DirecTV ( DTV ) provides a high quality digital orbiter broadcast medium service to endorsers in the United States and Latin American geographic markets. DirecTV’s concern scheme revolves around merchandise distinction. therefore the company focuses on the ability to offer a big assortment of channels and services. including up to 1800 criterion channels. more than 130 High Definition ( HDTV ) channels. assorted film and athleticss bundles. and DVR capablenesss to about 20 million endorsers. DirecTV’s client market is chiefly single consumers and families ; nevertheless the company besides offers services to bars. hotels. eating houses. and infirmaries through their DirecTV for concern service.
* June. 1994 – DirecTV launches services in the United States. * October. 1994 – DirecTV attains countrywide handiness. * November. 1995 – The one millionth client marks with DirecTV. * April. 1999 – DirecTV acquires the orbiter broadcast medium company. PrimeStar. * May. 1999 – DTV acquires satellite telecasting company United States Satellite Broadcasting ( USSB ) . * July. 2001 – The 10 millionth client marks with DirecTV. * December. 2003 – News Corp. acquires a 34 % involvement in DirecTV. * October. 2005 – The 15 millionth client marks with DirecTV. * January. 2006 – DirecTV acquires 100 % ownership of DirecTV Latin America. * February. 2008 – Liberty Media acquires 41 % of DirecTV. * February. 2008 – DirecTV Latin America reaches 5 million clients.
Recent Company News
* February 4th. 2009 – Congress voted to detain the digital switchover until June 12th. Congress believed that Americans failed to fix themselves for the original deadline. On June 12th. Americans will necessitate either a satellite telecasting subscription or digital convertor box.
* February 4th. 2009 – DirecTV announced a $ 50 measure recognition for every referred client.
* February 2nd. 2009 – DirecTV and AT & A ; T announced a trade to give clients satellite Television service through DirecTV along with cyberspace and phone services. The trade went in consequence January 31. 2009. the termination day of the month of the AT & A ; T and Dish webs integrating trade.
DirecTV’s competitory advantage is quadruple and focuses on multiple facets of the concern and company. The focal points include the geographic markets of operations. the bundles and services they offer. partnerships with possible houses. and keeping strategic concern aims focused on the scheme of merchandise distinction. Looking foremost at the geographic competitory advantage. DTV is the lone supplier of services in Latin America. giving them an chance for growing non available to Time Warner Cable. Dish Network. or Comcast.
Increasing gross growing in this section has illustrated financially the competitory advantage. Second. taking into history the bundles and services. DTV is the lone supplier of and NFL athleticss bundle. DTV is under contract to supply NFL Sunday Ticket through the 2010 NFL season. guaranting a degree of stableness in their net incomes for the coming old ages. The following of import consideration would be possible partnerships with DirecTV to make synergisms otherwise non available. Most late. DTV’s partnership with AT & A ; T gives a selling base and service roll uping ability non available to Serve Networks. This partnership gives DTV a stronger advantage over DISH in the orbiter broadcast medium duopoly. Last. and concentrating on the concern scheme. DirecTV offers the most High Definition and Premium channels in the rival equal group. with over 130 HDTV channels.
DirecTV generates grosss in two geographic sections: Latin America and the United States. Though the Latin America market is significantly smaller than the U. S. market. Latin America saw 48 % growing in gross from 2007 to 2008. The U. S. market is much more constituted and as such is sing a lower growing rate in grosss. attributable to the long-run phase of growing relative to the concern rhythm. Still. DirecTV U. S. saw 12. 7 % growing in gross from 2007 to 2008 ( FYE Sept. 30th ) . DirecTV sees the increasing growing in Latin America as a significant chance for the company in approaching old ages.
Grosss by Operating Segment
The gross dislocation depicts the growing of both sections. while foregrounding that the U. S. section is where most of the company’s operations occur: noted by the overall addition in gross of 16. 25 % with immensely different growing rates lending. the U. S. at 12 % and Latin America at 48 % . The pie charts show the displacement in per centum of gross from U. S. to Latin America ; in 2007 Latin America accounted for merely 10 % of DTV’s entire gross. while in 2008 that market accounted for 13 % of entire gross.
Chase Carey – Chief Executive Officer
Mr. Carey has been the CEO of DirecTV since 2003. Prior to working for DirecTV. he was the Chief Operating Officer of News Corporation. Chief Operating Officer of Fox Television. and Chief Executive Officer of Sky Global Networks.
Patrick Doyle – Chief Financial Officer
Mr. Doyle joined DirecTV in 1992 as manager of Taxes. He became CFO in 2005. Prior to working for DirecTV. he worked as a public comptroller for Deloitte and Touche and for Baker Hughes. an oilfield services company.
Michael Palkovic – Vice President of Operations
Mr. Palkovic joined DirecTV in 1994 as the manager of Financial Planning. He later worked as DirecTV’s Chief Financial Officer until 2004. when he assumed the rubric of Vice President of Operations. Prior to working for DirecTV. he worked as Director of Operations at Times Mirror Cable Television.
Bruce Churchill – Chief Executive Officer: DirecTV Latin America
Mr. Churchill joined DirecTV as the Chief Financial Officer in 2004 and later became Chief Executive Officer of DirecTV Latin America and Senior Vice President of New Ventures. Prior to working for DirecTV. he was the Chief Operating Officer of STAR and Senior Vice President of Finance for Fox Television. Macroeconomic Environment
Economists offer a black mentality for the approaching twelvemonth. The unemployment rate is upwards near 8 % for the first clip in decennaries. forcing province governments’ benefits financess to the bound. Transportation system costs have decreased with slowed economic growing. which provides a slender border of alleviation to consumers. However. the widespread effects of unemployment continue to countervail the lessening in transit costs as consumer disbursement and personal incomes have declined. Protectionism besides has resurfaced as duty rates. quotas. and the figure of anti-dumping cases clamps down the free flow of goods and services. WTO predicts a 2. 1 % lessening in international trade volume
DirecTV is a consumer discretionary. and is non immune to economic conditions. However. recent studies show telecasting is the last discretional point to be cut. and the overseas telegram and satellite sub-industry provides chance for growing and sustainability.
Digital Switch Over: DirecTV operates in the overseas telegram and satellite sub-industry. With the digital switchover slated for June 2009. there is chance for growing as Americans will be required to hold digital convertors or satellite Television subscriptions. DirecTV will confront competition from two foreparts after the digital switchover: satellite service suppliers and overseas telegram service suppliers.
Market Dynamicss: The orbiter broadcast services market is presently a duopoly. with DirecTV surpassing Dish Networks. The overseas telegram services market is more disconnected. but major competition will come from Time Warner Cable and Comcast. The consumer market is extremely saturated. with about 110 million families paying for either satellite telecasting ( 30 % ) or traditional overseas telegram pay-tv service ( 70 % ) . Service suppliers in the overseas telegram and satellite sub-industry generate their grosss through subscriptions.
Bundled Servicess: The overseas telegram and orbiter industry has seen a tendency towards bundled services. Time Warner Cable and Comcast offer package trades having overseas telegram. phone. and high-velocity cyberspace. To counter the economic systems of graduated table gained by overseas telegram suppliers through bundling. satellite suppliers such as DirecTV and Dish Networks have formed opposing concern schemes. DirecTV late gained a partnership with ATT. giving them a strong advantage in the duopolistic orbiter market.
Business Schemes: DirecTV has taken a merchandise distinction scheme focused on engineering and client service. and looked to organize partnerships with telecom companies to make packages of their ain. Dish Networks has unsuccessfully maintained the low-priced supplier scheme. as they have lost market portion and seen net incomes decrease about 50 % since 2005.
Time Warner Cable ( TWC )
Headquartered in New York. New York. Time Warner Cable provides digital and linear telecasting services to about 15 million clients in New York. the Carolinas. Ohio. California. and Texas. Time Warner Cable is a traditional overseas telegram service supplier with the ability to roll up telephone. cyberspace. and telecasting services together into one bundle. Digital overseas telegram services include On-Demand. selected High Definition channels. and Digital Video Recording capablenesss.
Comcast ( CMCSA )
Headquartered in Philadelphia. Pennsylvania. Comcast ( CMCSA ) provides digital and linear telecasting services to about 25 million clients in 39 provinces. Like Time Warner Cable. Comcast is a traditional overseas telegram service supplier and packages cyberspace. phone. and telecasting services together. Video services include On-Demand. selected High Definition Channels. Digital Video Recording capablenesss. and premium channel ascents. Comcast besides operates assorted web sites. including Fandango. com.
Dish Networks ( DISH )
Headquartered in Englewood. Colorado. Dish Networks provides digital broadcast medium services through satellite engineering to 13. 8 million endorsers. Dish Networks provides DirecTV’s merely competition for orbiter service. With 11 in-orbit orbiters. Dish provides up to 2. 700 channels. including High Definition and Digital Video Recording capablenesss. Dish Networks operates with the end of being the ‘lowest cost digital supplier. ’
| Total Subscribers| Regions| Basic Package Price|
DirecTV| 20. 7 million| US. Latin America| $ 29. 99/ minute for 1 year| DISH| 13. 8 million| US| $ 9. 99/ minute for 6 months|
Comcast| 24. 4 million| US ( 39 provinces ) | $ 29. 99/ minute for 6 months| TWC| 14. 7 million| NY. OH. NC. SC. TC. CA| $ 49. 95/ minute for 1 year|
| P/E ttm| PEG| 52 hebdomad range|
DirecTV| 16. 76| 1. 44| 17. 70 – 29. 10|
DISH| 7. 18| 0. 81| 8. 32-36. 11|
Comcast| 15. 54| 1. 47| 12. 50-22. 86|
TWC| NMF| 2. 29| 16. 30-31. 56|
* First mover in Latin America- Being the first in this market allows DirecTV to do great additions in an untapped market. * Ranked # 1 in client satisfaction and reliability- A repute for superior client service may entice clients off from traditional providers like Comcast and Time Warner Cable. * Partnership with AT & A ; T- Allows DTV to derive clients through AT & A ; T’s bundled offerings. * Offer the highest quality telecasting service. including premium athleticss and films bundles. and more HD channels ( 130 ) than any rival * Plenty of hard currency and strong hard currency flows- DirecTV has about $ 3 billion in hard currency and a modest debt burden. leting the company to capitalise on the current market conditions. The company late finished an aggressive redemption plan in January and started another beginning in February. * High paying customers- DirecTV’s gross is equal to about $ 80 per client. while the norm overseas telegram client merely pays $ 65.
* Consumer discretionary- The economic system is weakening and persons may cut back on disbursement they deem to be unneeded. * Insurance Costs- The cost of insurance premiums for orbiters or harm to uninsured orbiters could adversely impact net incomes. * Satellite Launches and operation- There is a hazard that orbiters could hold jobs during or after launch. which could add to costs.
* Latin America- This mostly untapped market is a immense chance for DTV because traditional overseas telegram suppliers do non hold the capital necessary to convey service to the country. * Digital switch over- The switchover could supply a new market of clients that used to utilize linear transmittal. * Emerging digital media- Easy entree to downloadable plans could adversely impact the company in the hereafter. * Possible acquisition of being acquired by Liberty Media with a base portion of about $ 30.
* Cable suppliers with ability to roll up services. DirecTV can roll up services through AT & A ; T. but can non harvest tantamount economic systems of graduated table * Congress pushed back the digital switch over to June 12. 2009. Congress still has the ability to force it back further depending on the macroeconomic environment * Increased production costs- DirecTV and other Television providers rely upon content supplier by webs. which are confronting increased costs. * Stolen Satellite Data- Some signals have been stolen in the yesteryear. Proliferation of this could damage grosss. Who’s Buying Now?
In April. Liberty Media purchased 73. 3 million portions of DirecTV. hence deriving a bulk involvement in DTV. The possible for Liberty to get DTV would give a addition to investors. as the base projected monetary value per portion is about $ 30 and a current monetary value of $ 22. 58. The Liberty Media purchase of the portions has been the lone important institutional trade in the past twelvemonth.
Analysts are bullish on DirecTV. with merely one sell recommendation. The analysts’ recommendations have remained changeless over the past three months. with no additions in bargain or sell recommendations. This can be seen as a mark of investor assurance in DirecTV’s forecasted net incomes and growing potency.
Investor Relations interview to take topographic point this coming hebdomad. an fond regard will be handed out when the study is presented. The demand to wait to hold the interview involves the fourth One-fourth and 2008 Annual Net incomes Call to take topographic point foremost.