The DIRECTV Group Announces Second Quarter 2006 Results

-- DIRECTV U.S. Revenues Increase 12% to $3.3 Billion and Cash Flow before Interest and Taxes Nearly Triples to $450 Million

-- Results Bolstered by Lower Monthly Churn of 1.59% and Strong ARPU Growth of 5.6%

The DIRECTV Group, Inc. (NYSE:DTV) today reported that secondquarter revenues increased 10% to $3.52 billion and operating profitbefore depreciation and amortization(1) nearly doubled to $977 millioncompared to last year's second quarter. The DIRECTV Group reportedsecond quarter 2006 operating profit and net income both more thandoubled to $741 million and $459 million, respectively, when comparedto the same period last year. Earnings per share were $0.36 comparedwith $0.12 in the same period last year. These operating resultsinclude the effect of $253 million of equipment that DIRECTV U.S.capitalized during the quarter under its lease program, which wasimplemented March 1, 2006.

"Similar to recent quarters, DIRECTV U.S. generated excellentfinancial results highlighted by a 12% increase in revenues to $3.3billion, a 93% increase in operating profit before depreciation andamortization to $977 million and a nearly tripling of cash flow beforeinterest and taxes to $450 million," said Chase Carey, president andCEO of The DIRECTV Group, Inc.

Carey continued, "In many ways, the results in the quarter reflectour strategy to target higher quality subscribers. For example,although gross subscriber additions of 863,000 and net additions of125,000 in the quarter were below expectations, it's important to notethat we added 11% more higher quality gross subscribers in the quartercompared to last year. This trend -- which is driving both thetop-line and bottom-line financial results -- is primarily due to theongoing changes we're making to refine our credit policy and dealernetwork. These factors played an important role in reducing DIRECTV'smonthly churn rate from 1.69% to 1.59% this quarter. In addition,customers are buying more premium services such as high definitionprogramming and digital video recorders which is contributing to thestrong ARPU growth of 5.6% in the quarter. The increase in operatingprofit -- excluding the accounting effect from the new lease program-- is also directly linked to the improved subscriber mix primarilydue to the reduced acquisition costs associated with the significantreduction in lower quality customers attained and the related lowerbad debt expense incurred. We are also pleased that our acquisitioncost per subscriber, or SAC, declined both sequentially and comparedto last year as our set-top box cost reductions offset the highersales of advanced boxes."

Carey concluded, "With continued improvements in subscriber growthand the launch of several new products and services, we look forwardto a strong second half of the year. For example, we are currentlypromoting our enhanced NFL SUNDAY TICKET(R) package that features newinteractive services and more high definition games. In addition, wejust launched 19 regional sports networks in high definition and wewill continue to add new high definition local channel markets as westrive to reach approximately 75% of all U.S. television households bythe end of the year. Finally, we're also very excited about the launchof our new HD-DVR which is scheduled to be introduced in Los Angeleslater this month and nationwide in the following weeks."

Second Quarter Review

Lease Program. On March 1, 2006, DIRECTV U.S. introduced a set-topreceiver lease program primarily to increase future profitability byproviding DIRECTV U.S. with the opportunity to retrieve and reuseset-top receivers from deactivated customers. Under this new program,set-top receivers are capitalized and depreciated over their estimateduseful lives of three years. Prior to March 1, 2006, set-top receiversprovided to new and existing DIRECTV U.S. subscribers were immediatelyexpensed upon activation as a subscriber acquisition or upgrade andretention cost. The lease program is expected to result in a reductionin subscriber acquisition, and upgrade and retention costs. The amountof set-top receivers capitalized during the period is now reported inthe DIRECTV U.S. Consolidated Statements of Cash Flows under thecaptions "Cash paid for subscriber leased equipment - subscriberacquisitions" and "Cash paid for subscriber leased equipment - upgradeand retention." The amount of cash DIRECTV U.S. paid during thequarter ended June 30, 2006 for leased set-top receivers totaled $253million -- $153 million for subscriber acquisitions and $100 millionfor upgrade and retention.
THE DIRECTV GROUP'S OPERATIONAL REVIEW

Three Months Six Months
Ended June 30, Ended June 30,
Dollars in Millions except Earnings --------------- ---------------
per Common Share 2006 2005 2006 2005
-------------------------------------- ------- ------- ------- -------
Revenues $3,520 $3,188 $6,906 $6,336
-------------------------------------- ------- ------- ------- -------
Operating Profit Before
Depreciation and Amortization(1) 977 523 1,582 681
-------------------------------------- ------- ------- ------- -------
Operating Profit 741 312 1,134 257
-------------------------------------- ------- ------- ------- -------
Net Income 459 162 694 120
-------------------------------------- ------- ------- ------- -------
Earnings Per Common Share ($) 0.36 0.12 0.53 0.09
-------------------------------------- ------- ------- ------- -------
Free Cash Flow(2) 397 99 566 (103)
-------------------------------------- ------- ------- ------- -------

Operational Review. In the second quarter of 2006, The DIRECTVGroup's revenues of $3.52 billion increased 10% over the same periodin the prior year principally due to the larger subscriber bases atDIRECTV U.S. and DIRECTV Latin America, as well as strong growth inaverage revenue per subscriber (ARPU) at DIRECTV U.S. These changeswere partially offset by the exclusion of Hughes Network Systems (HNS)results in 2006 due to its sale.

The higher operating profit before depreciation and amortizationof $977 million and operating profit of $741 million were mostlyrelated to DIRECTV U.S. operations due to the capitalization ofcustomer equipment under the lease program for both new and existingsubscribers, the increase in gross profit generated from the higherrevenues, and reduced subscriber acquisition costs resulting primarilyfrom lower gross subscriber additions. Also impacting the comparisonwas a non-cash gain of $28 million in the second quarter of 2005related to the successful migration and retention of a portion of theDIRECTV Latin America subscribers in Mexico to the Sky Mexicoplatform.

Net income increased to $459 million in the second quarter of 2006primarily due to the changes in operating profit discussed above and asecond quarter 2005 charge of $65 million related to the premium paidfor the redemption of senior notes and the write-off of a portion ofdeferred debt issuance costs resulting from debt refinancing (recordedin "Other, net" in the Consolidated Statements of Operations).Partially offsetting these improvements was higher income tax expensein the most recent quarter associated with the higher pre-tax incomeand a $31 million credit in the second quarter of 2005 (recorded in"Income from discontinued operations, net of taxes" in theConsolidated Statements of Operations) related to the favorablesettlement of a U.S. federal income tax dispute associated with apreviously divested business.

Year-To-Date Review

The DIRECTV Group's revenues of $6.91 billion in the first half of2006 increased 9% compared to the same period of 2005 drivenprincipally by subscriber growth at DIRECTV U.S. and DIRECTV LatinAmerica, as well as continued solid ARPU growth at DIRECTV U.S. Thesechanges were partially offset by the exclusion of Hughes NetworkSystems (HNS) results in 2006 due to its sale.

In the first six months of 2006, operating profit beforedepreciation and amortization more than doubled to $1.58 billion andoperating profit more than quadrupled to $1.13 billion drivenprimarily by DIRECTV U.S. due to the capitalization of $339 million ofcustomer equipment under the lease program for both new and existingsubscribers, the increase in gross profit generated from higherrevenues, and reduced subscriber acquisition costs resulting fromlower gross subscriber additions, partially offset by higher retentionand upgrade spending at DIRECTV U.S. Also impacting the comparison wasa $57 million non-cash gain recorded in the first quarter of 2006resulting from the completion of DIRECTV Latin America's Sky Mexicotransactions, a non-cash gain of $28 million in the second quarter of2005 related to the migration and retention of a portion of theDIRECTV Latin America subscribers in Mexico to the Sky Mexicoplatform, and a loss in the first quarter of 2005 at HNS primarilyrelated to charges associated with its sale.

The increase in first half 2006 net income to $694 million was dueto the higher operating profit discussed above, a second quarter 2005charge of $65 million related to the premium paid for the redemptionof senior notes and the write-off of a portion of deferred debtissuance costs from debt refinancing, and higher interest income in2006 resulting primarily from higher average interest rates. Partiallyoffsetting these improvements were higher 2006 income tax expenseresulting from an increase in pre-tax income and a $31 million creditin the second quarter of 2005 related to the favorable settlement of aU.S. federal income tax dispute associated with a previously divestedbusiness.
SEGMENT FINANCIAL REVIEW
DIRECTV U.S. Segment

Three Months Six Months
Ended June 30, Ended June 30,
DIRECTV U.S. --------------- ---------------
Dollars in Millions except ARPU 2006 2005 2006 2005
-------------------------------------- ------- ------- ------- -------
Revenue $3,318 $2,961 $6,512 $5,761
-------------------------------------- ------- ------- ------- -------
Average Monthly Revenue per Subscriber
(ARPU) ($) 71.59 67.79 70.73 66.91
-------------------------------------- ------- ------- ------- -------
Operating Profit Before Depreciation
and Amortization(1) 977 505 1,521 720
-------------------------------------- ------- ------- ------- -------
Operating Profit 774 333 1,137 372
-------------------------------------- ------- ------- ------- -------
Cash Flow Before Interest and Taxes(3) 450 154 661 217
-------------------------------------- ------- ------- ------- -------
Free Cash Flow(2) 224 126 272 151
-------------------------------------- ------- ------- ------- -------
Subscriber Data (in 000's except
Churn)
-------------------------------------- ------- ------- ------- -------
Gross Subscriber Additions 863 964 1,782 2,101
-------------------------------------- ------- ------- ------- -------
Average Monthly Subscriber Churn 1.59% 1.69% 1.52% 1.59%
-------------------------------------- ------- ------- ------- -------
Net Subscriber Additions 125 225 380 730
-------------------------------------- ------- ------- ------- -------
Cumulative Subscribers 15,513 14,670 15,513 14,670
-------------------------------------- ------- ------- ------- -------

DIRECTV U.S. gross subscriber additions of 863,000 declined 10%compared to the second quarter of 2005 primarily due to theimplementation of revised credit policies and dealer incentivesdesigned to improve the quality of new subscriber additions. As aresult of these changes, DIRECTV U.S. increased the number of higherquality subscribers attained in the quarter by 11% compared to lastyear. This trend of attaining higher quality subscribers was a majorcontributor to the reduction in monthly churn from 1.69% to 1.59% inthe current quarter. DIRECTV U.S. added 125,000 net subscribers in thequarter bringing the total number of DIRECTV U.S. subscribers to 15.51million as of June 30, 2006, an increase of 6% over the 14.67 millionsubscribers on June 30, 2005.

In the quarter, DIRECTV U.S. revenues increased 12% to $3.32billion due to the larger subscriber base and strong ARPU growth. ARPUof $71.59 increased 5.6% compared to last year principally due toprogramming package price increases as well as higher mirroring,lease, digital video recorder (DVR) and high-definition programmingfees.

The second quarter 2006 operating profit before depreciation andamortization increased 93% to $977 million and operating profitincreased 132% to $774 million primarily due to the capitalization ofcustomer equipment, the increase in gross profit generated from thehigher revenues and lower subscriber acquisition costs resultingprimarily from the reduction in lower quality subscriber additions.Excluding the $253 million of customer equipment that was capitalizedunder the new lease program, operating profit before depreciation andamortization would have increased 44%.

DIRECTV Latin America Segment

DIRECTV Latin America and Sky Consolidation. On October 11, 2004,The DIRECTV Group announced a series of transactions with NewsCorporation, Grupo Televisa, Globo and Liberty Media that are designedto strengthen the operating and financial performance of DIRECTV LatinAmerica by combining the two Direct-To-Home platforms into a singleplatform in each of the major territories served in the region. In2006, The DIRECTV Group paid News Corporation and Liberty Mediaapproximately $373 million for their equity stakes in Sky Mexico andreceived approximately $59 million from Televisa at the completion ofthe Sky Mexico transaction. DIRECTV Latin America completed themigration of approximately 144,000 subscribers to the Sky Mexicoplatform and ceased operations in 2005. The DIRECTV Group ownsapproximately 41% of Sky Mexico, which has 1.39 million subscribers.In the third quarter of 2006, The DIRECTV Group expects to receiveapproximately $97 million from News Corporation upon completion of thetransaction in Brazil. For the rest of the region, the consolidationtransactions have been completed.
Three Months Six Months
DIRECTV Latin America Ended June 30, Ended June 30,
Dollars in Millions -------------- --------------
2006 2005 2006 2005
-------------------------------------- ------- ------ ------- ------
Revenue $202 $184 $395 $367
-------------------------------------- ------- ------ ------- ------
Operating Profit Before Depreciation
and Amortization(1) 21 45 96 68
-------------------------------------- ------- ------ ------- ------
Operating Profit (Loss) (13) 4 31 (10)
-------------------------------------- ------- ------ ------- ------
Net Subscriber Additions(4) (000's) 77 45 139 74
-------------------------------------- ------- ------ ------- ------
Cumulative Subscribers(4) (000's) 1,732 1,519 1,732 1,519
-------------------------------------- ------- ------ ------- ------

Operational Review. In the second quarter of 2006, DIRECTV LatinAmerica added 77,000 net subscribers principally due to solidsubscriber growth in Argentina and Venezuela. The total number ofDIRECTV subscribers in Latin America as of June 30, 2006 increased 14%to 1.73 million compared to 1.52 million as of June 30, 2005.

Revenues for DIRECTV Latin America increased 10% to $202 millionin the quarter primarily due to the larger subscriber base partiallyoffset by the absence of revenues in 2006 from DIRECTV Latin America'sMexico operations due to its shutdown. The decline in DIRECTV LatinAmerica's second quarter 2006 operating profit before depreciation andamortization to $21 million and the operating loss of $13 million wereprimarily attributable to a non-cash gain of $28 million in the secondquarter of 2005 related to the successful migration and retention of aportion of the DIRECTV Latin America subscribers in Mexico to the SkyMexico platform.
Network Systems Segment

Three Months Six Months
Ended June 30, Ended June 30,
Network Systems Segment -------------- --------------
Dollars in Millions 2006 2005 2006 2005
-------------------------------------- ------ ----- ------ -----
Revenue - $45 - $211
-------------------------------------- ------ ----- ------ -----
Operating Loss Before Depreciation and
Amortization(1) - (8) - (61)
-------------------------------------- ------ ----- ------ -----
Operating Loss - (8) - (61)
-------------------------------------- ------ ----- ------ -----

On April 22, 2005, The DIRECTV Group completed the sale of a 50%interest in HNS LLC, an entity that owns substantially all of theassets of HNS, to SkyTerra Communications, Inc. As of the date of thissale until January 2006, The DIRECTV Group accounted for 50% of HNS'net income or loss as an equity investment in "Other, net" in theConsolidated Statements of Operations. In January 2006, The DIRECTVGroup completed the sale of the remaining 50% interest in HNS LLC toSkyTerra and received $110 million in cash.
CONSOLIDATED BALANCE SHEET AND CASH FLOW

The DIRECTV Group June 30, December 31,
----------------- --------------
Dollars in Billions 2006 2005
------------------------------------- ----------------- --------------
Cash, Cash Equivalents & Short-Term
Investments $2.05 $4.38
------------------------------------- ----------------- --------------
Total Debt 3.41 3.42
------------------------------------- ----------------- --------------
Net Debt/(Cash) 1.36 (0.96)
------------------------------------- ----------------- --------------

The DIRECTV Group's consolidated cash and short-term investmentbalance of $2.05 billion declined by $2.34 billion in the first halfof 2006 mostly due to the implementation of a planned $3.00 billionshare repurchase program announced on February 8, 2006. During thefirst half of the year, The DIRECTV Group repurchased and retired 168million shares of DIRECTV Group common stock (including 131 millionshares of common stock purchased from General Motors employee pensionand benefit trusts) for approximately $2.70 billion at an averageprice of $16.01 per share. Also impacting the cash balance throughJune 30, 2006, were net payments of $314 million related to theDIRECTV Latin America transactions, $110 million received for the saleof the remaining interest in HNS, as well as free cash flow in theperiod of $566 million. Free cash flow was driven by cash flow fromoperations of $1.30 billion partially offset by cash paid forsatellites and property and equipment of $734 million. Total debtremained essentially unchanged at $3.41 billion.

CONFERENCE CALL INFORMATION

A live webcast of The DIRECTV Group's second quarter 2006 earningscall will be available on the company's website at www.directv.com.The webcast will begin at 2:00 p.m. ET, today, August 8, 2006 and willbe archived on our website at www.directv.com.
FOOTNOTES

(1) Operating profit (loss) before depreciation and amortization,
which is a financial measure that is not determined in accordance
with accounting principles generally accepted in the United States
of America, or GAAP, should be used in conjunction with other GAAP
financial measures and is not presented as an alternative measure
of operating results, as determined in accordance with accounting
principles generally accepted in the United States of America.
Please see each of The DIRECTV Group's and DIRECTV Holdings LLC's
Annual Reports on Form 10-K for the year ended December 31, 2005
for further discussion of operating profit (loss) before
depreciation and amortization. Operating profit before
depreciation and amortization margin is calculated by dividing
operating profit before depreciation and amortization by total
revenues.

(2) Free cash flow, which is a financial measure that is not
determined in accordance with GAAP, is calculated by deducting
amounts under the captions "Cash paid for property and equipment,"
"Cash paid for satellites," "Cash paid for subscriber leased
equipment - subscriber acquisitions," and "Cash paid for
subscriber leased equipment - upgrade and retention" from "Net
cash provided by (used in) 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. The DIRECTV Group and DIRECTV U.S. management use free
cash flow to evaluate the cash generated by DIRECTV U.S.' 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 and for additional
capital expenditures. The DIRECTV Group and DIRECTV U.S. believe
this measure is useful to investors, along with other GAAP
measures (such as cash flows from operating and investing
activities), to compare DIRECTV U.S.' 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 our current and projected
subscriber base to fund required and discretionary spending and to
help determine the financial value of the company.

(3) Cash flow before interest and taxes, which is a financial
measure that is not determined in accordance with GAAP, is
calculated by deducting amounts under the captions "Cash paid for
property and equipment," "Cash paid for satellites," "Cash paid
for subscriber leased equipment - subscriber acquisitions" and
"Cash paid for subscriber leased equipment - upgrade and
retention" from "Net cash provided by (used in) operating
activities" from the Consolidated Statements of Cash Flows and
then adding back net interest paid and "Cash paid (refunded) for
income taxes." 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. The DIRECTV
Group and DIRECTV U.S. management use cash flow before interest
and taxes to evaluate the cash generated by DIRECTV U.S.' current
subscriber base, net of capital expenditures, interest, and taxes,
for the purpose of allocating resources to activities such as
adding new subscribers, retaining and upgrading existing
subscribers and for additional capital expenditures. The DIRECTV
Group and DIRECTV U.S. believe this measure is useful to
investors, along with other GAAP measures (such as cash flows from
operating and investing activities), to compare DIRECTV U.S.'
operating performance to other communications, entertainment and
media companies. We believe that investors also use current and
projected cash flow before interest and taxes to determine the
ability of our current and projected subscriber base to fund
required and discretionary spending and to help determine the
financial value of the company.

(4) DIRECTV Latin America net subscriber additions exclude DIRECTV
Latin America's subscriber activity in Mexico. DIRECTV Latin
America cumulative subscribers exclude subscribers of the Sky
Mexico service.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

NOTE: This release may include or incorporate by reference certainstatements that we believe are, or may be considered to be,"forward-looking statements" within the meaning of various provisionsof the Securities Act of 1933 and of the Securities Exchange Act of1934. These forward-looking statements generally can be identified byuse of statements that include phrases such as "believe," "expect,""estimate," "anticipate," "intend," "plan," "foresee," "project" orother similar words or phrases. Similarly, statements that describeour objectives, plans or goals also are forward-looking statements.All of these forward-looking statements are subject to certain risksand uncertainties that could cause actual results to differ materiallyfrom historical results or from those expressed or implied by therelevant forward-looking statement. Such risks and uncertaintiesinclude, but are not limited to: economic conditions; product demandand market acceptance; ability to simplify aspects of our businessmodel, improve customer service, create new and desirable programmingcontent and interactive features, and achieve anticipated economies ofscale; government action; local political or economic developments inor affecting countries where we have operations, including political,economic and social uncertainties in many Latin American countries inwhich DTVLA operates; foreign currency exchange rates; ability toobtain export licenses; competition; the outcome of legal proceedings;ability to achieve cost reductions; ability to timely perform materialcontracts; ability to renew programming contracts under favorableterms; technological risk; limitations on access to distributionchannels; the success and timeliness of satellite launches; in-orbitperformance of satellites, including technical anomalies; loss ofuninsured satellites; theft of satellite programming signals; and ourability to access capital to maintain our financial flexibility. Weurge you to consider these factors carefully in evaluating theforward-looking statements.

DIRECTV is the nation's leading digital television serviceprovider with more than 15.5 million customers. DIRECTV and theCyclone Design logo are registered trademarks of DIRECTV, Inc. DIRECTV(NYSE:DTV) is approximately 39 percent owned by News Corporation. Formore information visit directv.com.
THE DIRECTV GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
------------------- -------------------

Revenues $3,520.0 $3,187.9 $6,905.6 $6,335.8
------------------------------ ---------------------------------------

Operating Costs and Expenses
Costs of revenues, exclusive
of depreciation and
amortization expense
Broadcast programming and
other 1,383.3 1,238.9 2,782.5 2,583.8
Subscriber service expenses 267.1 230.9 515.3 463.0
Broadcast operations
expenses 74.6 63.2 145.5 125.4
Selling, general and
administrative expenses,
exclusive of depreciation
and amortization expense
Subscriber acquisition
costs 422.1 644.1 1,009.2 1,405.3
Upgrade and retention costs 145.6 226.5 440.7 481.0
General and administrative
expenses 250.3 261.6 430.5 596.8
Depreciation and amortization
expense 235.6 211.1 448.4 423.1
------------------------------ ---------------------------------------
Total Operating Costs and
Expenses 2,778.6 2,876.3 5,772.1 6,078.4
------------------------------ ---------------------------------------

Operating Profit 741.4 311.6 1,133.5 257.4

Interest income 32.3 31.0 79.5 53.1
Interest expense (56.6) (60.2) (115.3) (115.5)
Other, net (1.8) (71.9) 19.8 (73.6)
------------------------------ ---------------------------------------

Income From Continuing
Operations Before Income
Taxes and Minority Interests 715.3 210.5 1,117.5 121.4

Income tax expense (256.6) (75.6) (417.3) (31.9)
Minority interests in net
earnings of subsidiaries - (4.7) (6.3) (0.7)
------------------------------ ---------------------------------------

Income from continuing
operations 458.7 130.2 693.9 88.8
Income from discontinued
operations, net of taxes - 31.3 - 31.3
------------------------------ ---------------------------------------


Net Income $458.7 $161.5 $693.9 $120.1
============================== =======================================

Basic and Diluted Earnings Per
Common Share:
Income from continuing
operations $0.36 $0.10 $0.53 $0.07
Income from discontinued
operations, net of taxes - 0.02 - 0.02
------------------------------ ---------------------------------------
Basic and Diluted Earnings Per
Common Share: $0.36 $0.12 $0.53 $0.09
============================== =======================================

Weighted average number of
common shares outstanding (in
millions)
Basic 1,256.9 1,387.6 1,301.7 1,386.8
Diluted 1,263.8 1,393.5 1,308.2 1,392.8
============================== =======================================


THE DIRECTV GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)

June 30, December 31,
ASSETS 2006 2005
-------------------------------------- ---------------- --------------
Current Assets
Cash and cash equivalents $1,884.2 $3,701.3
Short-term investments 163.7 683.2
Accounts receivable, net of allowances
of $73.9 and $80.5 1,047.0 1,033.2
Inventories 201.3 283.1
Deferred income taxes 136.4 163.3
Prepaid expenses and other 180.6 232.3
-------------------------------------- ---------------- --------------

Total Current Assets 3,613.2 6,096.4
Satellites, net 1,882.5 1,875.5
Property and Equipment, net 1,602.2 1,199.2
Goodwill 3,045.3 3,045.3
Intangible Assets, net 1,723.7 1,878.0
Deferred Income Taxes 155.5 492.4
Investments and Other Assets 1,254.0 1,043.4
-------------------------------------- ---------------- --------------

Total Assets $13,276.4 $15,630.2
====================================== ================ ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------- ---------------- --------------
Current Liabilities
Accounts payable and accrued
liabilities $2,158.6 $2,541.8
Unearned subscriber revenue and
deferred credits 276.2 276.6
Short-term borrowings and current
portion of long-term debt 11.0 9.7
-------------------------------------- ---------------- --------------

Total Current Liabilities 2,445.8 2,828.1
Long-Term Debt 3,400.2 3,405.3
Other Liabilities and Deferred Credits 1,368.5 1,407.6
Commitments and Contingencies
Minority Interests 55.5 49.2
Stockholders' Equity 6,006.4 7,940.0
-------------------------------------- ---------------- --------------

Total Liabilities and Stockholders'
Equity $13,276.4 $15,630.2
====================================== ================ ==============


THE DIRECTV GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)

Six Months Ended June 30,
2006 2005
-------------------------------------- -------------------------------
Cash Flows From Operating Activities
Net Income $693.9 $120.1
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 448.4 423.1
Gain from DIRECTV Mexico
transaction (57.0) (28.3)
Impairment charge - 25.3
Net (gain) loss from sale of
investments (14.3) 0.6
Gain from discontinued operations - (31.3)
Loss on disposal of fixed assets 15.6 4.3
Share-based compensation expense 22.0 20.4
Write-off of debt issuance costs - 19.0
Deferred income taxes and other 367.6 55.1
Change in other operating assets
and liabilities
Accounts receivable, net 80.7 47.3
Inventories 81.8 (171.7)
Prepaid expenses and other 48.5 (3.6)
Accounts payable and accrued
liabilities (387.2) (14.9)
Unearned subscriber revenue and
deferred credits (0.4) (18.9)
Other, net 0.6 (116.1)
-------------------------------------- -------------------------------
Net Cash Provided by Operating
Activities 1,300.2 330.4
-------------------------------------- -------------------------------
Cash Flows From Investing Activities
Purchase of short-term investments (1,673.1) (1,783.5)
Sale of short-term investments 2,193.3 1,931.6
Cash paid for investments (389.6) -
Proceeds from sale of investments 182.4 113.1
Proceeds from sale of businesses - 246.0
Cash paid for property and equipment (628.8) (205.7)
Cash paid for satellites (105.2) (227.5)
Other, net (23.9) (0.3)
-------------------------------------- -------------------------------
Net Cash Provided by (Used in)
Investing Activities (444.9) 73.7
-------------------------------------- -------------------------------
Cash Flows From Financing Activities
Common shares repurchased and retired (2,681.7) -
Net decrease in short-term borrowings (1.3) (3.2)
Excess tax benefit from share-based
compensation 1.5 -
Cash proceeds from refinancing
transactions - 3,003.3
Repayment of long-term debt (2.5) (2,002.4)
Repayment of other long-term
obligations (47.7) (44.6)
Stock options exercised 59.3 15.3
Debt issuance costs - (4.7)
-------------------------------------- -------------------------------
Net Cash Provided by (Used in)
Financing Activities (2,672.4) 963.7
-------------------------------------- -------------------------------
Net increase (decrease) in cash and
cash equivalents (1,817.1) 1,367.8
Cash and cash equivalents at beginning
of the period 3,701.3 2,307.4
-------------------------------------- -------------------------------
Cash and cash equivalents at the end
of the period $1,884.2 $3,675.2
-------------------------------------- -------------------------------

Supplemental Cash Flow Information
Cash paid for interest $113.9 $116.6
Cash paid (refunded) for income taxes (15.1) 5.0


THE DIRECTV GROUP, INC.
SELECTED SEGMENT DATA
(Dollars in Millions)
(Unaudited)

Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2006 2005 2006 2005
----------------------------------------------------------------------
DIRECTV U.S.
Revenues $3,318.3 $2,960.5 $6,511.8 $5,761.3
Operating Profit Before
Depreciation and
Amortization(1) 976.7 504.6 1,521.3 720.2
Operating Profit Before
Depreciation and Amortization
Margin(1) 29.4% 17.0% 23.4% 12.5%
Operating Profit $ 774.3 $ 333.2 $1,136.7 $ 371.6
Operating Profit Margin 23.3% 11.3% 17.5% 6.4%
Depreciation and Amortization $ 202.4 $ 171.4 $ 384.6 $ 348.6
Capital Expenditures(2)(3) 423.2 197.7 643.1 343.9

----------------------------------------------------------------------
DIRECTV LATIN AMERICA
Revenues $ 202.1 $ 183.5 $ 394.6 $ 367.4
Operating Profit Before
Depreciation and
Amortization(1) 21.3 45.3 96.4 67.9
Operating Profit Before
Depreciation and Amortization
Margin(1) 10.5% 24.7% 24.4% 18.5%
Operating Profit (Loss) $ (12.8) $ 4.0 $ 30.7 $ (9.5)
Operating Profit Margin N/A 2.2% 7.8% N/A
Depreciation and Amortization $ 34.1 $ 41.3 $ 65.7 $ 77.4
Capital Expenditures(2) 40.5 24.6 69.6 41.6

----------------------------------------------------------------------
NETWORK SYSTEMS
Revenues $ - $ 45.2 $ - $ 211.4
Operating Loss Before
Depreciation and
Amortization(1) - (8.0) - (60.8)
Operating Loss - (8.0) - (60.8)
Depreciation and Amortization - - - -
Capital Expenditures(2) - 3.9 - 18.1

----------------------------------------------------------------------
ELIMINATIONS and OTHER
Revenues $ (0.4) $ (1.3) $ (0.8) $ (4.3)
Operating Loss Before
Depreciation and
Amortization(1) (21.0) (19.2) (35.8) (46.8)
Operating Loss (20.1) (17.6) (33.9) (43.9)
Depreciation and Amortization (0.9) (1.6) (1.9) (2.9)
Capital Expenditures(2) - 1.4 - 29.6

----------------------------------------------------------------------
TOTAL
Revenues $3,520.0 $3,187.9 $6,905.6 $6,335.8
Operating Profit Before
Depreciation and
Amortization(1) 977.0 522.7 1,581.9 680.5
Operating Profit Before
Depreciation and Amortization
Margin(1) 27.8% 16.4% 22.9% 10.7%
Operating Profit $ 741.4 $ 311.6 $1,133.5 $ 257.4
Operating Profit Margin 21.1% 9.8% 16.4% 4.1%
Depreciation and Amortization $ 235.6 $ 211.1 $ 448.4 $ 423.1
Capital Expenditures(2) 463.7 227.6 712.7 433.2

======================================================================

(1) See footnote 1 above.

(2) Capital expenditures include cash paid and amounts accrued during
the period for property, equipment and satellites.

(3) Beginning in March 2006, capital expenditures at DIRECTV U.S.
include the cost of set-top receivers capitalized under its lease
program.


DIRECTV HOLDINGS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
------------------- -------------------

Revenues $3,318.3 $2,960.5 $6,511.8 $5,761.3
----------------------------------------------------------------------

Operating Costs and Expenses
Costs of revenues, exclusive
of depreciation and
amortization expense
Broadcast programming and
other 1,314.4 1,137.7 2,645.9 2,287.3
Subscriber service expenses 255.5 219.2 492.2 439.7
Broadcast operations
expenses 45.6 35.3 87.6 70.7
Selling, general and
administrative expenses,
exclusive of depreciation
and amortization expense
Subscriber acquisition
costs 401.4 622.2 969.0 1,367.8
Upgrade and retention costs 143.8 223.2 436.9 475.4
General and administrative
expenses 180.9 218.3 358.9 400.2
Depreciation and amortization
expense 202.4 171.4 384.6 348.6
----------------------------------------------------------------------
Total Operating Costs and
Expenses 2,544.0 2,627.3 5,375.1 5,389.7
----------------------------------------------------------------------

Operating Profit 774.3 333.2 1,136.7 371.6

Interest income 17.3 3.7 31.7 4.5
Interest expense (53.9) (57.9) (109.8) (114.7)
Other expense (0.7) (65.2) (1.3) (65.6)
----------------------------------------------------------------------

Income Before Income Taxes 737.0 213.8 1,057.3 195.8

Income tax expense (281.7) (82.0) (404.1) (75.1)
----------------------------------------------------------------------

Net Income $455.3 $131.8 $653.2 $120.7
======================================================================


DIRECTV HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)

June 30, December 31,
ASSETS 2006 2005
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents $1,401.2 $1,164.8
Accounts receivable, net of allowances
of $68.5 and $75.0 913.6 995.9
Inventories 198.2 281.4
Deferred income taxes 120.4 148.1
Prepaid expenses and other 138.5 136.9
----------------------------------------------------------------------

Total Current Assets 2,771.9 2,727.1
Satellites, net 1,911.7 1,907.9
Property and Equipment, net 1,257.8 848.3
Goodwill 3,031.7 3,031.7
Intangible Assets, net 1,720.7 1,875.0
Other Assets 148.3 135.0
----------------------------------------------------------------------

Total Assets $10,842.1 $10,525.0
======================================================================

LIABILITIES AND OWNER'S EQUITY
----------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued
liabilities $1,945.3 $2,362.9
Unearned subscriber revenue and
deferred credits 258.3 259.0
Current portion of long-term debt 10.3 7.8
----------------------------------------------------------------------

Total Current Liabilities 2,213.9 2,629.7
Long-Term Debt 3,400.2 3,405.3
Other Liabilities and Deferred Credits 1,001.5 989.2
Deferred Income Taxes 257.1 204.4
Commitments and Contingencies

Owner's Equity 3,969.4 3,296.4
----------------------------------------------------------------------

Total Liabilities and Owner's Equity $10,842.1 $10,525.0
======================================================================


DIRECTV HOLDINGS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)

Six Months Ended June 30,
2006 2005
----------------------------------------------------------------------
Cash Flows From Operating Activities
Net Income $653.2 $120.7
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization
expense 384.6 348.6
Share-based compensation expense 18.7 13.2
Equity losses from unconsolidated
affiliates 1.3 0.7
Amortization of debt issuance costs 2.3 3.9
Write-off of debt issuance costs - 19.0
Deferred income taxes and other 80.4 55.3
Change in other operating assets
and liabilities
Accounts receivable, net 83.1 49.9
Inventories 83.2 (172.2)
Prepaid expenses and other (1.6) 48.3
Other assets (17.9) (1.9)
Accounts payable and accrued
liabilities (398.2) 91.6
Unearned subscriber revenue and
deferred credits (0.7) (30.4)
Other liabilities and deferred
credits 47.3 (52.2)
----------------------------------------------------------------------
Net Cash Provided by Operating
Activities 935.7 494.5
----------------------------------------------------------------------
Cash Flows From Investing Activities
Cash paid for property and equipment (219.1) (148.3)
Cash paid for subscriber leased
equipment - subscriber acquisitions (199.4) -
Cash paid for subscriber leased
equipment - upgrade and retention (139.9) -
Cash paid for satellites (105.2) (195.6)
Other (2.0) -
----------------------------------------------------------------------
Net Cash Used in Investing Activities (665.6) (343.9)
----------------------------------------------------------------------
Cash Flows From Financing Activities
Cash proceeds from refinancing
transactions - 3,003.3
Repayment of long-term debt (2.5) (2,001.8)
Repayment of borrowing from Parent - (875.0)
Repayment of other long-term
obligations (33.1) (31.2)
Cash contribution from Parent - 538.3
Excess tax benefit from share-based
compensation 1.9 -
Debt issuance costs - (4.7)
----------------------------------------------------------------------
Net Cash Provided by (Used in)
Financing Activities (33.7) 628.9
----------------------------------------------------------------------
Net increase in cash and cash
equivalents 236.4 779.5
Cash and cash equivalents at beginning
of the period 1,164.8 34.5
----------------------------------------------------------------------
Cash and cash equivalents at end of
the period $1,401.2 $814.0
======================================================================

Supplemental Cash Flow Information
Cash paid for interest $108.3 $114.9
Cash paid (refunded) for income taxes 311.9 (44.1)


Non-GAAP Financial Measure Reconciliation Schedules
(Unaudited)

----------------------------------------------------------------------
The DIRECTV Group
----------------------------------------------------------------------
Reconciliation of Operating Profit Before Depreciation and
Amortization to Operating Profit(a)
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
--------- -------- --------- -------
(Dollars in (Dollars in
Millions) Millions)
Operating Profit Before
Depreciation and Amortization $977.0 $522.7 $1,581.9 $680.5
Subtract: Depreciation and
amortization expense 235.6 211.1 448.4 423.1
--------------------------------- ------------------ -----------------
Operating Profit $741.4 $311.6 $1,133.5 $257.4
================================= ================== =================

----------------------------------------------------------------------
(a) For a reconciliation of this non-GAAP financial measure for each
of our segments, please see the Notes to the Consolidated
Financial Statements which will be included in The DIRECTV Group's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
This Form 10-Q is expected to be filed with the SEC in August
2006.
----------------------------------------------------------------------


----------------------------------------------------------------------
The DIRECTV Group
----------------------------------------------------------------------
Reconciliation of Cash Flow before Interest and Taxes(3) and Free Cash
Flow(2) to Net Cash Provided by Operating Activities
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
--------- -------- --------- -------
(Dollars in (Dollars in
Millions) Millions)
Cash Flow before Interest and
Taxes $400.4 $104.0 $585.5 $(34.3)
Adjustments:
Cash paid for interest (53.0) (33.7) (113.9) (116.6)
Interest income 32.3 31.0 79.5 53.1
Income taxes refunded (paid) 17.0 (2.3) 15.1 (5.0)
--------------------------------- ------------------ -----------------
Subtotal - Free Cash Flow 396.7 99.0 566.2 (102.8)
Add Cash Paid For:
Property and equipment 415.1 132.5 628.8 205.7
Satellites 48.6 95.1 105.2 227.5
--------------------------------- ------------------ -----------------
Net Cash Provided by Operating
Activities $860.4 $326.6 $1,300.2 $330.4
================================= ================== =================

----------------------------------------------------------------------


----------------------------------------------------------------------
DIRECTV Holdings LLC
----------------------------------------------------------------------
Reconciliation of Cash Flow before Interest and Taxes(3) and Free Cash
Flow(2) to Net Cash Provided by Operating Activities
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
--------- -------- --------- -------
(Dollars in (Dollars in
Millions) Millions)
Cash Flow before Interest and
Taxes $449.5 $153.8 $660.6 $216.9
Adjustments:
Cash paid for interest (50.3) (31.2) (108.3) (114.9)
Interest income 17.3 3.7 31.7 4.5
Income taxes refunded (paid) (192.5) - (311.9) 44.1
--------------------------------- ------------------ -----------------
Subtotal - Free Cash Flow 224.0 126.3 272.1 150.6
Add Cash Paid For:
Property and equipment 121.3 102.5 219.1 148.3
Subscriber leased equipment -
subscriber acquisitions 153.0 - 199.4 -
Subscriber leased equipment -
upgrade and retention 99.5 - 139.9 -
Satellites 48.6 95.2 105.2 195.6
--------------------------------- ------------------ -----------------
Net Cash Provided by Operating
Activities $646.4 $324.0 $935.7 $494.5
================================= ================== =================

----------------------------------------------------------------------

(2) and (3) -- see footnotes above in this earnings release


DIRECTV HOLDINGS LLC
Non-GAAP Financial Measure Reconciliation and Other Data
(Unaudited)

----------------------------------------------------------------------
DIRECTV Holdings LLC
----------------------------------------------------------------------
Reconciliation of Pre-SAC Margin to Operating Profit
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(Dollars in Millions)

Operating Profit $774.3 $333.2 $1,136.7 $371.6
Adjustments:
Subscriber acquisition costs
(expensed) 401.4 622.2 969.0 1,367.8
Depreciation and
amortization expense 202.4 171.4 384.6 348.6
Cash paid for subscriber
leased equipment - upgrade
and retention (99.5) - (139.9) -
---------------------------------------
Pre-SAC margin(a) $1,278.6 $1,126.8 $2,350.4 $2,088.0
=======================================
Pre-SAC margin as a percentage
of revenue(a) 38.5% 38.1% 36.1% 36.2%
----------------------------------------------------------------------

----------------------------------------------------------------------
SAC Calculation
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(Dollars in Millions, Except SAC
Amounts)
Subscriber acquisition costs
(expensed) $401.4 $622.2 $969.0 $1,367.8
Cash paid for subscriber
leased equipment - subscriber
acquisitions 153.0 - 199.4 -
---------------------------------------
Total acquisition costs $554.4 $622.2 $1,168.4 $1,367.8
=======================================
Gross subscriber additions
(000's) 863 964 1,782 2,101
Average subscriber acquisition
costs-per subscriber (SAC) $642 $646 $656 $651
----------------------------------------------------------------------

----------------------------------------------------------------------
Other Data
----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Average monthly revenue per
subscriber (ARPU) $71.59 $67.79 $70.73 $66.91
Average monthly churn % 1.59% 1.69% 1.52% 1.59%
Total number of subscribers-
platform (000's) 15,513 14,670 15,513 14,670
Capital expenditures
(millions) $423.2 $197.7 $643.1 $343.9
----------------------------------------------------------------------

----------------------------------------------------------------------
(a) Pre-SAC Margin, which is a financial measure that is not
determined in accordance with accounting principles generally
accepted in the United States of America, or GAAP, is calculated
for DIRECTV U.S. by adding amounts under the captions "Subscriber
acquisition costs" and "Depreciation and amortization expense" to
"Operating Profit" from the Consolidated Statements of Operations
and subtracting "Cash paid for subscriber leased equipment -
upgrade and retention" 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 operating results, as determined in
accordance with GAAP. The DIRECTV Group and DIRECTV U.S.
management use Pre-SAC Margin to evaluate the profitability of
DIRECTV U.S.' current subscriber base for the purpose of
allocating resources to discretionary activities such as adding
new subscribers, upgrading and retaining existing subscribers
and for capital expenditures. To compensate for the exclusion of
"Subscriber acquisition costs," management also uses operating
profit and operating profit before depreciation and amortization
expense to measure profitability.

The DIRECTV Group and DIRECTV U.S. believe this measure is useful
to investors, along with other GAAP measures (such as revenues,
operating profit and net income), to compare DIRECTV U.S.'
operating performance to other communications, entertainment and
media companies. The DIRECTV Group and DIRECTV U.S. believe that
investors also use current and projected Pre-SAC Margin to
determine the ability of DIRECTV U.S.' current and projected
subscriber base to fund discretionary spending and to determine
the financial returns for subscriber additions.