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DirecTV Announces First Quarter Results:

From DirecTV's Website:

The DIRECTV Group Announces First Quarter 2007 Results

DIRECTV U.S. First Quarter Financial Highlights

-- Net Subscriber Additions of 235,000 Driven by an Increase in
Gross Additions and the Lowest Monthly Churn Rate in 3 Years
of 1.44%

-- Revenues Increase 11% to Over $3.5 Billion Fueled by a 5.2%
Increase in Average Monthly Revenue Per Subscriber (ARPU) to
$73.40

EL SEGUNDO, Calif.--(BUSINESS WIRE)--May 9, 2007--The DIRECTV Group, Inc. (NYSETV) today reported that first quarter revenues increased 15% to $3.91 billion and operating profit before depreciation and amortization(1) increased 54% to $930 million compared to last year's first quarter. The DIRECTV Group reported that first quarter 2007 operating profit increased 44% and net income increased 43% to $563 million and $336 million, respectively, when compared to the same period last year. Earnings per share were $0.27 compared with $0.17 in the same period last year.

"First quarter results highlight DIRECTV U.S.' operating strength and ability to generate strong cash flow as indicated by the $343 million of cash flow before interest and taxes in the quarter. The increase in gross subscribers and the lowest churn rate in three years reflect the strength of DIRECTV's video service and improved competitive positioning in the marketplace. Particularly noteworthy was the significant growth in advanced products in the quarter, including the addition of nearly twice as many high definition, or HD, customers compared to the prior year," said Chase Carey, president and CEO of The DIRECTV Group, Inc.

Carey continued, "The increased sales of HD and digital video recorders are driving favorable results for most of our key operating metrics. For example, the quarterly increase in gross subscriber additions to 929,000, the decline in monthly churn to 1.44% and the ARPU growth of over 5% to $73.40 were all favorably impacted by the significant increase in sales of advanced services. The strong subscriber and ARPU growth drove revenues to over $3.5 billion, up 11% over the prior year."

Carey added, "Operating profit before depreciation and amortization of $869 million increased over 50% compared to last year primarily due to the capitalization of set-top boxes under the lease program implemented in March 2006. Upgrade and retention costs, including capitalized equipment, were higher than the prior year due to the increased number of customers upgrading to HD and DVR services, as well as converting to our new MPEG-4 HD equipment. As we've seen in recent quarters, investments in subscribers with advanced services continue to drive superior financial returns that are generally 2 to 3 times greater than subscribers without advanced services due to the significantly higher ARPU and lower churn generated from these households."

Carey concluded, "It's very exciting to see the strong demand for HD services, particularly considering the fact that we plan to greatly expand our HD programming later this year. With the successful launch of DIRECTV 10--currently targeted to lift-off in late June--we remain on schedule to offer up to 100 HD channels by the end of this year. With this added capacity, we expect to offer significantly more HD channels than most of our competitors, providing DIRECTV with an important advantage in this rapidly growing market."

THE DIRECTV GROUP'S OPERATIONAL REVIEW

Lease Program. On March 1, 2006, DIRECTV U.S. introduced a set-top receiver lease program primarily to increase future profitability by providing DIRECTV U.S. with the opportunity to retrieve and reuse set-top receivers. Under this new program, set-top receivers are capitalized and depreciated over their estimated useful lives of three years. Prior to March 1, 2006, set-top receivers provided to new and existing DIRECTV U.S. subscribers were immediately expensed upon activation as a subscriber acquisition, upgrade or retention cost. The lease program is expected to result in a reduction in all of these costs. The amount of set-top receivers capitalized during the period is now reported in the DIRECTV U.S. Consolidated Statements of Cash Flows under the captions "Cash paid for subscriber leased equipment - subscriber acquisitions" and "Cash paid for subscriber leased equipment - upgrade and retention." The amount of cash DIRECTV U.S. paid during the quarter ended March 31, 2007 for leased set-top receivers totaled $406 million - $188 million for subscriber acquisitions and $218 million for upgrade and retention. By comparison, in March 2006 DIRECTV paid $86 million for leased equipment - $46 million for subscriber acquisitions and $40 million for upgrade and retention.