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DirecTV Latin America Eyes Restructuring


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#1 OFFLINE   Steve Mehs

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Posted 09 January 2003 - 05:01 AM

DirecTV Latin America, struggling with the continuing downturn in the South/Central American economy, said it has initiated discussions with programmers, suppliers, lenders and business associates to address its financial and operational challenges.

Issues DirecTV Latin America is trying to address include excessive fixed costs and a substantial debt burden, all of which are occurring during a time of economic deterioration throughout the Latin American region. If discussions with partners don't result in reasonable agreements, DirecTV Latin America Chairman Kevin McGrath said the company would consider other options, including a restructuring under Chapter 11 bankruptcy.

"There are some significant contracts that need to be realigned with the realities of the marketplace," McGrath said. "We will also continue to encourage programmers and suppliers to share directly and appropriately the risks of exchange rate fluctuation and currency devaluation."

DirecTV Latin America has retained AlixPartners, a turnaround and management services firm, to assist with its restructuring initiative. Michael Feder, a principal at AlixPartners, was named chief restructuring officer at DirecTV Latin America, reporting to McGrath.

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#2 OFFLINE   raj2001

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Posted 09 January 2003 - 05:23 PM

Apart from the economic downturn in Latin America, DTVLA faces stiff competition from cable. In the US, cable TV is cheaper than DirecTV or Dish, and the DBS companies used that as their marketing strategy. In Latin America, the opposite is true. Cable rates are going up, but they are still cheaper than DirecTV. Cable also provides local channels, DirecTV does not, and in a few countries even provides free movie channels (probably illegally). In many DTVLA markets they also do not have the same sort of cheap/free equipment deals that we have here in the US.

In Caribbean countries DTVLA isn't popular because most of the programming is in Spanish, and most of the people in Caribbean countries speak English. There are a few exceptions - Puerto Rico, Dominican Republic etc.




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