Then we'll go through to noon, at which time Bruce will wrap things up, and then we'll launch into a Q&A session. So I'd like to ask everybody to hold onto their questions until that time, and we'll leave plenty of time for your questions at the end of the session. After that, we're going to be hosting lunch. We have a lot of tables set out outside in the ballroom -- right outside the ballroom, along the hallway there. And we're going to be asking executives from across the company to host individual tables. So hopefully, you can join us. And if you didn't get all your questions answered or you'd like to find out a little bit more about some of our businesses, that would be a great opportunity.So before getting started, of course, we are obligated to show you our customary cautionary language and also our Regulation G language. So that's about it. So with that, I'm pleased to introduce Mike White, Chairman and CEO. Michael D. White Thanks, Jon. I really like those last 2 slides, Jon, well done. Good morning, everybody. Welcome. We're excited to have a chance to share with you the story of our Latin America business today. And I think I know there've been lots of questions that have been raised over the last year or so about the Latin America business. We hope we'll be answering most of those questions today and giving you a much better understanding of both the performance and more importantly, the potential of that business. If I just kind of give you the basics, most of you know this already pretty well. DIRECTV has 3 parts: our U.S. business, very large business with over $20 billion in revenue; our Latin America business, which has over $5 billion in revenue; and our Regional Sports Networks. As I said, our goal today is to both share with you much greater clarity and understanding of both the performance and the potential of our Latin America business. We've had a terrific couple of years with our Latin America business's performance, and I also want to hope you'll get the understanding that the best is yet to come.
So if I think about DIRECTV -- okay, guys. To me, this is a gem of an investment vehicle. The reason is it's not too complicated. We're not Unilever in terms of the number of businesses you got to try and value. There were really 2 big complementary and highly synergistic businesses. There's the U.S. business and there's the Latin America business from a geographic standpoint. You got 100 million households in the United States and you've got 140 million households in Latin America to tackle as an opportunity. We've got both the premier brand, but we've equally been smart, and I think you'll see a lot of that today, about how we also offer value offerings to consumers in the middle-income classes in Latin America, and frankly, our entertainment package that we've launched in the United States that's also off to a good start that, frankly, was inspired by some of the work that our teams in Latin America did.You've got an opportunity to invest in both mature and emerging markets. And there aren't that many vehicles. We've got actually a healthy dose of emerging markets in the portfolio. And you've got both the mature, high cash-generating U.S. business and the high-growth, lower cash-generating business in Latin America. Highly complementary, and I would also argue, highly synergistic. Now I've said this before. The Latin America business for DIRECTV is a really important part of our portfolio. Just by way of comparison. The nemesis of my former employer, The Coca-Cola Company, which has been doing business in Latin America for years and years and years, and I would argue is one of the largest and most successful businesses in Latin America. So for Coke, Latin America is about 10% of their revenue and about 24% of their profits. For DIRECTV, not even counting our stake, our 41% stake in the joint venture with Televisa in Mexico, Latin America is now 19% of our revenue and 24% of our profits. Not even counting Mexico. So in terms of size and scale, it's a significant contributor. But when you look at it through the growth lens, of course, it's even more important to the DIRECTV investment story.
Last year was an amazing year with almost 1/2 of our revenue growth and over 80% of our profit growth coming from Latin America. I don't think that's realistic to kind of count on that year-in and year-out. But suffice it to say, I think it's pretty clear that Latin America will be a disproportionate share of our revenue and profit growth for years to come. And in 2012 alone, I think you can fairly safely assume it's going to be north of -- well north of 40% of both our revenue and profit growth.And finally, I would say in terms of Latin America, while we've had a terrific run the last couple of years, rest assured we think the best is yet to come. I don't care whether you look at household formation compared to the U.S., whether you look at the penetration of pay television or whether you look at our market share, we're winning on all 3 of those counts. We have 3 levers, any one of which can help us drive success in Latin America. And we'll share that more with you today. We've got scale, which matters hugely in terms of both your programming cost and your infrastructure with a regional footprint that no one else has. And I think I've said this before. To me, the thing I always learned about Latin America from the day I got to DIRECTV is, yes, they're wonderful businesses. But as somebody that used to be a strategist, I look at them through the lens of whether you've got strategic sustainability. And we have got layers of advantage in that business that are far deeper than the U.S. business for a whole host of reasons that I think you'll hear about today. And the business, as I said, is synergistic relative to our U.S. business, and it works both ways. First of all, our U.S. business spends over $100 million a year on what you might call R&D cost. Latin America gets the benefit to leverage that investment. The technology roadmaps for Latin America, while there are some tailored things for the lowest cost boxes you need, but by and large, all the advanced products are basically matching our U.S. roadmap. The middleware in the box, the most proprietary part of our business, is all leveraged from the work we've done in North America. Even 30% of our programming cost, which tend to be U.S. media companies, is leveraged. The broadcast centers, one of the biggest broadcast centers for Latin America is in Southern California and is run by the same organization that runs the U.S. broadcast center. All of the capabilities in that broadcast center are leveraged. The satellite procurement capability, the knowledge of the satellite business is leveraged. And most importantly, when it comes to speed-to-market, given the advances in the U.S. and that Latin America typically lags the U.S., we're going to be well-positioned to be ahead of competition on any advances.
Now by the same token, I would tell you that the U.S. is starting to learn some lessons from Latin America. I would tell you that the Brazil business, in the way they provide a white-glove treatment for their best customers, is something that we're looking at for our U.S. protection plan. I would tell you that the way they've tailored their value chain to manage the lower-priced offerings as well as the premium offerings is something we're learning from. And even as I said, the way they're dealing with the value customer has lessons for our U.S. business.Now for DIRECTV as a whole, I think as you know, we've performed well over the last several years relative to our competition and relative to the S&P. This year, we're up over 12% ahead of the S&P. A key part of the driver of our stock price, we know, has been Latin America. If I just take your consensus valuation in 2009, it was around $6 billion. In 2012, it's around $14 billion. And we certainly hope this morning to convince you that it should be worth even more than that. With all that said, our DIRECTV multiple is still low. Heck, for me, I look at it relative to bottlers I used to buy and sell. It's less than bottlers, which to me, is crazy when we own the brand. And therefore, I think when you look at the growth and the size of the Latin America business and its relevance to our total portfolio as an investment vehicle, I think it's a terrific opportunity for investors. And rest assured, we at DIRECTV are committed to continue to deliver that kind of outstanding performance to our shareholders. So as I close, let me just recap the key strategies. We've talked before about our U.S. business and what our mid-term goals are in terms of mid-single-digit revenue and OPBDA growth over the next 3 years. We have kind of rebalanced some things this year in terms of reducing credits and discounts, tightening up spending in a few areas and -- but in terms of the strategies: investing in the entertainment experience; driving growth in ad sales; driving our VoD offerings; driving our commercial business; expanding our TV Everywhere capabilities, which we just did a week ago; and taking our focus on customer service to whole another level. We've always been the best in our industry. Our goal is to look at other industries and see how we can take customer service to a whole another level. And in terms of Latin America, as I think you'll hear today, we've got lots of opportunities: to continue to drive our premium service with the A/B segment, exploding the middle market, and pursuing selectively emerging opportunities like wireless and over-the-top.
Finally, in terms of our Latin America business, over the last 2 years, we've stepped up our communication with you, our investors. Bruce has been out at a lot of investor conferences the last couple of years. And I think today, in many ways, is a culmination of taking that communication around our Latin America business to a whole another level. I look at it as Bruce Churchill team's coming-out party this morning. It's an opportunity for us to share with you our excitement and passion for the future of this business. In that regard, Brazil has also grown up, and our auditors tell us that it's time to report them as a segment. So in the future, you'll see revenue profits and CapEx for our Brazil business. In addition this morning, you're going to find a good deal more granularity around both the DTVLA P&L, as well as most importantly the capital spending. And we'll be talking about, going forward, what more information we'll provide on a regular basis.In closing, the growth potential for this region is still huge. DIRECTV is well positioned to deliver against that. Most importantly, because apart from the strategies, the people you're going to see this morning. We have a world-class team of executives all across our Latin America businesses. I've done business in international most of my career, and having street-smart, savvy, experienced leaders with integrity in their value set is a gem. And we're recognized for that. I got a note just yesterday that DIRECTV Latin America was named #18 out of the top 25 places to work in Latin America. That's a tribute to the leaders you're going to see this morning, for the culture and the values and the mindset that they nurture in their organization and for the talent that they bring to work every day that makes this such a great business opportunity. With that, I'll turn it over to the leader of our Latin America business, Bruce Churchill. Bruce?
Bruce ChurchillGood morning, everyone. Welcome. And I'm very appreciative of everybody for coming out today because we really feel we have a great story to tell. And my management team and I are very excited about filling you in a little bit more about what we've been up to since we all last met, which was about 15 months ago when I participated in what was a broader investor day for all of DIRECTV. So I don't know what you guys have been doing the last 15 months, but we've grown our company by 45%. So we've been busy. Let me take this first section here this morning. I just want to review again what are the components of our company are for those of you that are maybe less familiar with our company and maybe were unable to join us 15 months ago, as well as update you on some of the performance of the individual components. So I'll start with Brazil. SKY -- our brand there is SKY, SKY Brasil. It's really, in many ways, our flagship asset. It's our largest business with revenues of a touch over -- revenues in 2011 of a touch over $3 billion and OPBDA of a touch over $1 billion. In the time since we all last met, SKY Brasil has had tremendous success, gaining 5 percentage points of market share. And the real phenomenon and the story that you're going to hear about Brazil, going forward, is the growth of the middle class. There's still low penetration among that group and our ability to profitably serve that group. And that's what's really been driving our growth in Brazil. So as a reminder, we actually own 93% of that business. The minority shareholder is Globo, which is the largest media company and most successful media company in Brazil. And they've actually been partners in the business going back quite a long time.
Next is our platform which we call PanAmericana. This is -- PanAmericana operates in Spanish-speaking South America. So we pretty much operate in every country in Spanish-speaking South America, except for Bolivia and Paraguay. PanAmericana is actually our largest platform with over 4 million subscribers. We own 100% of it. And similar to Brazil, in most of those countries, you have relatively low pay-TV penetration. Growing economies, growing middle-class, and therefore, a market ripe for the taking. And I would say that what we have been probably pleasantly surprised about since we all last met is that even in the markets which are for Latin America relatively penetrated, so for example, Argentina, which is above a 50% penetration rate, we are still experiencing substantial growth in that market as well. So as we look across the whole portfolio of -- it's really 9 major countries for PanAmericana, we still see growth across-the-board. And the size of that business there is a little over $2 billion of revenue and about $700 million of OPBDA. And we own 100% of that, so we own all of that business.And then finally, SKY Mexico. It is the one business that we do not consolidate for financial reporting purposes. We own 41%. It is -- the majority owner is Grupo Televisa, which is the most dominant Spanish-language media company in the world and operates obviously out of Mexico and is the most successful media company in Mexico. SKY is the #1 pay-TV provider in the region, and over the last couple of years has had absolutely explosive growth in serving the middle-market consumer there adding, I think, in total almost 2 million subscribers in the last 2 years alone. And again, the story, very similar, relatively low pay-TV penetration in Mexico still. Great potential in that market, we're the market leader. And again, through all the advantages that we're going to talk to you about today, we've been able to gain share, so continue to be very excited about SKY Mexico. And I would also say that it's actually very much part of our platform as well. We perform a lot of services for SKY. You'll hear about some of the content. We often look at buying content together. So even though it is not something we consolidate for financial purposes, it's very much part of the way we operate, and I also hope very much part of the way that you guys think about the value of the company. So those are the 3 platforms.
These are the 2011 figures that now include all 3 platforms. So they're different than the ones for financial reporting. But again, as you can see, we've had just, in 2011, explosive growth in both gross and net adds, pretty much all across-the-board. The mix of postpaid and prepaid, which is something you're going to hear a little bit about still, when you -- at all 3 platforms, about 60% postpaid. There's a very heavy weighting of the prepaid in SKY Mexico, and Alex is going to talk about that. But overall, if you take all the platforms, still roughly 75% of the business is a postpaid business. So the prepaid is something that we're very bullish about. We think it has great opportunities and is a great product for serving the emerging middle classes in Latin America.Read the rest of this transcript for free on seekingalpha.com