CORRECTED - (OFFICIAL)-TEXT-Moody's release on DIRECTV

(In DIRECTV Holdings LLC ratings list, Moody's corrects second item to debt
"Senior Secured Bank Credit Facility.")

(The following statement was released by the rating agency)

May 7 - Moody's Investors Service assigned DIRECTV Holdings, LLC's
("DIRECTV" - Ba2 Corporate Family rating -- "CFR") proposed new $1.0 billion
senior secured Term Loan C maturing in 2013, and $1.35 billion senior unsecured
notes maturing in 2016, which may increase to $1.5 billion, Baa3 (LGD2-19%) and
Ba3 (LGD5-73%) ratings, respectively, and affirmed all existing ratings for the
company. Net proceeds from the new debt offerings will be used for general
corporate purposes and to fund share repurchases at the company's parent,
DIRECTV Group, Inc. (DTV.O: Quote, Profile, Research) ("DTVG"). Moody's also assigned the company an
SGL-1 speculative grade liquidity rating and changed its ratings outlook from
negative to stable.
Assignments:
..Issuer: DIRECTV Holdings LLC
....Speculative Grade Liquidity Rating, Assigned SGL-1
....Senior Secured Bank Credit Facility, Assigned Baa3 (LGD2-19%)
....Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD5-73%)
Outlook Actions:
..Issuer: DIRECTV Holdings LLC
....Outlook, Changed To Stable From Negative
The existing bank debt agreement permits the company to create a new Term Loan
C with similar terms as the existing Term Loans. The debt ratings for the new
Term Loan C and the new senior unsecured notes are based upon their pari-passu
ranking with the existing similarly rated bank debt and senior unsecured notes,
respectively, and the roughly consistent proportions of pro forma debt at each
priority level within the debt capital structure both before and after
completion of the proposed transactions. The notes are being sold in a
privately-negotiated transaction without registration under the Securities Act
of 1933 (the "Act") under circumstances reasonably designed to preclude a
distribution thereof in violation of the Act. The issuance has been designed to
permit resale under Rule 144A.
The SGL-1 rating reflects the company's very good liquidity profile,
encompassing strong free cash flow, large cash balances (>$1 billion at
3/31/2008) and low reliance on its undrawn $500 revolving credit facility to
fund a relatively modest $65 million of term loan maturities over the next 12
months. Further, Moody's believes DIRECTV will continue to maintain significant
cushion under its financial covenants and have unfettered access to its
revolver should any unforeseen cash needs arise.
While financial leverage as measured by debt-to-EBITDA will increase from less
than 1.0x before the new debt issuance, it is still expected to be relatively
modest relative to the current ratings at about 1.5x for the near-term (and
well below the company's 2.5x-to-3.5x target), affording the company
significant financial and operational flexibility within its Ba2 CFR. In
addition, a new stand still agreement was negotiated between Liberty Media, LLC
("Liberty" -- Ba2 CFR) and DTVG, with the result effectively freezing Liberty's
voting control at about 48%, regardless of their economic ownership level.
Therefore, it is unlikely that the first of two triggers for the change of
control protection provision in DIRECTV's bond indentures (Liberty's voting
stake increasing to over 50%) will be tripped, and the second trigger, which is
a rating downgrade due to the change of control, is also unlikely over the next
12-to-18 months. Moody's had previously maintained a negative outlook due to
anticipation of a high likelihood that Liberty's stake would exceed 50% over
the near term. In our view, in order for the bondholder protective covenant to
be effective as it was originally intended, we would have had that one
opportunity - at the 50% crossover point, to consider whether we believed that
leverage would likely increase over the intermediate-term to beyond the 3.5
times debt-to-EBITDA ceiling level considered appropriate in our view for the
Ba2 CFR rating. But, now that the first trigger has been effectively
neutralized, Moody's no longer needs to make a rating determination at the
imminent crossover point to possibly trip the second trigger if we felt it
necessary due to longer term concerns. Therefore, despite a moderate increase
in leverage, Moody's believes that the company's significant financial
flexibility makes it unlikely that the company's ratings will face downward
pressure over the coming 12 to 18 months, and therefore a stable outlook is now
warranted. "However," noted Neil Begley, Moody's Senior Vice President, "we
believe that upward leverage pressure still exists, as only a minimal number of
other large aggressive shareholders would be needed to add to Liberty's 48%
voting interest to effect greater control and drive balance sheet change that
would negatively impact bondholders in the future, and the standstill agreement
demonstrates that the Board of Directors is less likely to be as balanced in
its consideration of protecting the interests of bondholders."
The change in ownership prerequisite of the change of control provision would
now be triggered if at any point in the future Liberty were to tender for all
of DTVG's outstanding shares or both parties agreed to terminate the agreement.
A trigger of the change of control provision would require DTVG to repurchase
the outstanding notes at a price of 101. The new bonds have a change of control
provision which considers a change in control other than by Liberty Media.
DIRECTV Holdings LLC's is the wholly-owned, U.S. operating company of The
DIRECTV Group, Inc. and is the largest direct-to-home digital television
service provider in the United States with 17 million subscribers as of
3/31/08. Annual revenues of DTVG and DIRECTV approximate $17 billion and $16
billion, respectively. DTVG's additional revenues are generated by the
company's Latin American DBS operators.
(New York Ratings Team)