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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
For the quarterly period ended June 30, 2011
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-106529

Commission file number 333-106529

DIRECTV HOLDINGS LLC
DIRECTV FINANCING CO., INC.
(Exact name of registrant as specified in its charter)

DIRECTV Holdings LLC—Delaware DIRECTV Financing Co., Inc.—Delaware (State or other jurisdiction of incorporation or organization)		25-1902628 59-3772785 (I.R.S. Employer Identification Number)
DIRECTV Holdings LLC—Delaware DIRECTV Financing Co., Inc.—Delaware		25-1902628 59-3772785
2230 East Imperial Highway, El Segundo, California (Address of principal executive offices)		90245 (Zip Code)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2230 East Imperial Highway, El Segundo, California		90245
(Address of principal executive offices)		(Zip Code)
(310) 964-5000 (Registrant's telephone number, including area code)
N/A (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The registrant has met the conditions set forth in General Instructions H(1) (a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with the reduced disclosure format.

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DIRECTV HOLDINGS LLC

TABLE OF CONTENTS

			Page No
Part I—Financial Information (Unaudited)
	Item 1. Financial Statements		1
		Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010	1
		Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010	1
		Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010	2
		Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010	2
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010	3
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010	3
		Notes to the Consolidated Financial Statements	4
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		1719
	Item 4. Controls and Procedures		2731
Part II—Other Information
	Item 1. Legal Proceedings		2832
	Item 1A. Risk Factors		2932
	Item 6. Exhibits		2933
Signatures			3134

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DIRECTV HOLDINGS LLC

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

			Three Months Ended March 31,
			Three Months Ended June 30,						Six Months Ended June 30,
			2011			2010			2011			2010
			(Dollars in Millions)
Revenues			$	5,~~145~~277		$	4,~~772~~934		$	10,422		$	9,706
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		2,~~200~~207			2,~~014~~019			4,407			4,033
		Subscriber service expenses		~~351~~355			~~323~~325			706			648
		Broadcast operations expenses		7475			6966			149			135
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		~~682~~626			~~595~~610			1,308			1,205
		Upgrade and retention costs		~~259~~298			~~250~~259			557			509
		General and administrative expenses		~~216~~270			~~215~~261			486			476
	Depreciation and amortization expense			~~442~~430			~~498~~495			872			993
Total operating costs and expenses				4,~~224~~261			34,~~964~~035			8,485			7,999
Operating profit				~~921~~1,016			~~808~~899			1,937			1,707
Interest income				—1			31			1			4
Interest expense				(~~156~~186	)		(97116	)		(342	)		(213	)
Other, net				(629	)		(5	)		23			—
Income before income taxes				~~759~~860			~~709~~789			1,619			1,498
Income tax expense				(~~288~~323	)		(~~276~~307	)		(611	)		(583	)
Net income			$	~~471~~537		$	~~433~~482		$	1,008		$	915

The accompanying notes are an integral part of these Consolidated Financial Statements.

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DIRECTV HOLDINGS LLC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

			March 31, 2011			December 31, 2010
			June 30, 2011			December 31, 2010
			(Dollars in Millions)
ASSETS
Current assets
	Cash and cash equivalents		$	1,~~680~~296		$	687
	Accounts receivable, net of allowances of $48 and $46			1,606			1,735
	Accounts receivable, net of allowances of $66 and $46			1,673			1,735
	Inventories			~~293~~298			227
	Prepaid expenses and other			~~168~~188			187
		Total current assets		3,~~747~~455			2,836
Satellites, net				1,~~759~~737			1,794
Property and equipment, net				2,~~799~~801			2,832
Goodwill				3,~~176~~177			3,176
Intangible assets, net				~~480~~466			495
Other assets				~~289~~252			267
		Total assets	$	1211,~~250~~888		$	11,400
LIABILITIES AND OWNER'S DEFICIT
Current liabilities
	Accounts payable and accrued liabilities		$	2,~~881~~571		$	2,977
	Unearned subscriber revenues and deferred credits			~~360~~372			378
		Total current liabilities		32,~~241~~943			3,355
Long-term debt				1413,~~121~~462			10,472
Deferred income taxes				~~976~~1,035			906
Other liabilities and deferred credits				~~276~~249			288
Commitments and contingencies
Owner's deficit
	Capital stock and additional paid-in capital			2551			7
	Accumulated deficit			(65,~~389~~852	)		(3,628	)
		Total owner's deficit		(65,~~364~~801	)		(3,621	)
		Total liabilities and owner's deficit	$	1211,~~250~~888		$	11,400

The accompanying notes are an integral part of these Consolidated Financial Statements.

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DIRECTV HOLDINGS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

				Three Months Ended March 31,
				Six Months Ended June 30,
				2011			2010
				(Dollars in Millions)
Cash Flows from Operating Activities
Net income				$	~~471~~1,008		$	~~433~~915
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization				~~442~~872			~~498~~993
	Amortization of deferred revenues and deferred credits				(818	)		(817	)
	Share-based compensation expense				1843			1631
	Deferred income taxes				64119			3458
	Other				(131	)		1013
	Change in other operating assets and liabilities:
		Accounts receivable			~~131~~81			909
		Inventories			(6671	)		(834	)
		Prepaid expenses and other			222			153
		Accounts payable and accrued liabilities			(~~108~~337	)		~~238~~(55	)
		Unearned subscriber revenue and deferred credits			(186	)		(256	)
		Other, net			(312	)		(1337	)
			Net cash provided by operating activities		~~944~~1,650			1,~~280~~941
Cash Flows from Investing Activities
	Cash paid for property and equipment				(~~102~~245	)		(~~109~~222	)
	Cash paid for subscriber leased equipment—subscriber acquisitions				(~~174~~324	)		(~~115~~246	)
	Cash paid for subscriber leased equipment—upgrade and retention				(69145	)		(81152	)
	Cash paid for satellites				(3148	)		(869	)
			Net cash used in investing activities		(376	)		(313	)
	Investment in companies, net of cash acquired				(11	)		(1	)
	Other				55			—
			Net cash used in investing activities		(718	)		(690	)
Cash Flows from Financing Activities
	Cash proceeds from debt issuance				3,990			2,996
	Debt issuance costs				(2830	)		(1416	)
	Repayment of long-term debt				(~~341~~1,000	)		(1,~~013~~103	)
	Repayment of other long-term obligations				(2654	)		(2348	)
	Cash dividends to Parent				(3,250	)		(34,~~500~~000	)
	Cash contribution from Parent				60			—
	Excess tax benefit from share-based compensation				21			8
	Excess tax benefit from share-based compensation				20			8
			Net cash used in financing activities		(323	)		(2,163	)
			Net cash provided by (used in) financing activities		425			(1,546	)
Net increase (decrease) in cash and cash equivalents					609			(912	)
Net increase (decrease) in cash and cash equivalents					993			(579	)
Cash and cash equivalents at beginning of the period					687			1,716
Cash and cash equivalents at end of the period				$	1,~~680~~296		$	~~1,137~~804
Supplemental cash flow information
Cash paid for interest				$	~~148~~277		$	19171
Cash paid for income taxes					1449			1438

The accompanying notes are an integral part of these Consolidated Financial Statements.

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Basis of Presentation

DIRECTV Holdings LLC is an indirect, wholly-owned subsidiary of DIRECTV and consists of DIRECTV Enterprises, LLC and its wholly-owned subsidiaries and DIRECTV Financing Co., Inc., or DIRECTV Financing. We sometimes refer to DIRECTV Holdings LLC as DIRECTV Holdings, DIRECTV U.S., we or us and sometimes refer to DIRECTV as our Parent. We are the largest provider of direct-to-home, or DTH, digital television services and the second largest provider in the multi-channel video programming distribution, or MVPD, industry in the United States.

We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial reporting. In the opinion of management, all adjustments (consisting only of normal recurring items) that are necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC on February 28, 2011, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed with the SEC on May 6, 2011 and all of our other filings, including Current Reports on Form 8-K, filed with the SEC after such date and through the date of this report.

We prepare ~~Note 2:~~our ~~Accounting~~consolidated ~~Change~~ financial statements in conformity with accounting principles generally accepted in the United States of America, which requires us to make estimates and assumptions that affect amounts reported herein. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, our actual results reported in future periods may be affected by changes in those estimates.

Note 2: Divestiture

In April 2011, we sold an equity method investment for $55 million in cash. As a result of this sale, we recognized a $37 million gain, or $23 million after tax, on the sale in "Other, net" in the Consolidated Statements of Operations, which represents the difference between the selling price and the carrying amount of the equity method investment sold.

Note 3: Accounting Change

Revenue Recognition

On January 1, 2011 we adopted the revisions issued by the Financial Accounting Standards Board to the standard for revenue arrangements with multiple deliverables. The revised standard allows entities to use the "best estimate of selling price" in addition to third-party evidence or actual selling prices for determining the fair value of a deliverable, and includes additional disclosure requirements. The adoption of this change did not have an effect on our consolidated results of operations and financial position.

We enter into multiple-deliverable revenue arrangements with our subscribers under which we provide DIRECTV receiving equipment and installation at the inception of the arrangement, and programming during their contract period of up to two years. We allocate consideration to each deliverable in the arrangement based on its relative selling price. We determine the selling price of the ~~DIRECTV~~ receiving equipment using our best estimate. We determine the selling price for installation services based on prices charged by third parties. We determine the selling price of the programming using our standard programming rates. The DIRECTV receiving equipment, installation services and programming are each considered separate units of accounting.

We recognize subscription and pay-per-view revenues when programming is broadcast to subscribers. We recognize subscriber fees for multiple set-top receivers, our published programming guide, warranty services and equipment rental as revenue, as earned. We recognize advertising revenues when the related services are performed. We defer programming payments received from subscribers in advance of the broadcast as "Unearned subscriber revenues and deferred credits" in the Consolidated Balance Sheets until earned. We recognize revenues to be received under contractual commitments on a straight line basis over the minimum contractual period. We report revenues net of customer credits and discounted promotions.

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

DIRECTV receiving ~~Note 3:~~equipment ~~Debt~~ using our best estimate. We determine the selling price for installation services based on prices charged by third parties. We determine the selling price of the programming using our standard programming rates. The DIRECTV receiving equipment, installation services and programming are each considered separate units of accounting.

~~All~~We recognize ofsubscription ~~our~~and ~~senior~~pay-per-view ~~notes~~revenues ~~were~~when ~~issued~~programming byis usbroadcast ~~and~~to ~~have~~subscribers. ~~been~~We ~~registered~~recognize ~~under~~subscriber ~~the~~fees ~~Securities~~for ~~Act~~multiple ofset-top receivers, ~~1933~~warranty services and equipment rental as revenue, as ~~amended~~earned. ~~All~~We ofrecognize ~~our~~advertising ~~senior notes~~revenues when the related services are ~~unsecured~~performed. ~~and~~We ~~have~~defer ~~been~~programming ~~fully~~payments ~~and~~received ~~unconditionally~~from subscribers ~~guaranteed,~~in ~~jointly~~advance of the broadcast as "Unearned subscriber revenues and ~~severally,~~deferred bycredits" ~~substantially~~in ~~all~~the ofConsolidated ~~our~~Balance ~~domestic~~Sheets ~~subsidiaries~~until earned. We recognize revenues to be received under contractual ~~Principal~~commitments on a straight line basis over the ~~senior~~minimum ~~notes~~contractual isperiod. ~~payable~~We ~~upon~~report ~~maturity,~~revenues ~~while~~net ~~interest~~of iscustomer ~~payable~~credits ~~semi-annually~~and discounted promotions.

~~As of~~ ~~March~~Note ~~31,~~4: ~~2011, we had the ability to borrow up to $2 billion under a revolving credit facility discussed below.~~ Debt

Senior Notes

The following table sets forth our outstanding senior notes balance as of:

		Principal amount		Carrying value, net of unamortized original issue discounts or including premium

		June 30, 2011		June 30, 2011		December 31, 2010
				(Dollars in Millions)
4.750% senior notes due 2014		$	1,000	$	998	$	998
3.550% senior notes due 2015			1,200		1,199		1,199
6.375% senior notes due 2015			—		—		1,002
3.125% senior notes due 2016			750		750		750
3.500% senior notes due 2016			1,500		1,497		—
7.625% senior notes due 2016			1,500		1,500		1,500
5.875% senior notes due 2019			1,000		994		994
5.200% senior notes due 2020			1,300		1,298		1,298
4.600% senior notes due 2021			1,000		999		999
5.000% senior notes due 2021			1,500		1,494		—
6.350% senior notes due 2040			500		499		499
6.000% senior notes due 2040			1,250		1,234		1,233
6.375% senior notes due 2041			1,000		1,000		—

	Total senior notes	$	13,500	$	13,462	$	10,472

The fair value of our senior notes was approximately $14,188 million at June 30, 2011 and $10,881 million at December 31, 2010. We calculated the fair values based on quoted market prices of our senior notes, which is a Level 1 input under accounting guidance for fair value measurements of assets and liabilities.

All of our senior notes were issued by us and have been registered under the Securities Act of 1933, as amended. All of our senior notes are unsecured and have been fully and unconditionally

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

guaranteed, jointly and severally, by substantially all of our domestic subsidiaries. Principal on the senior notes is payable upon maturity, while interest is payable semi-annually.

As of June 30, 2011, we had the ability to borrow up to $2 billion under a revolving credit facility discussed below.

2011 Financing Transactions

On March 10, 2011 we issued the following senior notes:

	Principal		Proceeds, net of discount

	(Dollars in Millions)
3.500% senior notes due 2016	$	1,500	$	1,497
5.000% senior notes due 2021		1,500		1,493
6.375% senior notes due 2041		1,000		1,000

	$	4,000	$	3,990

We incurred $24 million of debt issuance costs in connection with this transaction.

On March 17, 2011, we purchased, pursuant to a tender offer, $341 million of our then outstanding $1,002 million of 6.375% senior notes due in 2015, representing approximately 34% of the total outstanding principal of these notes, at a price of 103.313%, plus accrued and unpaid interest. ~~The~~On ~~redemption~~June 15, ~~resulted~~2011, inwe redeemed, pursuant to the terms of our indenture, the remaining $659 million of our outstanding 6.375% senior notes due 2015, at a ~~first~~price of 102.125%, plus accrued and unpaid interest. We recorded a pre-tax charge of $14 million, $9 million after tax, during the second quarter of 2011 and a pre-tax charge of $1125 million, $716 million after tax, ~~which~~during ~~resulted~~the ~~primarily~~six ~~from~~months ~~the~~ended June 30, ~~premium~~2011, ~~paid~~as ~~for~~a ~~redemption~~result of ~~our~~the ~~6.375%~~redemptions, ~~senior~~primarily ~~notes~~for the premiums paid. The pre-tax charge was recorded in "Other, net" in our Consolidated Statements of Operations.

2010 Financing Transactions

On March 11, 2010 we issued the following senior notes:

	Principal		Proceeds, net of discount

	(Dollars in Millions)
3.550% senior notes due 2015	$	1,200	$	1,199
5.200% senior notes due 2020		1,300		1,298
6.350% senior notes due 2040		500		499

	$	3,000	$	2,996

We incurred $17 million of debt issuance costs in connection with this transaction.

On March 16, 2010, we repaid the $985 million of remaining principal on Term Loan C of our senior secured credit facility. The repayment of Term Loan C resulted in a first quarter 2010 pre-tax charge of $9 million, $6 million after tax, of which $6 million resulted from the write-off of unamortized discount and $3 million resulted from the write-off of deferred debt issuance and other

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

transaction costs. The charge was recorded in "Other, net" in our Consolidated Statements of Operations.

Senior Notes

The following table sets forth our outstanding senior notes balance as of:

		Outstanding Balance
		March 31, 2011		December 31, 2010
		(Dollars in Millions)
4.750% senior notes due 2014, net of unamortized discount of $2 million as of March 31, 2011 and as of December 31, 2010		$	998	$	998
3.550% senior notes due 2015, net of unamortized discount of $1 million as of March 31, 2011 and December 31, 2010			1,199		1,199
6.375% senior notes due 2015, includes unamortized bond premium of $1 million as of March 31, 2011 and $2 million as of December 31, 2010			660		1,002
3.125% senior notes due 2016			750		750
3.500% senior notes due 2016, net of unamortized discount of $3 million as of March 31, 2011			1,497		—
7.625% senior notes due 2016			1,500		1,500
5.875% senior notes due 2019, net of unamortized discount of $6 million as of March 31, 2011 and as of December 31, 2010			994		994
5.200% senior notes due 2020, net of unamortized discount of $2 million as of March 31, 2011 and as of December 31, 2010			1,298		1,298
4.600% senior notes due 2021, net of unamortized discount of $1 million as of March 31, 2011 and as of December 31, 2010			999		999
5.000% senior notes due 2021, net of unamortized discount of $7 million as of March 31, 2011			1,493		—
6.350% senior notes due 2040, net of unamortized discount of $1 million as of March 31, 2011 and as of December 31, 2010			499		499
6.000% senior notes due 2040, net of unamortized discount of $16 million as of March 31, 2011 and $17 million as of December 31, 2010			1,234		1,233
6.375% senior notes due 2041			1,000		—
	Total senior notes	$	14,121	$	10,472

The fair value of our senior notes was approximately $14,485 million at March 31, 2011 and $10,881 million at December 31, 2010. We calculated the fair values based on quoted market prices of our senior notes, which is a Level 1 input under accounting guidance for fair value measurements of assets and liabilities.

Our senior notes mature as follows: $1,000 million in 2014, $1,859 million in 2015 and $11,300 million thereafter.

Credit Facilities

At December 31, 2010, our senior secured credit facility consisted of a $500 million undrawn six-year revolving credit facility.

6 In February 2011, our senior secured credit facility was terminated and replaced by a five-year, $2.0 billion revolving credit facility. We pay a commitment fee of .30% per year for the unused commitment under the revolving credit facility, and borrowings will bear interest at an annual rate of (i) the London interbank offer rate (LIBOR) (or for Euro advances the EURIBOR rate) plus 1.50% or at our option (ii) the higher of the prime rate plus 0.50% or the Fed Funds Rate plus 1.00%. The commitment fee and the annual interest rate may be increased or decreased under certain conditions, which include changes in our long-term, unsecured debt ratings. The revolving credit facility has been fully and unconditionally guaranteed, jointly and severally, by substantially all of our subsidiaries on a senior unsecured basis.

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In February 2011, our senior secured credit facility was terminated and replaced by a five-year, $2.0 billion revolving credit facility. We pay a commitment fee of .30% per year for the unused commitment under the revolving credit facility, and borrowings will bear interest at an annual rate of (i) the London interbank offer rate (LIBOR) (or for Euro advances the EURIBOR rate) plus 1.50% or at our option (ii) the higher of the prime rate plus 0.50% or the Fed Funds Rate plus 1.00%. The commitment fee and the annual interest rate may be increased or decreased under certain conditions, which include changes in our long-term, unsecured debt ratings. The revolving credit facility is unsecured and has been fully and unconditionally guaranteed, jointly and severally, by substantially all of our subsidiaries on a senior unsecured basis.

Covenants and Restrictions

The revolving credit facility requires us to maintain at the end of each fiscal quarter a specified ratio of indebtedness to adjusted net income. The revolving credit facility also includes covenants that restrict our ability to, among other things, (i) incur additional subsidiary indebtedness, (ii) incur liens, (iii) enter into certain transactions with affiliates, (iv) merge or consolidate with another entity, (v) sell, assign, lease or otherwise dispose of all or substantially all of our assets, and (vi) change our lines of business. Additionally, the senior notes contain restrictive covenants that are similar. Should we fail to comply with these covenants, all or a portion of our borrowings under the senior notes could become immediately payable and our revolving credit facility could be terminated. At ~~March~~June 3130, 2011, we were in compliance with all such covenants. The senior notes and revolving credit facility also provide that the borrowings may be required to be prepaid if certain change-in-control events occur.

Note 45: Contingencies

National Football League Labor Dispute. We have a contract with the National Football League, or NFL, for the exclusive rights to distribute the NFL Sunday Ticket Package to our subscribers. The NFL's collective bargaining agreement with its players expired in March 2011. The NFL and its players are engaged in a labor dispute that is in litigation and there is a possibility that no games will be played or a reduced schedule will be played during the 2011-2012 season. If the league and the players do not reach a new collective bargaining agreement or alternative arrangement before or during the 2011-2012 season, we would still be obligated to make certain contractual payments to the NFL. Our subscriber revenues in 2011 would decrease if NFL games are not played or a full season is lost and cash flows from operating activities would decrease due to lower revenues and because we would still be obligated to make certain contractual payments to the NFL. We will be able to partially offset these payments through provisions such as credits in the following year, reimbursements for games not played and our rights to an extra season if an entire season is cancelled, but in the near term a continued labor dispute could have a material adverse effect on our cash flows from operating activities primarily due to payments we may have to make to the NFL, including minimum contractual obligations, an optional advance payment that may be requested by the NFL, and the loss of subscriber revenue as well as possibly resulting in reduced subscriber additions and higher churn.

Litigation

Litigation is subject to uncertainties and the outcome of individual litigated matters is not predictable with assurance. Various legal actions, claims and proceedings are pending against us arising in the ordinary course of business. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. Some of the matters may involve compensatory, punitive, or treble damage claims, or demands that, if granted, could require us to pay damages or make other expenditures in amounts that could not be estimated at June 30, 2011. After discussion with counsel representing us in those actions, it is the opinion of management that such litigation is not expected to have a material effect on our consolidated financial statements.

Intellectual Property Litigation. We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be the responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. To the extent that the allegations in these lawsuits can be

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~treble~~analyzed ~~damage~~by ~~claims,~~us orat ~~demands~~this ~~that,~~stage ifof ~~granted~~their proceedings, ~~could~~we ~~require~~believe usthe toclaims ~~pay~~are ~~damages~~without ormerit ~~make~~and ~~other~~intend ~~expenditures~~to indefend ~~amounts~~the ~~that~~actions ~~could~~vigorously. ~~not~~We behave ~~estimated~~determined atthat ~~March 31,~~the ~~2011.~~likelihood ~~After~~of ~~discussion~~a ~~with~~material liability ~~counsel~~in ~~representing~~such usmatters inis ~~those~~remote ~~actions,~~or ithave ismade ~~the~~appropriate ~~opinion~~accruals ofand ~~management~~the ~~that~~final ~~such~~disposition ~~litigation~~of these claims is not expected to have a material ~~adverse~~ effect on our consolidated financial ~~statements~~position. However, if an adverse ruling is made in a lawsuit involving key intellectual property, such ruling could result in a loss that would be material to our consolidated results of operations of any one period. No assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Intellectual Property Litigation. We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our business. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be the responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. To the extent that the allegations in these lawsuits can be analyzed by us at this stage of their proceedings, we believe the claims are without merit and intend to defend the actions vigorously. The final disposition of these claims is not expected to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations of any one period. No assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Early Cancellation Fees. In 2008, a number of plaintiffs filed putative class action lawsuits in state and federal courts challenging the early cancellation fees we assess our customers when they do not fulfill their programming commitments. Several of these lawsuits are pending—some in California state court purporting to represent statewide classes, and some in federal courts purporting to represent nationwide classes. The lawsuits seek both monetary and injunctive relief. While the theories of liability vary, the lawsuits generally challenge these fees under state consumer protection laws as both unfair and inadequately disclosed to customers. In light of the U.S. Supreme Court's recent decision in AT&T Mobility LLC v. Concepcion, we intend to move to compel these cases to arbitration in accordance with our Customer Agreement. We believe that our early cancellation fees are adequately disclosed, and represent reasonable estimates of the costs we incur when customers cancel service before fulfilling their programming commitments.

From time to time, we receive investigative inquiries or subpoenas from state and federal authorities with respect to alleged violations of state and federal statutes. These inquiries may lead to legal proceedings in some cases. We have received a request for information from the Federal Trade Commission, or FTC, on issues similar to those recently resolved with a multistate group of state attorneys general. We are cooperating with the FTC by providing information about our sales and marketing practices and customer complaints.

Satellites

We may purchase in-orbit and launch insurance to mitigate the potential financial impact of satellite launch and in-orbit failures if the premium costs are considered economic relative to the risk of satellite failure. The insurance generally covers the unamortized book value of covered satellites. We do not insure against lost revenues in the event of a total or partial loss of the capacity of a satellite. We generally rely on in-orbit spare satellites and excess transponder capacity at key orbital slots to mitigate the impact a satellite failure could have on our ability to provide service. At ~~March~~June 3130, 2011, the net book value of in-orbit satellites was $1,~~675~~626 million, all of which was uninsured.

Note 6: Related Party Transactions

In the ordinary course of our operations, we enter into transactions with related parties as discussed below.

DIRECTV and affiliates

We determine our income taxes based upon our tax sharing agreement with our Parent, which generally provides that the current income tax liability or receivable be computed as if we were a separate taxpayer. Payments made to our Parent under this tax sharing arrangement were $429 million for the six months ended June 30, 2011 and $425 million for the six months ended June 30, 2010. We

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

also receive ~~Note~~an allocation of employee benefit expenses from our Parent. We believe that our consolidated financial statements reflect our cost of doing business in accordance with SEC Staff Accounting Bulletin Topic 5:1.B, "Allocation of Expenses and Related ~~Party~~Disclosures ~~Transactions~~ in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity."

InWe paid ~~the~~dividends ~~ordinary~~to ~~course~~our Parent of ~~our~~$3,250 million ~~operations~~during the six months ended June 30, we2011 ~~enter~~and ~~into~~$4,000 million ~~transactions~~during ~~with~~the ~~related~~six ~~parties~~months asended ~~discussed~~June 30, ~~below~~2010 from available cash and cash equivalents.

DIRECTV and affiliates

We determine our income taxes based upon our tax sharing agreement with our Parent, which generally provides that the current income tax liability or receivable be computed as if we were a separate taxpayer. No payments were made under the tax sharing arrangement for the three months ended March 31, 2011 and 2010. We also receive an allocation of employee benefit expenses from our Parent. We believe that our consolidated financial statements reflect our cost of doing business in accordance with SEC Staff Accounting Bulletin No. 55, "Allocation of Expenses and Related Disclosures in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity."

We paid dividends to our Parent of $3,250 million in the first quarter of 2011 and $3,500 million in the first quarter of 2010 from available cash and cash equivalents.

Transactions with regional sports networks owned by our Parent are also included as transactions with DIRECTV and affiliates.

Liberty Media, Liberty Global and Discovery Communications

On June 16, 2010, our Parent completed a transaction, ~~which we refer to as the Malone Transaction,~~ with Dr. John Malone~~, his~~ ~~wife~~ and ~~certain~~his ~~trusts for the benefit of their children~~family, which we refer to as the Malones, which resulted in the reduction of the Malones' voting interest in our Parent from approximately 24.3% to approximately 3% and Dr. Malone's concurrent resignation from our Parent's Board of Directors. Transactions with Liberty Media, Discovery Communications, Inc. and Liberty Global, Inc. and their subsidiaries or equity method investees were considered to be related party transactions as a result of Dr. Malone's ownership interest and management roles for these entities. Such transactions consisted primarily of purchases of programming created, owned or distributed by these entities.

The majority of payments under contractual arrangements with Liberty Media, Discovery Communications, Inc. and Liberty Global, Inc. entities relate to multi-year programming contracts. Payments under these contracts are typically subject to annual rate increases and are based on the number of subscribers receiving the related programming.

Other

Companies in which we hold equity method investments are also considered related parties.

Transactions with the Game Show Network, in which our Parent holds an equity method investment in, are also included as transactions with Other.

The majority of payments under contractual arrangements with related parties are pursuant to multi-year programming contracts. Payments under these contracts are typically subject to annual rate increases and are based on the number of subscribers receiving the related programming.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table summarizes sales to, and purchases from, related parties:

		Three Months Ended March 31,
		Three Months Ended June 30,				Six Months Ended June 30,
		2011		2010		2011		2010
		(Dollars in Millions)
Sales:
Liberty Media and affiliates		$	—	$	1412	$	—	$	26
Discovery Communications, Liberty Global and affiliates			—		32		—		5
DIRECTV and affiliates			2		2		4		4
	Total	$	2	$	19
Other			1		1		1		1
Purchases:
	Total	$	3	$	17	$	5	$	36
Liberty Media and affiliates		$	—	$	78
Purchases:
Discovery Communications, Liberty Global and affiliates			—		61
Liberty Media and affiliates		$	—	$	65	$	—	$	143
DIRECTV and affiliates			14		12
Discovery Communications, Liberty Global and affiliates			—		50		—		111
Other			25		22
DIRECTV and affiliates			14		15		28		27
	Total	$	39	$	173
Other			21		23		46		45
	Total	$	35	$	153	$	74	$	326

The following table sets forth the amount of accounts receivable from and accounts payable to related parties as of:

	March 31, 2011		December 31, 2010
	June 30, 2011		December 31, 2010
	(Dollars in Millions)
Accounts receivable	$	83	$	9
Accounts payable		~~113~~50		63

The accounts receivable and accounts payable balances as of ~~March~~June 3130, 2011 and December 31, 2010 are primarily related to intercompany transactions with our Parent.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 67: Condensed Consolidating Financial Statements

The following presents the condensed consolidating statements of operations for the three and six months ended ~~March~~June 3130, 2011 and June 30, 2010, the condensed consolidating balance sheets as of ~~March~~June 3130, 2011 and December 31, 2010, and the condensed consolidating statements of cash flows for the ~~three~~six months ~~ended~~ ~~March~~ended June 3130, 2011 and 2010 of DIRECTV Holdings together with DIRECTV Financing, or the Co-Issuers, and each of DIRECTV Holdings' material subsidiaries (other than DIRECTV Financing), or the Guarantor Subsidiaries, and the eliminations necessary to present DIRECTV Holdings' financial statements on a consolidated basis. These condensed consolidating financial statements should be read in conjunction with the accompanying consolidated financial statements of DIRECTV Holdings.

Condensed Consolidating Statement of Operations For the Three Months Ended ~~March~~June 3130, 2011

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
Revenues			$	~~143~~183		$	5,~~145~~277		$	(~~143~~183	)	$	5,~~145~~277
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			2,~~200~~207			—			2,~~200~~207
		Subscriber service expenses		—			~~351~~355			—			~~351~~355
		Broadcast operations expenses		—			7475			—			7475
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			~~682~~626			—			~~682~~626
		Upgrade and retention costs		—			~~259~~298			—			~~259~~298
		General and administrative expenses		—			~~359~~453			(~~143~~183	)		~~216~~270
	Depreciation and amortization expense			—			~~442~~430			—			~~442~~430
		Total operating costs and expenses		—			4,~~367~~444			(~~143~~183	)		4,~~224~~261
Operating profit				~~143~~183			~~778~~833			—			~~921~~1,016
Equity in income of consolidated subsidiaries				~~484~~547			—			(~~484~~547	)		—
Interest expense				(155	)		(1	)		—			(156	)
Interest income				—			1			—			1
Other, net				(11	)		5			—			(6	)
Interest expense				(185	)		(1	)		—			(186	)
Income before income taxes				461			782			(484	)		759
Other, net				(14	)		43			—			29
Income tax benefit (expense)				10			(298	)		—			(288	)
Income before income taxes				531			876			(547	)		860
Net income			$	471		$	484		$	(484	)	$	471
Income tax benefit (expense)				6			(329	)		—			(323	)
Net income			$	537		$	547		$	(547	)	$	537

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidating Statement of Operations For the Three Months Ended ~~March~~June 3130, 2010

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
Revenues			$	91110		$	4,~~772~~934		$	(91110	)	$	4,~~772~~934
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		—			2,~~014~~019			—			2,~~014~~019
		Subscriber service expenses		—			~~323~~325			—			~~323~~325
		Broadcast operations expenses		—			6966			—			6966
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		—			~~595~~610			—			~~595~~610
		Upgrade and retention costs		—			~~250~~259			—			~~250~~259
		General and administrative expenses		—			~~306~~371			(91110	)		~~215~~261
	Depreciation and amortization expense			—			~~498~~495			—			~~498~~495
		Total operating costs and expenses		—			4,~~055~~145			(91110	)		34,~~964~~035
Operating profit				91110			~~717~~789			—			~~808~~899
Equity in income of consolidated subsidiaries				~~441~~484			—			(~~441~~484	)		—
Interest income				—1			3—			—			31
Interest expense				(95114	)		(2	)		—			(97116	)
Other, net				(9—	)		45			—			(5	)
Income before income taxes				~~428~~481			~~722~~792			(~~441~~484	)		~~709~~789
Income tax benefit (expense)				51			(~~281~~308	)		—			(~~276~~307	)
Net income			$	~~433~~482		$	~~441~~484		$	(~~441~~484	)	$	~~433~~482

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidating ~~Balance~~Statement ~~Sheet As~~ of ~~March~~Operations For the Six Months Ended June 3130, 2011

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
ASSETS
Revenues			$	327		$	10,422		$	(327	)	$	10,422
Total current assets			$	1,751		$	2,048		$	(52	)	$	3,747
Operating costs and expenses
Satellites, net				—			1,759			—			1,759
	Costs of revenues, exclusive of depreciation and amortization expense
Property and equipment, net				—			2,799			—			2,799
		Broadcast programming and other		—			4,407			—			4,407
Goodwill				1,828			1,348			—			3,176
		Subscriber service expenses		—			706			—			706
Intangible assets, net				—			480			—			480
		Broadcast operations expenses		—			149			—			149
Other assets				13,936			6,487			(20,134	)		289
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
Total assets			$	17,515		$	14,921		$	(20,186	)	$	12,250
		Subscriber acquisition costs		—			1,308			—			1,308
LIABILITIES AND OWNER'S EQUITY (DEFICIT)
		Upgrade and retention costs		—			557			—			557
Total current liabilities			$	169		$	3,122		$	(50	)	$	3,241
		General and administrative expenses		—			813			(327	)		486
Long-term debt				14,121			—			—			14,121
	Depreciation and amortization expense			—			872			—			872
Deferred income taxes				—			976			—			976
		Total operating costs and expenses		—			8,812			(327	)		8,485
Other liabilities and deferred credits				9,589			275			(9,588	)		276
Operating profit				327			1,610			—			1,937
Owner's equity (deficit)
Equity in income of consolidated subsidiaries				1,031			—			(1,031	)		—
	Capital stock and additional paid-in capital			25			4,639			(4,639	)		25
Interest income				—			1			—			1
	Retained earnings (Accumulated deficit)			(6,389	)		5,909			(5,909	)		(6,389	)
Interest expense				(340	)		(2	)		—			(342	)
		Total owner's equity (deficit)		(6,364	)		10,548			(10,548	)		(6,364	)
Other, net				(24	)		48			(1	)		23
Total liabilities and owner's equity (deficit)			$	17,515		$	14,921		$	(20,186	)	$	12,250
Income before income taxes				994			1,657			(1,032	)		1,619
Income tax benefit (expense)				14			(625	)		—			(611	)
Net income			$	1,008		$	1,032		$	(1,032	)	$	1,008

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidating ~~Balance~~Statement ~~Sheet As~~ of ~~December~~Operations For the Six Months Ended June 3130, 2010

			Co-Issuers			Guarantor Subsidiaries			Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
ASSETS
Revenues			$	201		$	9,706		$	(201	)	$	9,706
Total current assets			$	743		$	2,147		$	(54	)	$	2,836
Operating costs and expenses
Satellites, net				—			1,794			—			1,794
	Costs of revenues, exclusive of depreciation and amortization expense
Property and equipment, net				—			2,832			—			2,832
		Broadcast programming and other		—			4,033			—			4,033
Goodwill				1,828			1,348			—			3,176
		Subscriber service expenses		—			648			—			648
Intangible assets, net				—			495			—			495
		Broadcast operations expenses		—			135			—			135
Other assets				13,032			6,069			(18,834	)		267
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
Total assets			$	15,603		$	14,685		$	(18,888	)	$	11,400
		Subscriber acquisition costs		—			1,205			—			1,205
LIABILITIES AND OWNER'S EQUITY (DEFICIT)
		Upgrade and retention costs		—			509			—			509
Total current liabilities			$	160		$	3,247		$	(52	)	$	3,355
		General and administrative expenses		—			677			(201	)		476
Long-term debt				10,472			—			—			10,472
	Depreciation and amortization expense			—			993			—			993
Deferred income taxes				—			1,123			(217	)		906
		Total operating costs and expenses		—			8,200			(201	)		7,999
Other liabilities and deferred credits				8,592			289			(8,593	)		288
Operating profit				201			1,506			—			1,707
Owner's equity (deficit)
Equity in income of consolidated subsidiaries				925			—			(925	)		—
	Capital stock and additional paid-in capital			7			4,602			(4,602	)		7
Interest income				1			3			—			4
	Retained earnings (Accumulated deficit)			(3,628	)		5,424			(5,424	)		(3,628	)
Interest expense				(209	)		(4	)		—			(213	)
		Total owner's equity (deficit)		(3,621	)		10,026			(10,026	)		(3,621	)
Other, net				(9	)		9			—			—
Total liabilities and owner's equity (deficit)			$	15,603		$	14,685		$	(18,888	)	$	11,400
Income before income taxes				909			1,514			(925	)		1,498
Income tax benefit (expense)				6			(589	)		—			(583	)
Net income			$	915		$	925		$	(925	)	$	915

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidating ~~Statement~~Balance Sheet As of ~~Cash Flows For the Three Months Ended March~~June 3130, 2011

			Co-Issuers			Guarantor Subsidiaries			~~DIRECTV Holdings Consolidated~~Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
Cash flows from operating activities
ASSETS
	Net cash provided by operating activities		$	623		$	321		$	944
Total current assets			$	1,371		$	2,171		$	(87	)	$	3,455
Cash flows from investing activities
Satellites, net				—			1,737			—			1,737
	Cash paid for property and equipment			—			(102	)		(102	)
Property and equipment, net				—			2,801			—			2,801
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(174	)		(174	)
Goodwill				1,828			1,349			—			3,177
	Cash paid for subscriber leased equipment—upgrade and retention			—			(69	)		(69	)
Intangible assets, net				—			466			—			466
	Cash paid for satellites			—			(31	)		(31	)
Other assets				14,720			6,906			(21,374	)		252
		Net cash used in investing activities		—			(376	)		(376	)
Total assets			$	17,919		$	15,430		$	(21,461	)	$	11,888
Cash flows from financing activities
LIABILITIES AND OWNER'S EQUITY (DEFICIT)
	Cash proceeds from debt issuance			3,990			—			3,990
Total current liabilities			$	222		$	2,809		$	(88	)	$	2,943
	Debt issuance costs			(28	)		—			(28	)
Long-term debt				13,462			—			—			13,462
	Repayment of long-term debt			(341	)		—			(341	)
Deferred income taxes				—			1,252			(217	)		1,035
	Repayment of other long-term obligations			—			(26	)		(26	)
Other liabilities and deferred credits				10,036			249			(10,036	)		249
	Cash dividend to Parent			(3,250	)		—			(3,250	)
Owner's equity (deficit)
	Cash contribution from Parent			—			60			60
	Capital stock and additional paid-in capital			51			4,665			(4,665	)		51
	Excess tax benefit from share-based compensation			—			20			20
	Retained earnings (accumulated deficit)			(5,852	)		6,455			(6,455	)		(5,852	)
		Net cash provided by financing activities		371			54			425
		Total owner's equity (deficit)		(5,801	)		11,120			(11,120	)		(5,801	)
Net increase (decrease) in cash and cash equivalents				994			(1	)		993
Total liabilities and owner's equity (deficit)			$	17,919		$	15,430		$	(21,461	)	$	11,888
Cash and cash equivalents at beginning of the period				683			4			687
Cash and cash equivalents at the end of the period			$	1,677		$	3		$	1,680

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (~~Concluded~~Continued)

(Unaudited)

Condensed Consolidating ~~Statement~~Balance Sheet As of ~~Cash Flows For the Three Months Ended March~~December 31, 2010

			Co-Issuers			Guarantor Subsidiaries			~~DIRECTV Holdings Consolidated~~Eliminations			DIRECTV Holdings Consolidated
			(Dollars in Millions)
Cash flows from operating activities
ASSETS
	Net cash provided by operating activities		$	952		$	328		$	1,280
Total current assets			$	743		$	2,147		$	(54	)	$	2,836
Cash flows from investing activities
Satellites, net				—			1,794			—			1,794
	Cash paid for property and equipment			—			(109	)		(109	)
Property and equipment, net				—			2,832			—			2,832
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(115	)		(115	)
Goodwill				1,828			1,348			—			3,176
	Cash paid for subscriber leased equipment—upgrade and retention			—			(81	)		(81	)
Intangible assets, net				—			495			—			495
	Cash paid for satellites			—			(8	)		(8	)
Other assets				13,032			6,069			(18,834	)		267
		Net cash used in investing activities		—			(313	)		(313	)
Total assets			$	15,603		$	14,685		$	(18,888	)	$	11,400
Cash flows from financing activities
LIABILITIES AND OWNER'S EQUITY (DEFICIT)
	Cash proceeds from debt issuance			2,996			—			2,996
Total current liabilities			$	160		$	3,247		$	(52	)	$	3,355
	Debt issuance costs			(14	)		—			(14	)
Long-term debt				10,472			—			—			10,472
	Repayment of long-term debt			(1,013	)		—			(1,013	)
Deferred income taxes				—			1,123			(217	)		906
	Repayment of other long-term obligations			—			(23	)		(23	)
Other liabilities and deferred credits				8,592			289			(8,593	)		288
	Cash dividend to Parent			(3,500	)		—			(3,500	)
Owner's equity (deficit)
	Excess tax benefit from share-based compensation			—			8			8
	Capital stock and additional paid-in capital			7			4,602			(4,602	)		7
		Net cash used in financing activities		(1,531	)		(15	)		(1,546	)
	Retained earnings (accumulated deficit)			(3,628	)		5,424			(5,424	)		(3,628	)
Net decrease in cash and cash equivalents				(579	)		—			(579	)
		Total owner's equity (deficit)		(3,621	)		10,026			(10,026	)		(3,621	)
Cash and cash equivalents at beginning of the period				1,709			7			1,716
Total liabilities and owner's equity (deficit)			$	15,603		$	14,685		$	(18,888	)	$	11,400
Cash and cash equivalents at the end of the period			$	1,130		$	7		$	1,137

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DIRECTV HOLDINGS LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2011

			Co-Issuers			Guarantor Subsidiaries			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Cash flows from operating activities
	Net cash provided by operating activities		$	897		$	753		$	1,650

Cash flows from investing activities
	Cash paid for property and equipment			—			(245	)		(245	)
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(324	)		(324	)
	Cash paid for subscriber leased equipment—upgrade and retention			—			(145	)		(145	)
	Cash paid for satellites			—			(48	)		(48	)
	Investment in companies, net of cash acquired			—			(11	)		(11	)
	Other			—			55			55

		Net cash used in investing activities		—			(718	)		(718	)

Cash flows from financing activities
	Cash proceeds from debt issuance			3,990			—			3,990
	Debt issuance costs			(30	)		—			(30	)
	Repayment of long-term debt			(1,000	)		—			(1,000	)
	Repayment of other long-term obligations			—			(54	)		(54	)
	Cash dividend to Parent			(3,250	)		—			(3,250	)
	Excess tax benefit from share-based compensation			—			21			21

		Net cash used in financing activities		(290	)		(33	)		(323	)

Net increase in cash and cash equivalents				607			2			609
Cash and cash equivalents at beginning of the period				683			4			687

Cash and cash equivalents at the end of the period			$	1,290		$	6		$	1,296

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

(Unaudited)

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2010

			Co-Issuers			Guarantor Subsidiaries			DIRECTV Holdings Consolidated

			(Dollars in Millions)
Cash flows from operating activities
	Net cash provided by operating activities		$	1,214		$	727		$	1,941

Cash flows from investing activities
	Cash paid for property and equipment			—			(222	)		(222	)
	Cash paid for subscriber leased equipment—subscriber acquisition			—			(246	)		(246	)
	Cash paid for subscriber leased equipment—upgrade and retention			—			(152	)		(152	)
	Cash paid for satellites			—			(69	)		(69	)
	Investment in companies, net of cash acquired			—			(1	)		(1	)

		Net cash used in investing activities		—			(690	)		(690	)

Cash flows from financing activities
	Cash proceeds from debt issuance			2,996			—			2,996
	Debt issuance costs			(16	)		—			(16	)
	Repayment of long-term debt			(1,103	)		—			(1,103	)
	Repayment of other long-term obligations			—			(48	)		(48	)
	Cash dividend to Parent			(4,000	)		—			(4,000	)
	Excess tax benefit from share-based compensation			—			8			8

		Net cash used in financing activities		(2,123	)		(40	)		(2,163	)

Net decrease in cash and cash equivalents				(909	)		(3	)		(912	)
Cash and cash equivalents at beginning of the period				1,709			7			1,716

Cash and cash equivalents at the end of the period			$	800		$	4		$	804

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis should be read in conjunction with our management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC on February 28, 2011, ~~and~~our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed with the SEC on May 6, 2011and all of our other filings, including Current Reports on Form 8-K, filed with the SEC after such date and through the date of this report.

This Quarterly Report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, "forward-looking statements" within the meaning of various provisions of the Securities Act of 1933 and of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by the use of statements that include phrases such as we "believe", "expect", "anticipate", "intend", "plan", "foresee", "project" or other similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding our outlook for 2010 financial results, liquidity and capital resources.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include economic, business, competitive, national or global political, market and regulatory conditions and the following, each of which is described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2010 or in Part II, Item 1A. of this Quarterly Report on Form 10-Q:

•: Levels of competition are increasing.
•: We depend on others to produce programming and programming costs are increasing.
•: Increased subscriber churn or subscriber upgrade and retention costs could materially adversely affect our financial performance.
•: Our subscriber acquisition costs could materially increase.
•: Our ability to keep pace with technological developments is uncertain.
•: 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.
•: Construction or launch delays on satellites could materially adversely affect our revenues and earnings.
•: Our satellites are subject to significant launch and operational risks.
•: The loss of a satellite, none of which is currently insured, could materially adversely affect 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 ability to maintain FCC licenses and other regulatory approvals is critical to our business.

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•: Our Parent may have a significant indemnity obligation to Liberty Media, which is not limited in amount or subject to any cap, if parts of the Liberty Transaction or Liberty's 2008 Transaction with News Corporation are treated as a taxable transaction.
•: We face risks arising from the outcome of various legal proceedings.
•: We face risks related to our reliance on network information systems and other technology.
•: Those and the other factors that are described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2010.

Any forward- looking statement made by us in the Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may occur and it is not possible for us to predict them all. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as required by law.

CONTENTS

The following is a discussion of our results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report. Information in this section is organized as follows:

•: Business Overview
•: Significant Transactions
•: Executive Outlook
•: Results of Operations
•: Liquidity and Capital Resources
•: Contractual Obligations
•: Contingencies
•: Certain Relationships and Related Party Transactions
•: Critical Accounting Estimates
•: Accounting Changes
•: Key Terminology

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BUSINESS OVERVIEW

We are a wholly-owned subsidiary of DIRECTV and our subsidiaries include DIRECTV Enterprises, LLC and its wholly-owned subsidiaries and DIRECTV Financing Co., Inc. We acquire, promote, sell and distribute digital entertainment programming primarily via satellite to residential and commercial subscribers. We are the largest provider of direct-to-home, or DTH, digital television services and the second largest provider in the multi-channel video programming distribution, or MVPD, industry in the United States. As of ~~March~~June 3130, 2011, we had over 19.4 million subscribers.

SIGNIFICANT TRANSACTIONS

Financing Transactions

2011 Financing Transactions

In March 2011, we issued $4.0 billion of senior notes resulting in $3,990 million of proceeds, net of discount.

In March 2011, we completed a fixed price tender offer to purchase $341 million of ~~our~~the outstanding 6.375% senior notes due in 2015. ~~The~~On ~~redemption~~June 15, ~~resulted~~2011, inwe redeemed, pursuant to the terms of our indenture, the remaining $659 million of our outstanding 6.375% senior notes due 2015, at a ~~first~~price of 102.125%, plus accrued and unpaid interest. We recorded a pre-tax charge of $14 million, $9 million after tax, during the second quarter of 2011 and a pre-tax charge of $1125 million, $716 million after tax, during ~~which~~the ~~resulted~~six ~~primarily~~months ~~from~~ended ~~the~~June 30, ~~premium~~2011, ~~paid~~as ~~for~~a ~~redemption~~result of ~~our~~the ~~6.375%~~redemptions, ~~senior~~primarily ~~notes~~for the premiums paid. The pre-tax charge was recorded in "Other, net" in our Consolidated Statements of Operations.

2010 Financing Transactions

In March 2010, we issued $3.0 billion of senior notes resulting in net proceeds of $2,996 million and repaid the $985 million of remaining principal on Term Loan C of our senior secured credit facility. The repayment of Term Loan C resulted in a first quarter of 2010 pre-tax charge of $9 million, $6 million after tax, resulting from the write-off of the unamortized discount, deferred debt issuance and other transaction costs. The charges were recorded in "Other, net" in our Consolidated Statements of Operations.

Divestiture

In April 2011, we sold an equity method investment for $55 million in cash. We recognized a $37 million gain ($23 million after tax) on the sale in "Other, net" in the Consolidated Statements of Operations.

EXECUTIVE OUTLOOK

We previously reported in our Annual Report on Form 10-K for the year ended December 31, 2010 that we expect that the anticipated growth in revenues in 2011 will be partially offset by higher programming costs, including the costs associated with our contract with the NFL, resulting in operating profit before depreciation and amortization growth in the low to mid single digit percentage range. WeConsistent with this, we currently anticipate lower operating profit before depreciation and amortization margins in the second half of the year as compared to the first half of the year, primarily due to higher programming costs. Also, as a result of an increasing competitive environment, we anticipate gross subscriber additions to be relatively flat to slightly down from 2010 and churn to be modestly higher for the remainder of 2011.

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~~RESULTS~~Results OFof ~~OPERATIONS~~Operations

For a description of key terminology used in the discussion of our results of operations, see "Key Terminology" below.

The following table sets forth our unaudited consolidated statements of operations and certain other operating data:

Three Months Ended ~~March~~June 3130, 2011 Compared to Three Months Ended ~~March~~June 3130, 2010

			Three Months Ended March 31,						Change
			Three Months Ended June 30,						Change
			2011			2010			$			%
			(Dollars in Millions)
Revenues			$	5,~~145~~277		$	4,~~772~~934		$	~~373~~343			7.80	%
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		2,~~200~~207			2,~~014~~019			~~186~~188			9.23	%
		Subscriber service expenses		~~351~~355			~~323~~325			2830			89.72	%
		Broadcast operations expenses		7475			6966			59			713.26	%
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		~~682~~626			~~595~~610			8716			142.6	%
		Upgrade and retention costs		~~259~~298			~~250~~259			939			315.61	%
		General and administrative expenses		~~216~~270			~~215~~261			19			03.54	%
	Depreciation and amortization expense			~~442~~430			~~498~~495			(5665	)		(1113.21	)%
		Total operating costs and expenses		4,~~224~~261			34,~~964~~035			~~260~~226			65.6	%
Operating profit				~~921~~1,016			~~808~~899			~~113~~117			1413.0	%
Interest income				—1			31			(3—	)		~~(100~~0.0	)%
Interest expense				(~~156~~186	)		(97116	)		(5970	)		60.83	%
Other, net				(629	)		(5	)		(124	)		*NM480.0	%
Income before income taxes				~~759~~860			~~709~~789			5071			79.10	%
Income tax expense				(~~288~~323	)		(~~276~~307	)		(1216	)		45.32	%
Net income			$	~~471~~537		$	~~433~~482		$	3855			811.84	%
Other Data:
Operating profit before depreciation and amortization(1)
Operating profit			$	~~921~~1,016		$	~~808~~899		$	~~113~~117			1413.0	%
Add: Depreciation and amortization expense				~~442~~430			~~498~~495			(5665	)		(1113.21	)%
Operating profit before depreciation and amortization			$	1,~~363~~446		$	1,~~306~~394		$	5752			43.47	%
Operating profit before depreciation and amortization—margin(1)				2627.54	%		2728.43	%		NA			(3.32	)%
Cash Flow Information
Net cash provided by operating activities			$	~~944~~706		$	~~1,280~~661		$	~~(336~~45	)		~~(26~~6.38	)%
Net cash used in investing activities				(~~376~~342	)		(~~313~~377	)		~~(63~~35	)		20(9.13	)%
Net cash provided by (used in) financing activities				425			(1,546	)		1,971			*NM
Net cash used in financing activities				(748	)		(617	)		(131	)		21.2	%

*NM—Not meaningful 22

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		Three Months Ended March 31,						Change
		Three Months Ended June 30,						Change
		2011			2010			$			%
		(Dollars in Millions, Except Per Subscriber Amounts)
Free cash flow(2)
Net cash provided by operating activities		$	~~944~~706		$	~~1,280~~661		$	~~(336~~45	)		~~(26~~6.38	)%
Less: Cash paid for property and equipment			(~~102~~143	)		(~~109~~113	)		7(30	)		(626.45	)%
	Cash paid for subscriber leased equipment—subscriber acquisitions		(~~174~~150	)		(~~115~~131	)		(5919	)		5114.35	%
	Cash paid for subscriber leased equipment—upgrade and retention		(6976	)		(8171	)		12(5	)		~~(14~~7.80	)%
	Cash paid for satellites		(3117	)		(861	)		~~(23~~44	)		~~287~~(72.51	)%
Free cash flow		$	~~568~~320		$	~~967~~285		$	~~(399~~35	)		~~(41~~12.3	)%
Subscriber data
Total number of subscribers (000's)			19,~~407~~433			18,~~660~~760			~~747~~673			43.06	%
ARPU		$	8890.7958		$	8587.4790		$	32.3268			3.90	%
Average monthly subscriber churn %			1.5059	%		1.4851	%		—			15.43	%
Gross subscriber additions (000's)			~~1,052~~954			~~925~~946			~~127~~8			130.78	%
Subscriber disconnections (000's)			~~868~~928			~~825~~846			4382			59.27	%
Net subscriber additions (000's)			~~184~~26			100			84(74	)		84(74.0	)%
Average subscriber acquisition costs—per subscriber (SAC)		$	~~814~~813		$	~~768~~783		$	4630			63.08	%

(1)Operating profit before depreciation and amortization, which is a financial measure that is not determined in accordance with GAAP can be calculated by adding amounts under the caption "Depreciation and amortization expense" to "Operating profit." This measure should be used in conjunction with GAAP financial measures and is not presented as an alternative measure of operating results, as determined in accordance with GAAP. Our management and DIRECTV use operating profit before depreciation and amortization to evaluate the operating performance of our company and our business segments and to allocate resources and capital to business segments. This metric is also used as a measure of performance for incentive compensation purposes and to measure income generated from operations that could be used to fund capital expenditures, service debt or pay taxes. Depreciation and amortization expense primarily represents an allocation to current expense of the cost of historical capital expenditures and for acquired intangible assets resulting from prior business acquisitions. To compensate for the exclusion of depreciation and amortization expense from operating profit, our management and DIRECTV separately measure and budget for capital expenditures and business acquisitions. We believe this measure is useful to investors, along with GAAP measures (such as revenues, operating profit and net income), to compare our operating performance to other communications, entertainment and media service providers. We believe that investors use current and projected operating profit before depreciation and amortization and similar measures to estimate our current or prospective enterprise value and make investment decisions. This metric provides investors with a means to compare operating results exclusive of depreciation and amortization expense. Our management believes this is useful given the significant variation in depreciation and amortization expense that can result from the timing of capital expenditures, the capitalization of intangible assets, potential variations in expected useful lives when compared to other companies and periodic changes to estimated useful lives. ~~Operating profit~~ ~~before depreciation and amortization margin is calculated by dividing operating profit before depreciation and amortization by revenues.~~

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~~Subscribers. In the first quarter of 2011, gross subscriber additions increased compared to the first quarter of 2010 primarily due to~~Operating ~~higher~~profit ~~demand for~~before ~~advanced~~depreciation ~~services.~~and ~~Net~~amortization ~~subscriber~~margin ~~additions increased~~is ascalculated ~~higher~~by ~~gross~~dividing ~~subscriber~~operating ~~additions~~profit ~~exceeded~~before ~~the~~depreciation ~~higher~~and ~~number~~amortization ofby ~~subscriber disconnections associated with the larger subscriber base~~revenues.

(2): Free cash flow, which is a financial measure that is not determined in accordance with GAAP, can be calculated by deducting amounts under the captions "Cash paid for property and equipment," "Cash paid for subscriber leased equipment-subscriber acquisitions," "Cash paid for subscriber leased equipment-upgrade and retention," and "Cash paid for satellites" from "Net cash provided by operating activities" from the Consolidated Statements of Cash Flows. This financial measure should be used in conjunction with other GAAP financial measures and is not presented as an alternative measure of cash flows from operating activities, as determined in accordance with GAAP. Our management and DIRECTV use free cash flow to evaluate the cash generated by our current subscriber base, net of capital expenditures, for the purpose of allocating resources to activities such as adding new subscribers, retaining and upgrading existing subscribers, for additional capital expenditures and other capital investments or transactions and as a measure of performance for incentive compensation purposes. We believe this measure is useful to investors, along with other GAAP measures (such as cash flows from operating and investing activities), to compare our operating performance to other communications, entertainment and media companies. We believe that investors also use current and projected free cash flow to determine the ability of revenues from our current and projected subscriber base to fund required and discretionary spending and to help determine our financial value.

~~Revenues~~Subscribers. ~~Our~~In ~~revenues~~the ~~increased~~second asquarter ~~a result~~ of ~~the~~2011, ~~larger~~net subscriber ~~base~~additions ~~and~~decreased as higher ~~average~~gross ~~monthly~~additions ~~revenue~~were ~~per~~more ~~subscriber,~~than oroffset ~~ARPU.~~by ~~The~~higher ~~increase~~churn inresulting ~~ARPU resulted primarily~~ from ~~price~~a ~~increases~~more oncompetitive ~~programming~~environment ~~packages~~ and ~~set-top~~ongoing ~~receiver~~economic ~~lease fees, and higher digital video recorder, or DVR, service fees~~weakness.

~~Operating~~ Revenues. Our ~~profit~~revenues ~~before~~increased ~~depreciation~~as ~~and~~a ~~amortization. The~~result ~~improvement~~ of ~~operating~~the ~~profit~~larger ~~before~~subscriber ~~depreciation~~base and ~~amortization~~higher ~~was primarily~~ARPU. ~~due~~The ~~to the~~increase ~~gross~~in ~~profit~~ARPU ~~generated~~resulted primarily from price increases ~~the~~on programming packages and lease fees, as well as higher ~~revenues~~advanced service fees, partially offset by higher ~~subscriber~~promotional ~~acquisition~~offers ~~costs~~to new and existing subscribers.

~~Broadcast programming~~ Operating ~~and~~profit ~~other~~before ~~costs~~depreciation ~~increased~~and ~~due~~amortization. The toimprovement ~~annual~~of ~~program~~operating ~~supplier~~profit ~~rate~~before ~~increases~~depreciation and ~~the~~amortization ~~larger~~was primarily ~~number~~due ofto the ~~subscribers.~~increased ~~Subscriber~~gross ~~service~~profit ~~expenses~~generated ~~increased~~from in the ~~first quarter~~higher ofrevenues, ~~2011~~partially ~~compared~~offset toby ~~the~~higher ~~first~~upgrade ~~quarter~~and ofretention ~~2010~~costs ~~primarily~~resulting ~~due~~from toa ~~the~~ higher ~~number~~volume of ~~subscribers~~advanced ~~and~~equipment ~~higher service call costs~~upgrades.

~~Subscriber~~Broadcast ~~acquisition~~programming ~~costs~~ and ~~subscriber~~other ~~acquisition~~ costs ~~per subscriber, or SAC, which includes the cost of capitalized set-top receivers,~~ increased ~~primarily~~ due to ~~increased~~ ~~demand~~annual ~~for~~program ~~advanced~~supplier ~~products,~~rate ~~partially~~increases ~~offset~~and bythe ~~lower~~larger ~~marketing~~number ~~costs~~of subscribers. ~~Under~~Subscriber ~~our~~service ~~lease~~expenses ~~program~~increased wein ~~capitalized~~the ~~$174 million~~second quarter of ~~set-top~~2011 ~~receivers~~compared into the ~~first~~second quarter of ~~2011~~ ~~and~~2010 ~~$115 million~~primarily ~~the~~due ~~first~~to ~~quarter~~service ofquality ~~2010~~improvement ~~for~~initiatives ~~new~~and the higher number of subscribers.

~~Upgrade~~Subscriber acquisition costs and ~~retention~~subscriber acquisition costs ~~increased~~per insubscriber, ~~the~~or ~~first~~SAC, ~~quarter~~which includes the cost of ~~2011~~capitalized set-top receivers, increased primarily due to increased ademand ~~higher~~for ~~volume~~advanced ofproducts ~~advanced~~over ~~equipment~~the ~~upgrades~~second quarter of 2010. Under our lease program we capitalized $69150 million of set-top receivers in the ~~first~~second quarter of 2011 and $81131 million ~~of set-top receivers~~ in the ~~first~~second quarter of 2010 for subscriber ~~upgrades~~acquisitions.

~~General~~Upgrade and ~~administrative~~retention ~~expenses~~costs increased ~~due~~in tothe ~~higher~~second ~~labor~~quarter ~~costs~~of ~~and~~2011 ~~the~~due ~~benefit~~to of a ~~legal~~more ~~settlement~~competitive ~~recorded~~environment ~~during~~and ~~the~~a ~~first~~higher ~~quarter~~volume of ~~2010~~advanced equipment upgrades. ~~These~~Under ~~increases~~our ~~were~~lease ~~mostly~~program we ~~offset~~capitalized by$76 million aof ~~benefit~~set-top ~~from~~receivers ain ~~property~~the ~~tax~~second ~~adjustment~~quarter ~~recorded~~of ~~during~~2011 and $71 million in the ~~first~~second quarter of ~~2011~~2010 for subscriber upgrades.

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Operating profit. The increase in operating profit was primarily due to higher operating profit before depreciation and amortization, coupled with lower depreciation and amortization expense due to the completion of the amortization of a subscriber related intangible asset and decreased subscriber equipment capitalization.

Interest expense. The increase in interest expense was ~~due~~from to an increase in the average debt balance, ~~partially~~compared ~~offset~~to ~~by a decrease in weighted average interest rates on our outstanding borrowings~~2010.

Income tax expense. The increase in income tax expense was primarily due to the higher income before income taxes.

Six Months Ended June 30, 2011 Compared with the Six Months Ended June 30, 2010

			Six Months Ended June 30,						Change

			2011			2010			$			%
			(Dollars in Millions)
Revenues			$	10,422		$	9,706		$	716			7.4	%
Operating costs and expenses
	Costs of revenues, exclusive of depreciation and amortization expense
		Broadcast programming and other		4,407			4,033			374			9.3	%
		Subscriber service expenses		706			648			58			9.0	%
		Broadcast operations expenses		149			135			14			10.4	%
	Selling, general and administrative expenses, exclusive of depreciation and amortization expense
		Subscriber acquisition costs		1,308			1,205			103			8.5	%
		Upgrade and retention costs		557			509			48			9.4	%
		General and administrative expenses		486			476			10			2.1	%
	Depreciation and amortization expense			872			993			(121	)		(12.2	)%

		Total operating costs and expenses		8,485			7,999			486			6.1	%

Operating profit				1,937			1,707			230			13.5	%
Interest income				1			4			(3	)		(75.0	)%
Interest expense				(342	)		(213	)		(129	)		60.6	%
Other, net				23			—			23			100.0	%

Income before income taxes				1,619			1,498			121			8.1	%
Income tax expense				(611	)		(583	)		(28	)		4.8	%

Net income			$	1,008		$	915		$	93			10.2	%

Other Data:
Operating profit before depreciation and amortization(1)
Operating profit			$	1,937		$	1,707		$	230			13.5	%
Add: Depreciation and amortization expense				872			993			(121	)		(12.2	)%

Operating profit before depreciation and amortization			$	2,809		$	2,700		$	109			4.0	%

Operating profit before depreciation and amortization—margin(1)				27.0	%		27.8	%		NA			(2.9	)%
Cash Flow Information
Net cash provided by operating activities			$	1,650		$	1,941		$	(291	)		(15.0	)%
Net cash used in investing activities				(718	)		(690	)		(28	)		4.1	%
Net cash used in financing activities				(323	)		(2,163	)		1,840			(85.1	)%

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		Six Months Ended June 30,						Change

		2011			2010			$			%
		(Dollars in Millions, Except Per Subscriber Amounts)
Free cash flow(2)
Net cash provided by operating activities		$	1,650		$	1,941		$	(291	)		(15.0	)%
Less: Cash paid for property and equipment			(245	)		(222	)		(23	)		10.1	%
	Cash paid for subscriber leased equipment—subscriber acquisitions		(324	)		(246	)		(78	)		31.7	%
	Cash paid for subscriber leased equipment—upgrade and retention		(145	)		(152	)		7			(4.6	)%
	Cash paid for satellites		(48	)		(69	)		21			(30.4	)%

Free cash flow		$	888		$	1,252		$	(364	)		(29.1	)%

Subscriber data
Total number of subscribers (000's)			19,433			18,760			673			3.6	%
ARPU		$	89.75		$	86.69		$	3.06			3.5	%
Average monthly subscriber churn %			1.55	%		1.49	%		—			4.0	%
Gross subscriber additions (000's)			2,006			1,871			135			7.2	%
Subscriber disconnections (000's)			1,796			1,671			125			7.5	%
Net subscriber additions (000's)			210			200			10			5.0	%
Average subscriber acquisition costs—per subscriber (SAC)		$	814		$	776		$	38			4.9	%

Subscribers. In the first half of 2011, net subscriber additions increased slightly as the higher gross additions were coupled with a higher number of disconnections due to a higher average monthly subscriber churn rate on the larger subscriber base. The increase in churn was principally due to a more competitive environment.

Revenues. Our revenues increased as a result of the larger subscriber base and higher ARPU. The increase in ARPU resulted primarily from price increases on programming packages, higher set-top receiver lease fees and higher advanced service fees, partially offset by higher promotional offers to new and existing subscribers.

Operating profit before depreciation and amortization. The improvement of operating profit before depreciation and amortization was primarily due to the gross profit generated from the higher revenues, partially offset by higher subscriber acquisition and upgrade and retention costs.

Broadcast programming and other costs increased due to annual program supplier rate increases and the larger number of subscribers. Subscriber service expenses increased in the first half of 2011 compared to the first half of 2010 primarily due to the higher number of subscribers.

Subscriber acquisition costs increased primarily due to higher gross additions and higher SAC per subscriber. SAC per subscriber, which includes the cost of capitalized set-top receivers, increased primarily due to increased subscriber demand for advanced products over the first half of 2010 coupled with increased dealer commissions, partially offset by lower marketing costs per subscriber added. Under our lease program we capitalized $324 million of set-top receivers in the first half of 2011 and $246 million of set-top receivers in the first half 2010 for subscriber acquisitions.

Upgrade and retention costs increased in the first half of 2011 due to a higher volume of advanced equipment upgrades. Under our lease program we capitalized $145 million of set-top receivers in the first half of 2011 and $152 million the first half of 2010 for subscriber upgrades.

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Interest expense. The increase in interest expense was from an increase in the average debt balance compared to 2010.

Income tax expense. The increase in income tax expense was primarily due to the higher income before income taxes.

LIQUIDITY AND CAPITAL RESOURCES

At ~~March~~June 3130, 2011, our cash and cash equivalents totaled $1,~~680~~296 million compared with $687 million at December 31, 2010. The $~~993~~609 million increase resulted primarily from $3,990 million of cash proceeds from the issuance of senior notes and $~~944~~1,650 million in cash provided by by operating activities, partially offset by $3,250 million in dividends paid to our Parent, $~~341~~1,000 million of cash used to repay long-term debt and $~~376~~762 million of ~~cash~~ cash paid for property, equipment and satellites.

As of ~~March~~June 3130, 2011 we had the ability to borrow up to $2 billion under our revolving credit facility, which is available until February 2016. We are subject to restrictive certain covenants under the credit facility.

As a measure of liquidity, the current ratio (ratio of current assets to current liabilities) was 1.1617 at ~~March~~June 3130, 2011 and 0.85 at December 31, 2010. AtThe ~~March 31, 2011,~~increase wein ~~had working capital of~~our ~~$506 million~~current ~~compared~~ratio ~~with a deficit of $519 million at December 31, 2010. The increase~~ during the ~~three~~six months ended ~~March~~June 3130, 2011 was primarily due to the change in our cash and cash equivalents.

We have received capital contributions and have borrowed amounts from our Parent in the past to fund certain transactions. We may also provide dividends to our Parent or fund other cash requirements, including additional share repurchase programs or other distributions to its stockholders. We may use available cash and cash equivalents, cash from operations, or incur additional borrowings to fund such dividends.

We expect to fund our cash requirements and our existing business plan using our available cash balances and cash provided by operations. We may borrow additional amounts in the future to maintain our outstanding long-term debt target of approximately 2.5 times our annual operating profit before depreciation and amortization.Additional borrowings, which may ~~include~~ include borrowings under our $2 billion revolving credit facility, may be required to fund strategic investment opportunities should they arise.

WeSeveral factors may ~~borrow~~affect ~~additional~~our ~~amounts~~ability to fund our operations and commitments that we discuss in ~~the~~"Contractual ~~future~~Obligations" toand ~~maintain~~"Contingencies" below. In addition, our ~~outstanding~~future ~~long-term~~cash ~~debt~~flows may ~~target~~be ofreduced ~~approximately~~if 2we experience, among other things, significantly higher subscriber additions than planned, increased subscriber churn or upgrade and retention costs, higher than planned capital expenditures for satellites and broadcast equipment, satellite anomalies or signal theft.5 ~~times~~Additionally, our ~~operating~~ability ~~profit~~to ~~before~~borrow ~~depreciation~~under ~~and~~the revolving credit facility is contingent upon us meeting ~~amortization~~financial and other covenants associated with its facility as more fully described below.

Borrowings

At ~~March~~June 3130, 2011, we had $1413,~~121~~462 million in total outstanding borrowings, bearing a weighted average interest rate of 5.2%. Our outstanding borrowings consist of our senior notes as more fully described in Note 34 of the Notes to the Consolidated Financial Statements in Item 1, Part I of this ~~Quarterly~~ ~~Report and in Note 7 to the Notes to the Consolidated Financial Statements in Item 8, Part II of our 2010 Form 10-K.~~

~~Our senior notes mature as follows: $1,000 million in 2014, $1,859 million in 2015 and $11,300 million thereafter.~~ 27

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Quarterly Report and in Note 7 to the Notes to the Consolidated Financial Statements in Item 8, Part II of our 2010 Form 10-K.

Our senior notes mature as follows: $1,000 million in 2014, $1,200 million in 2015 and $11,300 million thereafter.

Revolving Credit Facility

In February 2011, our senior secured credit facility was terminated and replaced by a new 5 five-year, $2.0 billion revolving credit facility. We pay a commitment fee of .30% per year for the unused commitment under the revolving credit facility, and borrowings will bear interest at an annual rate of (i) the London interbank offer rate (LIBOR) (or for Euro advances the EURIBOR rate) plus 1.50% or at our option (ii) the higher of the prime rate plus 0.50% or the Fed Funds Rate plus 1.00%. The commitment fee and the annual interest rate may be increased or decreased under certain conditions, which include changes in our long-term, unsecured debt ratings. The revolving credit facility has been fully and unconditionally guaranteed, jointly and severally, by substantially all of our subsidiaries on a senior unsecured basis.

Covenants and Restrictions. The revolving credit facility requires us to maintain at the end of each fiscal quarter a specified ratio of indebtedness to adjusted net income. The revolving credit facility also includes covenants that restrict our ability to, among other things, (i) incur additional subsidiary indebtedness, (ii) incur liens, (iii) enter into certain transactions with affiliates, (iv) merge or consolidate with another entity, (v) sell, assign, lease or otherwise dispose of all or substantially all of our assets, and (vi) change our lines of business. Additionally, the senior notes contain restrictive covenants that are similar. Should we fail to comply with these covenants, all or a portion of our borrowings under the senior notes could become immediately payable and our revolving credit facility could be terminated. At ~~March~~June 3130, 2011, we were in compliance with all such covenants. The senior notes and revolving credit facility also provide that the borrowings may be required to be prepaid if certain change-in-control events occur.

~~Contingencies~~CONTRACTUAL OBLIGATIONS

~~National~~The ~~Football~~following ~~League~~table ~~Labor~~sets ~~Dispute. We~~forth ~~have~~our acontractual ~~contract~~obligations ~~with~~as ~~the~~of ~~National Football League~~June 30, ~~or NFL~~2011, ~~for~~including the ~~exclusive~~future ~~rights~~periods ~~to distribute~~in ~~the~~which ~~NFL~~payments ~~Sunday~~are ~~Ticket Package to our subscribers~~expected. ~~The~~Additional ~~NFL's~~details ~~collective~~regarding ~~bargaining~~these ~~agreement~~obligations ~~with its players expired in March 2011. The NFL and its players~~ are ~~engaged~~provided in ~~a labor dispute that is in litigation and there is a possibility that no games will be played or a reduced schedule will be played during~~ the ~~2011-2012~~Notes ~~season.~~to If the ~~league~~Consolidated ~~and~~Financial ~~the~~Statements ~~players~~in ~~do not reach a new collective bargaining agreement or alternative arrangement before or during the 2011-2012 season~~Part I, weItem 1 ~~would~~referenced ~~still~~in ~~be obligated to make certain contractual payments to~~ the ~~NFL.~~table ~~Our subscriber~~below ~~revenues in 2011 would decrease if NFL games are not played or a full season is lost~~ and ~~cash flows from operating activities would decrease due to lower revenues and~~the ~~because~~Notes ~~we would still be obligated~~ to ~~make certain contractual payments to~~ the ~~NFL.~~Consolidated WeFinancial ~~will~~Statements ~~be able to partially offset these payments through provisions such as credits~~ in ~~the following year~~Part II, ~~reimbursements~~ ~~for~~Item 8 ~~games not played and our rights to an extra season if an entire season is cancelled, but~~ in ~~the near term a continued labor dispute could have a material adverse effect on~~ our ~~cash flows~~Form 10-K ~~from~~for ~~operating activities primarily due to payments we may have to make to~~ the ~~NFL,~~year ~~including~~ended ~~minimum contractual obligations~~December 31, ~~an optional advance payment that may be requested by the NFL and the loss of subscriber revenue as well as possibly resulting in reduced subscriber additions and higher churn~~2010.

Other. Several factors may affect our ability to fund our operations and commitments that we discuss in "Contractual Obligations", "Off-Balance Sheet Arrangements" and "Contingencies" below. In addition, our future cash flows may be reduced if we experience, among other things, significantly higher subscriber additions than planned, increased subscriber churn or upgrade and retention costs, higher than planned capital expenditures for satellites and broadcast equipment, or satellite anomalies or signal theft. Additionally, our ability to borrow under the revolving credit facility is contingent upon our meeting a financial and other covenants associated with our facility as more fully described above.

	Payments due by period

Contractual Obligations	Total		2011		2012-2013		2014-2015		2016 and thereafter
	(Dollars in Millions)
Long-term debt obligations (Note 4)(a)	$	22,131	$	350	$	1,408	$	3,539	$	16,834
Purchase obligations(b)		6,367		1,006		3,477		1,844		40
Operating lease obligations(c)		313		34		93		46		140
Other long-term liabilities reflected on the Consolidated Balance Sheets under GAAP(d)		71		9		34		17		11

Total	$	28,882	$	1,399	$	5,012	$	5,446	$	17,025

24 (a)Long-term debt obligations include interest calculated based on the rates in effect at June 30, 2011, however, the obligations do not reflect potential prepayments required under its indentures.

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(b): Purchase obligations consist primarily of broadcast programming commitments, service contract commitments and satellite contracts. Broadcast programming commitments include guaranteed minimum contractual commitments that are typically based on a flat fee or a minimum number of required subscribers subscribing to the related programming. Actual payments may exceed the minimum payment requirements if the actual number of subscribers subscribing to the related programming exceeds the minimum amounts. Service contract commitments include minimum commitments for the purchase of services that have been outsourced to third parties, such as billing services, telemetry, tracking and control services and broadcast center services. In most cases, actual payments, which are typically based on volume, usually exceed these minimum amounts.
(c): Certain of our operating leases contain escalation clauses and renewal or purchase options, which we do not consider in the amounts disclosed.
(d): Payments due by period for other long-term liabilities reflected on the Consolidated Balance Sheet under GAAP do not include payments that could be made related to our net unrecognized tax benefits liability, which amounted to $57 million as of June 30, 2011. The timing and amount of any future payments is not reasonably estimable, as such payments are dependent on the completion and resolution of examinations with tax authorities. We do not expect a significant payment related to these obligations within the next twelve months.

CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations as of March 31, 2011, including the future periods in which payments are expected. Additional details regarding these obligations are provided in the Notes to the Consolidated Financial Statements in Part I, Item 1 referenced in the table below and the Notes to the Consolidated Financial Statements in Part II, Item 8 in our Form 10-K for the year ended December 31, 2010.

	Payments due by period
Contractual Obligations	Total		2011		2012-2013		2014-2015		2016 and thereafter
	(Dollars in Millions)
Long-term debt obligations (Note 3)(a)	$	23,089	$	502	$	1,492	$	4,261	$	16,834
Purchase obligations(b)		6,811		1,466		3,463		1,843		39
Operating lease obligations(c)		286		43		85		40		118
Other long-term liabilities reflected on the Consolidated Balance Sheets under GAAP(d)		101		39		34		17		11
Total	$	30,287	$	2,050	$	5,074	$	6,161	$	17,002

(a)Long-term debt obligations include interest calculated based on the rates in effect at March 31, 2011, however, the obligations do not reflect potential prepayments required under its indentures. (b)Purchase obligations consist primarily of broadcast programming commitments, service contract commitments and satellite contracts. Broadcast programming commitments include guaranteed minimum contractual commitments that are typically based on a flat fee or a minimum number of required subscribers subscribing to the related programming. Actual payments may exceed the minimum payment requirements if the actual number of subscribers subscribing to the related programming exceeds the minimum amounts. Service contract commitments include minimum commitments for the purchase of services that have been outsourced to third parties, such as billing services, telemetry, tracking and control services and broadcast center services. In most cases, actual payments, which are typically based on volume, usually exceed these minimum amounts. (c)Certain of our operating leases contain escalation clauses and renewal or purchase options, which we do not consider in the amounts disclosed. (d)Payments due by period for other long-term liabilities reflected on the Consolidated Balance Sheet under GAAP do not include payments that could be made related to our net unrecognized tax benefits liability, which amounted to $56 million as of March 31, 2011. The timing and amount of any future payments is not reasonably estimable, as such payments are dependent on the completion and resolution of examinations with tax authorities. We do not expect a significant payment related to these obligations within the next twelve months.

CONTINGENCIES

For a discussion of "Contingencies," see Part I, Item 1, Note 45 of the Notes to the Consolidated Financial Statements of this Quarterly Report, which we incorporate herein by reference.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

For a discussion of "Certain Relationships and Related Party Transactions," see Part I, Item 1, Note 56 of the Notes to the Consolidated Financial Statements of this Quarterly Report, which we incorporate herein by reference.

25 CRITICAL ACCOUNTING ESTIMATES

~~Table~~ There have been no material changes in our critical accounting estimates during the six months ended June 30, 2011. For additional information, see Item 7. Critical Accounting Estimates in Part II of ~~Contents~~our Annual Report on Form 10-K for the year ended December 31, 2010.

DIRECTV HOLDINGS LLC

ACCOUNTING CHANGES

For a discussion of "Accounting Changes" see Part I, Item 1, Note 23 of the Notes to the Consolidated Financial Statements of this Quarterly Report, which we incorporate herein by reference.

KEY TERMINOLOGY

The following key terminology is used in management's discussion and analysis of financial condition and results of operations:

Revenues. We earn revenues mostly from monthly fees we charge subscribers for subscriptions to basic and premium channel programming, HD programming and access fees, pay-per-view programming, and seasonal and live sporting events. We also earn revenues from monthly fees that we charge subscribers with multiple non-leased set-top receivers (which we refer to as mirroring fees), monthly fees we charge subscribers for leased set-top receivers, monthly fees we charge subscribers for DVR service, hardware revenues from subscribers who lease or purchase set-top receivers from us, our published programming guide, warranty service fees and advertising services. Revenues are reported net of customer credits and discounted promotions.

Broadcast Programming and Other. These costs primarily include license fees for subscription service programming, pay-per-view programming, live sports and other events. Other costs include expenses associated with the publication and distribution of our programming guide, continuing service fees paid to third parties for active subscribers and warranty service costs. 29

Subscriber Service Expenses. Subscriber service expenses include the costs of customer call centers, billing, remittance processing and certain home services expenses, such as in-home repair costs.

Broadcast Operations Expenses. These expenses include broadcast center operating costs, signal transmission expenses (including costs of collecting signals for our local channel offerings), and costs of monitoring, maintaining and insuring our satellites. Also included are engineering expenses associated with deterring theft of our signal.

Subscriber Acquisition Costs. These costs include the cost of set-top receivers and other equipment, commissions we pay to national retailers, independent satellite television retailers, dealers and telcos, and the cost of installation, advertising, marketing and customer call center expenses associated with the acquisition of new subscribers. Set-top receivers leased to new subscribers are capitalized in "Property and equipment, net" in the Consolidated Balance Sheets and depreciated over their useful lives. The amount of set-top receivers capitalized each period for subscriber acquisitions is included in "Cash paid for property and equipment" in the Consolidated Statements of Cash Flows.

Upgrade and Retention Costs. Upgrade and retention costs are associated with upgrade efforts for existing subscribers that we believe will result in higher ARPU and lower churn. Our upgrade efforts include subscriber equipment upgrade programs for DVR, HD and HD DVR receivers and local channels, our multiple set-top receiver offer and similar initiatives. Retention costs also include the costs of installing and providing hardware under our movers program for subscribers relocating to a new residence. Set-top receivers leased to existing subscribers under upgrade and retention programs are capitalized in "Property and equipment, net" in the Consolidated Balance Sheets and depreciated over their useful lives. The amount of set-top receivers capitalized each period for upgrade and retention programs is included in "Cash paid for property and equipment" in the Consolidated Statements of Cash Flows.

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DVR service, hardware revenues from subscribers who lease or purchase set-top receivers from us, warranty service fees and advertising services. Revenues are reported net of customer credits and discounted promotions.

Broadcast Programming and Other. These costs primarily include license fees for subscription service programming, pay-per-view programming, live sports and other events. Other costs include continuing service fees paid to third parties for active subscribers and warranty service costs.

Subscriber Service Expenses. Subscriber service expenses include the costs of customer call centers, billing, remittance processing and certain home services expenses, such as in-home repair costs.

Broadcast Operations Expenses. These expenses include broadcast center operating costs, signal transmission expenses (including costs of collecting signals for our local channel offerings), and costs of monitoring, maintaining and insuring our satellites. Also included are engineering expenses associated with deterring theft of our signal.

Subscriber Acquisition Costs. These costs include the cost of set-top receivers and other equipment, commissions we pay to national retailers, independent satellite television retailers, dealers and telcos, and the cost of installation, advertising, marketing and customer call center expenses associated with the acquisition of new subscribers. Set-top receivers leased to new subscribers are capitalized in "Property and equipment, net" in the Consolidated Balance Sheets and depreciated over their useful lives. The amount of set-top receivers capitalized each period for subscriber acquisitions is included in "Cash paid for subscriber leased equipment-subscriber acquisitions" in the Consolidated Statements of Cash Flows.

Upgrade and Retention Costs. Upgrade and retention costs are associated with upgrade efforts for existing subscribers that we believe will result in higher ARPU and lower churn. Our upgrade efforts include subscriber equipment upgrade programs for DVR, HD and HD DVR receivers and local channels, our multiple set-top receiver offer and similar initiatives. Retention costs also include the costs of installing and providing hardware under our movers program for subscribers relocating to a new residence. Set-top receivers leased to existing subscribers under upgrade and retention programs are capitalized in "Property and equipment, net" in the Consolidated Balance Sheets and depreciated over their useful lives. The amount of set-top receivers capitalized each period for upgrade and retention programs is included in "Cash paid for subscriber leased equipment-upgrade and retention" in the Consolidated Statements of Cash Flows.

General and Administrative Expenses. General and administrative expenses include departmental costs for legal, administrative services, finance, marketing and information technology. These costs also include expenses for bad debt and other operating expenses, such as legal settlements, and gains or losses from the sale or disposal of fixed assets.

Average Monthly Revenue Per Subscriber. We calculate ARPU by dividing average monthly revenues for the period (total revenues during the period divided by the number of months in the period) by average subscribers for the period. We calculate average subscribers for the period by adding the number of subscribers as of the beginning of the period and for each quarter end in the current year or period and dividing by the sum of the number of quarters in the period plus one.

Average Monthly Subscriber Churn. Average monthly subscriber churn represents the number of subscribers, whose service is disconnected, expressed as a percentage of the average total number of subscribers. We calculate average monthly subscriber churn by dividing the average monthly number of disconnected subscribers for the period (total subscribers disconnected, net of reconnects, during the period divided by the number of months in the period) by average subscribers for the period.

Subscriber Count. The total number of subscribers represents the total number of subscribers actively subscribing to our service, including seasonal subscribers, subscribers who are in the process of relocating and commercial equivalent viewing units. 30

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Subscriber Count. The total number of subscribers represents the total number of subscribers actively subscribing to our service, including subscribers who have suspended their account for a particular season of the year because they are temporarily away from their primary residence and subscribers who are in the process of relocating and commercial equivalent viewing units.

SAC. We calculate SAC, which represents total subscriber acquisition costs stated on a per subscriber basis, by dividing total subscriber acquisition costs for the period by the number of gross new subscribers acquired during the period. We calculate total subscriber acquisition costs for the period by adding together "Subscriber acquisition costs" expensed during the period and the amount of cash paid for equipment leased to new subscribers during the period.

* * *

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q under the supervision and with the participation of management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on the evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of ~~March~~June 3130, 2011.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended ~~March~~June 3130, 2011, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

* * *

2731

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

(a): Material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we became or were a party during the quarter ended June 30, 2011 or subsequent thereto, but before the filing of the report, are summarized below:

Intellectual Property Litigation. We are a defendant in several unrelated lawsuits claiming infringement of various patents relating to various aspects of our businesses. In certain of these cases other industry participants are also defendants, and also in certain of these cases we expect that any potential liability would be the responsibility of our equipment vendors pursuant to applicable contractual indemnification provisions. To the extent that the allegations in these lawsuits can be analyzed by us at this stage of their proceedings, we believe the claims are without merit and intend to defend the actions vigorously. ~~The~~We have determined that the likelihood of a material liability in such matters is remote or have made appropriate accruals and the final disposition of these claims is not expected to have a material ~~adverse~~ effect on our consolidated financial position. However, ~~but~~if an adverse ruling is made in a lawsuit involving key intellectual property, such ruling could ~~possibly~~result in a loss that would be material to our consolidated results of operations of any one period. No assurance can be given that any adverse outcome would not be material to our consolidated financial position.

Early Cancellation Fees. In 2008, a number of plaintiffs filed putative class action lawsuits in state and federal courts challenging the early cancellation fees we assess our customers when they do not fulfill their programming commitments. Several of these lawsuits are pending—some in California state court purporting to represent statewide classes, and some in federal courts purporting to represent nationwide classes. The lawsuits seek both monetary and injunctive relief. While the theories of liability vary, the lawsuits generally challenge these fees under state consumer protection laws as both unfair and inadequately disclosed to customers. In light of the U.S. Supreme Court's recent decision in AT&T Mobility LLC v. Concepcion, we intend to move to compel these cases to arbitration in accordance with our Customer Agreement. We believe that our early cancellation fees are adequately disclosed, and represent reasonable estimates of the costs we incur when customers cancel service before fulfilling their programming commitments.

Other. We are subject to other legal proceedings and claims that arise in the ordinary course of our business. The amount of ultimate liability with respect to such actions is not expected to materially affect our financial position, results of operations or liquidity.

(b): No previously reported legal proceedings were terminated during the second quarter ended June 30, 2011.

28 ITEM 1A. RISK FACTORS

Except as discussed below, the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report for the quarter ended March 31, 2011 have not materially changed. See Part I Item 2 of this Quarterly Report related to "forward-looking statements" which we incorporate by reference.

The National Football League labor dispute has been resolved.

We have a contract with the National Football League for the exclusive rights to distribute the NFL Sunday Ticket Package to our subscribers. The NFL's collective bargaining agreement with its players expired in March 2011 and the NFL and its players have been engaged in a labor dispute. The NFL and its players recently agreed to a new collective bargaining agreement. Therefore, our risks related to the labor dispute have been resolved and the NFL Sunday Ticket Package will be distributed to our subscribers for the 2011-2012 season pursuant to our contract with the NFL.

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ITEM 1A. RISK FACTORS

Except as discussed below, the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2010 have not materially changed. See Part I Item 2 of this Quarterly Report related to "forward-looking statements" which we incorporate by reference.

A continued National Football League labor dispute, if unresolved, could materially adversely affect our cash flows.

We have a contract with the National Football League, or NFL, for the exclusive rights to distribute the NFL Sunday Ticket Package to our subscribers. The NFL's collective bargaining agreement with its players expired in March 2011. The NFL and its players are engaged in a labor dispute that is in litigation and there is a possibility that no games will be played or a reduced schedule will be played during the 2011-2012 season. If the league and the players do not reach a new collective bargaining agreement or alternative arrangement before or during the 2011-2012 season, we would still be obligated to make certain contractual payments to the NFL. Our subscriber revenues in 2011 would decrease if NFL games are not played or a full season is lost and cash flows from operating activities would decrease due to lower revenues and because we would still be obligated to make certain contractual payments to the NFL. We will be able to partially offset these payments through provisions such as credits in the following year, reimbursements for games not played and our rights to an extra season if an entire season is cancelled, but in the near term a continued labor dispute could have a material adverse effect on our cash flows from operating activities primarily due to payments we may have to make to the NFL, including minimum contractual obligations, an optional advance payment that may be requested by the NFL and the loss of subscriber revenue as well as possibly resulting in reduced subscriber additions and higher churn.

ITEM 6. EXHIBITS

Exhibit Number			Exhibit Name
	*1.1		Underwriting Agreement, dated as of March 7, 2011, by and among DIRECTV Holdings LLC, DIRECTV Financing Co., Inc., the Guarantors signatory thereto and Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated, as representatives of the several underwriters signatory thereto (incorporated by reference to Exhibit 1.1 of the Form 8-K of DIRECTV Holdings LLC filed on March 10, 2011 (SEC File No. 333-106529)).
	**31.1		Certification of the Chief Executive Officer of DIRECTV Holdings LLC pursuant to Section 302.
	*4.1		Indenture, dated as of August 17, 2010, by and among DIRECTV Holdings LLC, DIRECTV Financing Co., Inc., the Guarantors signatory thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of the Form 8-K of DIRECTV Holdings LLC filed on August 23, 2010 (SEC File No. 333-106529)).
	**31.2		Certification of the Chief Financial Officer of DIRECTV Holdings LLC pursuant to Section 302.
	*4.2		Second Supplemental Indenture, dated as of March 10, 2011, by and among DIRECTV Holdings LLC, DIRECTV Financing Co., Inc., the Guarantors signatory thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 of the Form 8-K of DIRECTV Holdings LLC filed on March 10, 2011(SEC File No. 333-106529)).
	**31.3		Certification of the Chief Executive Officer of DIRECTV Financing Co., Inc. pursuant to Section 302.
	*4.3		Form of 3.500% Notes due 2016 (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.1 of the Form 8-K of DIRECTV Holdings LLC filed on March 10, 2011(SEC File No. 333-106529)).
	**31.4		Certification of the Chief Financial Officer of DIRECTV Financing Co., Inc. pursuant to Section 302.
	**32.1		Certification of the Chief Executive Officer of DIRECTV Holdings LLC pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 ("Section 906").
	**32.2		Certification of the Chief Financial Officer of DIRECTV Holdings LLC pursuant to Section 906.
	**32.3		Certification of the Chief Executive Officer of DIRECTV Financing Co., Inc. pursuant to Section 906.
	**32.4		Certification of the Chief Financial Officer of DIRECTV Financing Co., Inc. pursuant to Section 906.
	***101.INS		XBRL Instance Document
	***101.SCH		XBRL Taxonomy Extension Schema Document
	***101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	***101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	***101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	***101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

29 **Furnished, not filed. ***Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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Exhibit Number			Exhibit Name
	*4.4		Form of 5.000% Notes due 2021 (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.1 of the Form 8-K of DIRECTV Holdings LLC filed on March 10, 2011 (SEC File No. 333-106529)).
	*4.5		Form of 6.375% Notes due 2041 (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.1 of the Form 8-K of DIRECTV Holdings LLC filed on March 10, 2011 (SEC File No. 333-106529)).
	**31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	**31.2		Certification of the Chief Financial Officer of DIRECTV Holdings LLC pursuant to Section 302.
	**31.3		Certification of the Chief Executive Officer of DIRECTV Financing Co., Inc. pursuant to Section 302.
	**31.4		Certification of the Chief Financial Officer of DIRECTV Financing Co., Inc. pursuant to Section 302.
	**32.1		Certification of the Chief Executive Officer of DIRECTV Holdings LLC pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 ("Section 906").
	**32.2		Certification of the Chief Financial Officer of DIRECTV Holdings LLC pursuant to Section 906.
	**32.3		Certification of the Chief Executive Officer of DIRECTV Financing Co., Inc. pursuant to Section 906.
	**32.4		Certification of the Chief Financial Officer of DIRECTV Financing Co., Inc. pursuant to Section 906.
	***101.INS		XBRL Instance Document
	***101.SCH		XBRL Taxonomy Extension Schema Document
	***101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	***101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	***101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	***101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*Incorporated by reference. **Furnished, not filed. ***Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

Table of Contents

DIRECTV HOLDINGS LLC

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DIRECTV HOLDINGS LLC (Registrant)
Date: May 5, 2011	By:	/s/ PATRICK T. DOYLE Patrick T. Doyle Executive Vice President and Chief Financial Officer
Date: August 4, 2011	By:	/s/ PATRICK T. DOYLE Patrick T. Doyle (Duly Authorized Officer and Executive Vice President and Chief Financial Officer)
	DIRECTV FINANCING CO., INC. (Registrant)
Date: May 5, 2011	By:	/s/ PATRICK T. DOYLE Patrick T. Doyle Executive Vice President and Chief Financial Officer
Date: August 4, 2011	By:	/s/ PATRICK T. DOYLE Patrick T. Doyle (Duly Authorized Officer and Executive Vice President and Chief Financial Officer)

3134

EXHIBIT INDEX

Exhibit Number			Exhibit Name
	31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Filing Compare · DIRECTV FINANCING CO INC