“I am thrilled to be joining DIRECTV at a time when it has just completed one of its strongest years ever,” said Mike White, president and CEO of DIRECTV. “Strong fourth quarter results capped a record-setting year for both our U.S. and Latin American businesses as DIRECTV became the world’s largest provider of pay television services while also growing full year consolidated revenues by nearly 10% to $21.6 billion and free cash flow by over 40% to a record $2.4 billion. I’m also pleased to announce that our Board has approved a new share repurchase plan of $3.5 billion.”

White continued, “In the U.S., DIRECTV had strong fourth quarter financial results as revenues grew 8% to $5.1 billion, OPBDA margin expanded 260 basis points contributing to OPBDA growth of 21% to $1.3 billion and cash flow before interest and taxes increased 42% to a record $989 million. The significant growth in margins was largely due to operational improvements achieved over the past year in most key areas of our business including attaining greater returns on our upgrade and retention costs through more disciplined cost management and better customer segmentation, as well as gaining significant advances in our customer service levels and efficiencies. Our 119,000 net subscriber additions and higher subscriber acquisition costs in the quarter reflect tighter credit policies, increased competition and a generally cautious consumer seeking value in what continues to be a sluggish economy.”

White said, “In Latin America, increasing demand for DIRECTV’s pre-paid, DVR and HD services in a relatively stable macro-economic environment drove record growth across the region. Propelled by strong results in Venezuela, Colombia and Brazil, DTVLA’s gross additions grew 35% to 460,000 and net additions increased 59% to an all-time high of 254,000 in the fourth quarter. DTVLA revenues and OPBDA were also extremely strong in the quarter growing 47% and 20%, respectively, fueled by the significantly larger subscriber base and favorable exchange rates in Brazil.

“We head into 2010 with strong operating and financial momentum. In the U.S., we look to extend our video leadership with the introduction of many innovative and differentiated services including Multi-Room Viewing, 3-D, DIRECTV Cinema and the debut of our much-anticipated Home Media Center in the second half of this year.” White added, “In Latin America, we’re expecting another year of tremendous growth fueled by greater sales of our popular pre-paid services, increasing demand for HD and DVR services, as well as unparalleled coverage of the FIFA World Cup. With these strengths in both the U.S. and Latin America, we’re targeting another strong year financially as DIRECTV again strives for industry-leading top-line and bottom-line growth rates.”

DIRECTV’S CONSOLIDATED OPERATIONAL REVIEW

Fourth Quarter Review

DIRECTV’s consolidated fourth quarter revenues of $5.98 billion increased 13% over the same period last year principally due to the larger subscriber bases at DIRECTV U.S. and DIRECTV Latin America (DTVLA) and strong average revenue per subscriber (ARPU) growth at DTVLA. Operating profit before depreciation and amortization increased 22% to $1.49 billion and operating profit increased 49% to $862 million primarily due to the gross profit associated with the higher revenues, as well as lower upgrade and retention costs at DIRECTV U.S. due to stricter spending policies associated with better customer segmentation. These improvements were partially offset by an increase in general and administrative expenses primarily due to currency-related transaction charges in Venezuela ($45 million in the fourth quarter of 2009 compared to no charges in the prior year period) as a result of DTVLA’s ongoing efforts to repatriate cash from Venezuela. Also impacting the comparisons were higher subscriber acquisition costs related to the significant increase in gross subscriber additions at DTVLA.

Fourth quarter net income attributable to DIRECTV declined to a loss of $32 million while earnings per share fell to a loss of $0.03 compared with the same period last year. Excluding the pre-tax charge of $491 million ($486 million after tax) related to the merger with Liberty Entertainment completed on November 19, 2009, net income attributable to DIRECTV and diluted earnings per share increased 37% to $454 million and 50% to $0.48, respectively, compared with the fourth quarter of last year. The growth was primarily due to increased operating profit, partially offset by higher tax expense attributable to increased pre-tax earnings, as well as a $41 million impairment charge related to the decline in fair value of an equity method investment in Argentina (recorded in “Other, net” on the Consolidated Statements of Operations). In addition, earnings per share were favorably impacted by a 10% decline in weighted average common shares outstanding due to share repurchases throughout 2009 and the merger transaction with Liberty Entertainment.

Cash flow before interest and taxes grew 47% to $1.01 billion and free cash flow increased 64% to $710 million compared to the fourth quarter of 2008 primarily due to the higher OPBDA, lower set-top box capital expenditures at DIRECTV U.S. related to an increase in the use of refurbished set-top boxes and lower box costs, as well as a $24 million dividend payment from Sky Mexico. The quarter also included cash paid for share repurchases of $83 million, the repurchase of $327 million of 8% senior notes and the repayment of $30 million under DIRECTV’s senior secured credit facility. As part of the Liberty Entertainment transaction completed on November 19, 2009, DIRECTV made a payment, net of cash acquired, of $97 million and assumed $1.88B of debt as well as related equity collars. As of December 31, 2009, DIRECTV had made $751 million in principal payments on this loan and payments related to the partial settlement of the equity collars during the fourth quarter.

Full Year Review

DIRECTV’s 2009 consolidated revenues increased 10% to $21.57 billion principally due to strong subscriber growth at DIRECTV U.S. and DTVLA. Operating profit before depreciation and amortization increased 6% to $5.31 billion as the gross profit associated with the higher revenue was partially offset by higher acquisition costs related to the increase in gross subscriber additions at both DIRECTV U.S. and DTVLA. Also negatively impacting the comparison was higher general and administrative expenses at DTVLA primarily due to $213 million in currency-related transaction charges at Venezuela in 2009 compared with $29 million in 2008. Operating profit declined 1% to $2.67 billion as the higher OPBDA was more than offset by higher depreciation and amortization primarily associated with the capitalization of customer equipment under the DIRECTV U.S. and DIRECTV Latin America lease programs.

Net income declined 38% to $942 million and diluted earnings per share fell 31% to $0.95 in 2009. Excluding the pre-tax charge of $491 million ($486 million after tax) related to the Liberty Entertainment merger, net income attributable to DIRECTV declined 6% to $1.43 billion compared with 2008 due to the lower operating profit discussed above, as well as increased net interest expense due to higher average net debt balances. Diluted earnings per share excluding the charge increased 5% to $1.44 as the lower net income was offset by an 11% decline in the diluted weighted average common shares outstanding resulting from share repurchases throughout 2009 and the merger transaction with Liberty Entertainment.

Full year cash flow before interest and taxes increased 22% to $3.22 billion and free cash flow increased 40% to $2.36 billion compared to 2008 primarily due the higher OPBDA, lower set-top box capital expenditures at DIRECTV U.S. related to an increase in the use of refurbished set-top boxes and lower box costs, as well as $94 million in dividend payments received (compared to $35 million received last year), primarily from Sky Mexico. Free cash flow was also favorably impacted by lower income taxes paid primarily due to prior year credits. The year also included cash payments for share repurchases of $1.70 billion, the issuance of $2 billion of additional debt ($1 billion of 4% senior notes due 2014 and $1 billion of 5% senior notes due 2019), the repurchase of $910 million of 8% senior notes and the repayment of $108 million under DIRECTV’s senior secured credit facility. As part of the Liberty Entertainment transaction, DIRECTV made a payment, net of cash acquired, of $97 million and assumed $1.88B of debt as well as related equity collars. As of December 31, 2009, DIRECTV had made $751 million in principal payments on this loan and payments related to the partial settlement of the equity collars during the fourth quarter.