Fitch affirms DirecTV

Fitch Ratings said it affirmed DirecTV Holdings LLC's issuer default rating at BB, its senior secured credit facility at BB+ and its senior unsecured debt at BB.

The outlook is stable.

The ratings reflect the size and scale of the company's operations as the second-largest multi-channel video programming distributor in the United States, as well as Fitch's expectation for continued generation of free cash flow and its ability to up-sell subscribers. The ratings acknowledge the issuer's strong credit protection metrics relative to its rating category and that its EBITDA and free cash flow metrics have in part been positively affected by the slower pace of gross additions.

Rating concerns center on the company's lack of revenue diversity and narrow product offering. Fitch said it believes that the convergence of service offerings between the cable operators and the telephone companies have weakened the company's competitive position.

But Fitch believes the company's historically low leverage provides it with tremendous financial flexibility and capacity at the current ratings level. As of March 31, its leverage was 0.96 times, which is a significant improvement from December 2004 when leverage was 5.64 times.

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