The DIRECTV Group Announces First Quarter 2005 Results

Business Wire, May 2, 2005

EL SEGUNDO, Calif. -- The DIRECTV Group, Inc. (NYSE:DTV):

--DIRECTV U.S. Adds 505,000 Net Subscribers

--DIRECTV U.S. Increases Revenues 35% to $2.8 Billion and Operating Profit before Depreciation and Amortization 48% to $216 Million

The DIRECTV Group, Inc. (NYSE:DTV) today reported that first quarter revenues increased 26% to $3.15 billion and operating profit before depreciation and amortization(1) grew 77% to $158 million compared to last year's first quarter. The DIRECTV Group reported a first quarter 2005 operating loss of $54 million and net loss of $41 million compared with an operating loss of $96 million and a net loss of $639 million in the same period last year.

"The strong demand for DIRECTV U.S.' service throughout the country continued in the first quarter leading to first quarter records for both gross and net subscriber additions of 1.14 million and 505 thousand, respectively," said Chase Carey, president and CEO of The DIRECTV Group, Inc. "In addition, DIRECTV U.S.' 35% revenue growth and 48% increase in operating profit before depreciation and amortization demonstrate that we're beginning to see the benefits from our improved operating performance including efficiencies gained in the former NRTC territories. Although these results reflect steady progress in key operating areas such as churn, upgrade and retention marketing and subscriber acquisition costs, we still have much to accomplish as we continue to drive profitable growth."

Carey concluded, "We are moving quickly to enhance our service and in the coming months we will have launched three new satellites that will greatly expand our capacity and enable us to introduce an array of compelling new programming services, including additional local channels in high-definition format. We will roll out our new interactive digital video recorder in the summer, followed shortly thereafter by the launch of a suite of enhanced new services for our exclusive NFL SUNDAY TICKET(TM) package. Additionally, around the end of the year we will introduce the DIRECTV Home Media Center. We believe that the enhancements we are making to our service, coupled with our ongoing efforts to further improve DIRECTV's industry-leading customer service, will bring us closer to our goal of making DIRECTV the best television experience in the world."

First Quarter Review

Operational Review. In the first quarter of 2005, The DIRECTV Group's revenues of $3.15 billion increased 26% compared to the first quarter of 2004 driven principally by strong DIRECTV U.S. subscriber growth, the consolidation of the full economics of the former NRTC and Pegasus subscribers (acquired in the third quarter of 2004), and strong average monthly revenue per subscriber (ARPU) growth. These changes were partially offset by the absence of DIRECTV(R) set-top receiver revenues at Hughes Network Systems (HNS) due to the sale of the set-top box manufacturing operations in June 2004.

THE DIRECTV GROUP'S OPERATIONAL REVIEW

                                              Three Months
                                             Ended March 31,
                                    ----------------------------------
                                          2005             2004
----------------------------------- ------------------ ---------------
Revenues ($M)                           $3,148           $2,493
----------------------------------- ------------------ ---------------
Operating Profit Before
 Depreciation and Amortization ($M)        158               89
----------------------------------- ------------------ ---------------
Operating Loss ($M)                        (54)             (96)
----------------------------------- ------------------ ---------------
Net Loss ($M)                              (41)            (639)
----------------------------------- ------------------ ---------------
Loss Per Common Share ($)                (0.03)           (0.46)
----------------------------------- ------------------ ---------------
Free Cash Flow(1) ($M)                    (202)            (622)
----------------------------------- ------------------ ---------------

(1) See footnote 2 on page 6 of this release.

The improved operating profit before depreciation and amortization of $158 million was primarily due to the increase in gross profit generated from higher revenues at DIRECTV U.S. and a $33 million higher pre-tax charge in the first quarter of 2004 for severance, related pension costs and retention benefit expenses. These changes were partially offset by increased subscriber acquisition costs primarily related to the first quarter record gross subscriber additions and higher upgrade and retention costs at DIRECTV U.S. Also impacting the comparison was a larger loss at HNS primarily related to charges associated with the sale of the remaining HNS assets completed on April 22, 2005.

The smaller operating loss of $54 million was due to the higher operating profit before depreciation and amortization discussed above, the absence of depreciation at HNS due to its sale and lower depreciation at DIRECTV Latin America principally reflecting the effects of a fourth quarter 2004 write-down of assets in Mexico. These improvements were partially offset by higher amortization expense at DIRECTV U.S. resulting from intangible assets recorded as part of the NRTC and Pegasus transactions, which were completed in the third quarter of 2004.