks described in this Annual Report that could potentially have a material adverse impact on our cost or service quality or that could result in higher prices for our subscribers could also, in turn, cause an increase in churn and consequently have a material adverse effect on our earnings |
| Satellite programming signals have been stolen and may be stolen in the future, which could result in lost revenues and would cause us to incur incremental operating costs that do not result in subscriber acquisition |
| The delivery of subscription programming requires the use of conditional access technology to limit access to programming to only those who subscribe and are authorized to view it |
| The conditional access system uses, among other things, encryption technology to protect the transmitted signal from unauthorized access |
| It is illegal to create, sell or otherwise distribute software or devices to circumvent that conditional access technology |
| However, theft of cable and satellite programming has been widely reported, and the access or "e smart "e cards used in our conditional access system have been compromised in the past and could be further compromised in the future |
| We have undertaken various initiatives with respect to our conditional access system to further enhance the security of the DIRECTV signal |
| To help combat signal theft, we are currently providing our subscribers with more advanced access cards that we believe significantly enhance the security of our signal |
| However, we cannot guarantee that the new card will prevent the theft of our satellite programming signals |
| Furthermore, there can be no assurance that we will succeed in developing the technology we need to effectively restrict or eliminate signal theft |
| If we cannot promptly correct a compromise of our conditional access technology, our revenue and our ability to contract for video and audio services provided by programmers could be materially adversely affected |
| In addition, our operating costs could increase if we attempt to implement additional measures to combat signal theft |
| Construction or launch delays on satellites could materially adversely affect our revenues and earnings |
| A key component of our business strategy is our ability to expand our offering of new programming and services, including increased local and HD programming |
| In order to accomplish this goal, we need to construct and launch new satellites |
| The construction and launch of satellites are often subject to delays, including satellite and launch vehicle construction delays, periodic unavailability of reliable launch opportunities, and delays in obtaining regulatory approvals |
| A significant delay in the future delivery of any satellite would materially adversely affect the use of the satellite and thus could materially adversely affect our anticipated revenues and earnings |
| If satellite construction schedules are not met, there can be no assurance that a launch opportunity will be available at the time a satellite is ready to be launched |
| Certain delays in satellite construction could also jeopardize a satellite authorization that is conditioned on timely construction and launch of the satellite |
| Our satellites are subject to significant launch and operational risks |
| Satellites are subject to significant operational risks relating to launch and while in orbit |
| Launch risks include launch failure, incorrect orbital placement or improper commercial operation |
| Launch failures result in significant delays in the deployment of satellites because of the need both to construct replacement satellites, which can take up to 36 months, and obtain other launch opportunities |
| The overall historical loss rate in our industry for all launches of commercial satellites in fixed orbits in the 22 _________________________________________________________________ last five years is estimated to be 5prca but may be higher |
| Any significant delays or failures in successfully launching and deploying our satellites could materially adversely affect our ability to generate revenues |
| While we have traditionally purchased insurance covering the launch and, in limited cases, operation of our satellites, such policies typically cover the loss of the satellite itself and not the business interruption or other associated direct and indirect costs |
| DIRECTV US does not currently expect to purchase in-orbit insurance for any of its satellites scheduled for launch in 2006 and 2007 |
| In-orbit risks include malfunctions, commonly referred to as anomalies, and collisions with meteoroids, other spacecraft or other space debris |
| Anomalies occur as a result of various factors, such as satellite manufacturing errors, problems with the power systems or control systems of the satellites and general failures resulting from operating satellites in the harsh space environment |
| We work closely with our satellite manufacturers to determine and eliminate the potential causes of anomalies in new satellites and provide for redundancies of critical components in the satellites as well as having backup satellite capacity |
| However, we cannot assure you that we will not experience anomalies in the future, nor can we assure you that our backup satellite capacity will be sufficient for our business purposes |
| Any single anomaly or series of anomalies could materially adversely affect our operations and revenues and our relationships with our subscribers, as well as our ability to attract new subscribers for our services |
| Anomalies may also reduce the expected useful life of a satellite, thereby creating additional expenses due to the need to provide replacement or backup satellites and potentially reducing revenues if service is interrupted |
| Finally, the occurrence of anomalies may materially adversely affect our ability to insure our satellites at commercially reasonable premiums, if at all |
| Our ability to earn revenue also depends on the usefulness of our satellites |
| A number of factors affect the useful life of a satellite, including, among other things: • the design; • the quality of its construction; • the durability of its component parts; • the launch vehicleapstas insertion of the satellite into orbit; • any required movement, temporary or permanent, of the satellite; • the ability to continue to maintain proper orbit and control over the satelliteapstas functions; and • the remaining on-board fuel following orbit insertion |
| Generally, the minimum design life of the satellites in our fleet is between 12 and 15 years |
| The actual useful lives of the satellites may be shorter, in some cases significantly |
| Our operating results could be adversely affected if the useful life of any of our satellites were significantly shorter than 12 years from the date of launch |
| In the event of a failure or loss of any of our satellites, we may relocate another satellite and use it as a replacement for the failed or lost satellite |
| In the event of a complete satellite failure, our services provided via that satellite could be unavailable for several days or longer while backup in-orbit satellites are repositioned and services are moved |
| We are not insured for any resultant lost revenues |
| The use of backup satellite capacity for our programming may require us to discontinue some programming services due to potentially reduced capacity on the backup satellite |
| Any relocation of our satellites would require prior FCC approval and, among other things, a demonstration to the FCC that 23 _________________________________________________________________ the replacement satellite would not cause additional interference compared to the failed or lost satellite |
| Such FCC approval may not be obtained |
| We believe we have in-orbit satellite capacity to expeditiously recover transmission of most programming in the event one of our in-orbit satellites fails |
| However, programming continuity cannot be assured in the event of multiple satellite losses |
| The cost of commercial insurance coverage on our satellites or the loss of a satellite that is not insured could materially adversely affect our earnings |
| We use in-orbit and launch insurance to mitigate the potential financial impact of satellite fleet in-orbit and launch failures unless the premium costs are considered uneconomic relative to the risk of satellite failure |
| When insurance is obtained, it generally covers the unamortized book value of covered satellites |
| Although the insurance generally does not compensate for business interruption or loss of future revenues or subscribers, we rely on in-orbit spare satellites and excess transponder capacity at key orbital slots to mitigate the impact of satellite failure on our ability to provide service |
| The price, terms and availability of insurance fluctuate significantly |
| Launch and in-orbit policies on satellites may not continue to be available on commercially reasonable terms or at all |
| In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and satellite health-related policy exclusions |
| Any launch vehicle failure, or loss or destruction of any of our satellites for which we do not have commercial insurance coverage could have a material adverse effect on our financial condition and results of operations, our ability to comply with FCC regulatory obligations and our ability to fund the construction or acquisition of replacement satellites in a timely fashion, or at all |
| Our ability to keep pace with technological developments is uncertain |
| In the MVPD industry, changes occur rapidly as new technologies are developed, which could cause our services and products that deliver our services to become obsolete |
| We may not be able to keep pace with technological developments |
| If the new technologies on which we intend to focus our investments fail to achieve acceptance in the marketplace or our technology does not work and requires significant cost to replace or fix, we could suffer a material adverse effect on our future competitive position, which could cause a reduction in our revenues and earnings |
| For example, our competitors could be the first to obtain proprietary technologies that are perceived by the market as being superior |
| Further, after incurring substantial costs, one or more of the technologies under development by us or any of our strategic partners could become obsolete prior to its introduction |
| In addition, technological innovation depends, to a significant extent, on the work of technically skilled employees |
| Competition for the services of these employees is vigorous |
| We cannot assure you that we will be able to continue to attract and retain these employees |
| To access technologies and provide products that are necessary for us to remain competitive, particularly in the area of broadband services, we may make future acquisitions and investments and may enter into strategic partnerships with other companies |
| Such investments may require a commitment of significant capital and human and other resources |
| The value of such acquisitions, investments and partnerships and the technology accessed may be highly speculative |
| Arrangements with third parties can lead to contractual and other disputes and dependence on the development and delivery of necessary technology on third parties that we may not be able to control or influence |
| These relationships may commit us to technologies that are rendered obsolete by other developments or preclude the pursuit of other technologies which may prove to be superior |
| 24 _________________________________________________________________ New technologies could also create new competitors for DIRECTV Entities such as RBOCs are implementing and supporting digital video compression over existing telephone lines and building out fiber optic lines to enhance their capabilities to deliver programming services |
| While these entities are not currently providing MVPD services on a significant basis, many have the capabilities for such services and some have announced that they will begin rolling out video services more broadly this year |
| We may not be able to compete successfully with new entrants in the market for video services |
| Our business relies on intellectual property, some of which is owned by third parties, and we may inadvertently infringe patents and proprietary rights of others |
| Many entities, including some of our competitors, have or may in the future obtain patents and other intellectual property rights that cover or affect products or services related to those that we currently offer or may offer in the future |
| In general, if a court determines that one or more of our services or the products used to transmit or receive our services infringes on intellectual property owned by others, we and the applicable manufacturers or vendors may be required to cease developing or marketing those services and products, to obtain licenses from the owners of the intellectual property or to redesign those services and products in such a way as to avoid infringing the intellectual property rights |
| If a third party holds intellectual property rights, it may not allow us or the applicable manufacturers to use its intellectual property at any price, which could materially adversely affect our competitive position |
| We may not be aware of all intellectual property rights that our services or the products used to transmit or receive our services may potentially infringe |
| In addition, patent applications in the United States are confidential until the Patent and Trademark Office issues a patent |
| Therefore, we cannot evaluate the extent to which our services or the products used to transmit or receive our services may infringe claims contained in pending patent applications |
| Further, without lengthy litigation, it is often not possible to determine definitively whether a claim of infringement is valid |
| We cannot estimate the extent to which we may be required in the future to obtain intellectual property licenses or the availability and cost of any such licenses |
| Those costs, and their impact on our earnings, could be material |
| Damages in patent infringement cases may also include treble damages in certain circumstances |
| To the extent that we are required to pay royalties to third parties to whom we are not currently making payments, these increased costs of doing business could materially adversely affect our operating results |
| We are currently being sued in patent infringement actions related to use of technologies in our DTH business |
| There can be no assurance that the courts will conclude that our services or the products used to transmit or receive our services do not infringe on the rights of third parties, that we or the manufacturers would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we or the manufacturers would be able to redesign our services or the products used to transmit or receive our services to avoid infringement |
| The ability to maintain FCC licenses and other regulatory approvals is critical to our business |
| If we do not obtain all requisite US regulatory approvals for the construction, launch and operation of any of our existing or future satellites for the use of frequencies at the orbital locations planned for these satellites or for the provision of service, or the licenses obtained impose operational restrictions on us, our ability to generate revenue and profits could be materially adversely affected |
| In addition, under certain circumstances, existing licenses are subject to revocation or modification and upon expiration, renewal may not be granted |
| If existing licenses are not renewed, or are revoked or materially modified, our ability to generate revenue could be materially adversely affected |
| 25 _________________________________________________________________ In certain cases, satellite system operators are obligated by governmental regulation and procedures of the International Telecommunications Union to coordinate the operation of their systems with other users of the radio spectrum in order to avoid causing interference to those other users |
| Coordination may require a satellite system operator to reduce power, avoid operating on certain frequencies, relocate its satellite to another orbital location and/or otherwise modify planned or existing operations |
| For example, SES has petitioned the FCC for a declaratory ruling to allow it to provide DBS service using frequencies assigned to it by the Government of Gibraltar and the United Kingdom from an orbital slot located halfway between slots at which we currently operate and the next nearest existing US-licensed DBS slots |
| We believe this closer proximity, if permitted, significantly increases the risk of interference which could adversely affect the quality of service provided to our subscribers |
| We may not be able to successfully coordinate our satellites to the extent we are required to do so, and any modifications we make in the course of coordination, or any inability to successfully coordinate, may materially adversely affect our ability to generate revenue |
| Other regulatory risks include, among others: • the relocation of satellites to different orbital locations if the FCC determines that relocation is in the public interest; • the denial by the FCC of an application to replace an existing satellite with a new satellite or to operate a satellite beyond the term of its current authorization; • the loss of authorizations to operate satellites on certain frequencies at certain locations if we do not construct, launch and operate satellites into those locations by certain dates; and • the authorization by the United States or foreign governments of the use of frequencies by third party satellite or terrestrial facilities that have the potential to interfere with communication to or from our satellites, which could interfere with our contractual obligations or services to subscribers or other business operations |
| All of our FCC satellite authorizations are subject to conditions imposed by the FCC in addition to the FCCapstas general authority to modify, cancel or revoke those authorizations |
| Use of FCC licenses and conditional authorizations are often subject to conditions, including technical requirements and implementation deadlines |
| Failure to comply with such requirements, or comply in a timely manner, could lead to the loss of authorizations and could have a material adverse effect on our ability to generate revenue |
| For example, loss of an authorization could potentially reduce the amount of programming and other services available to DIRECTV subscribers |
| The materiality of such a loss of authorization would vary based upon, among other things, the orbital location at which the frequencies may be used |
| In addition, many of our authorizations and pending applications will be subject to petitions and oppositions filed by several companies, and there can be no assurance that our authorizations will not be cancelled, revoked or modified or that our applications will not be denied |
| Moreover, the FCC recently adopted new rules for licensing satellites that may limit our ability to file applications and secure licenses in the future |
| Congress has continued to shape the scope of the FCCapstas regulatory authority and enact legislation that impacts our business |
| In addition, FCC proceedings to implement legislation and enact additional regulations are ongoing |
| The outcomes of these legislative or regulatory proceedings or their effect on our business cannot be predicted |
| 26 _________________________________________________________________ Our international operation, DTVLA, is subject to various additional risks associated with doing business internationally, which include political instability, economic instability, and foreign currency exchange rate volatility |
| All of DTVLAapstas operating companies are located outside the United States |
| DTVLA operates and has subscribers located throughout Latin America and the Caribbean Basin, which makes it vulnerable to risks of conducting business in foreign markets, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations; • unexpected changes in regulatory environments; • longer payment cycles; • earnings that may be subject to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions; • political and economic instability; • export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries and international operations; and • difficulties in obtaining approval for significant transactions, such as the Sky Transactions |
| In the past, the countries that constitute some of DTVLAapstas largest markets, including Brazil, Argentina, Colombia and Venezuela have experienced economic crises, caused by external and internal factors, and characterized by exchange rate instability, high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment |
| These economic conditions have often been related to political instability, including political violence |
| If these economic conditions recur, they could substantially reduce the purchasing power of the population in our markets and materially adversely affect our business |
| Because DTVLA offers premium pay television programming, its business is particularly vulnerable to economic downturns |
| DTVLA has experienced, and may in the future experience, decreases or instability in consumer demand for its programming, as well as subscriber credit problems |
| DTVLAapstas inability to adjust its business and operations to adequately address these issues could materially adversely affect its revenues and ability to achieve profitability |
| We may not be able to obtain or retain certain foreign regulatory approvals |
| There can be no assurance that any current regulatory approvals held by us are, or will remain, sufficient in the view of foreign regulatory authorities, or that any additional necessary approvals will be granted on a timely basis or at all, in all jurisdictions in which we operate, or that applicable restrictions in those jurisdictions will not be unduly burdensome |
| The failure to obtain the authorizations necessary to operate satellites or provide satellite service internationally could have a material adverse effect on our ability to generate revenue and our overall competitive position |
| Our principal stockholder has significant influence over our management and over actions requiring stockholder approval and its interests may differ from ours |
| As of December 31, 2005, News Corporation held approximately 34prca of the issued and outstanding shares of our common stock |
| K Rupert Murdoch, Chairman and Chief Executive of News 27 _________________________________________________________________ Corporation, is the Chairman of our Board of Directors, and Chase Carey, who is currently a director of and was formerly employed by News Corporation, is our President and Chief Executive Officer and a member of our Board of Directors |
| Additionally, two current News Corporation executives are members of our Board of Directors |
| As a result, News Corporation has significant influence relating to our management and actions that require stockholder approval |
| The interests of News Corporation may differ from the interests of other holders of our common stock |
| The extent of New Corporationapstas stock ownership in us also may have the effect of discouraging offers to acquire control of us and may preclude holders of our common stock from receiving any premium above market price for their shares that may be offered in connection with any attempt to acquire control of us |
| The share repurchase program announced February 7, 2006 will result in an increase in News Corporationapstas ownership interest in us |
| We may face other risks described from time to time in periodic reports filed by us with the SEC We urge you to consider the above risk factors carefully in evaluating forward-looking statements contained in this Annual Report |
| The forward-looking statements included in this Annual Report are made only as of the date of this Annual Report and we undertake no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances |