DIRECTV 2003 Annual Report Download - page 10

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THE DIRECTV GROUP, INC.
operates 25 satellites that are capable of transmitting signals to geographic areas covering over 98% of
the world’s population. PanAmSat provides satellite capacity for the transmission of cable and broadcast
television programming from the content source to the cable operator or to the consumer’s home.
PanAmSat’s satellites serving the U.S. are able to reach nearly 100% of all cable subscribers.
PanAmSat’s global fleet also serves as the transmission platform for eight direct-to-home (sometimes
referred to as DTH) services worldwide, including DLA. In addition, PanAmSat provides satellite
services to telecommunications carriers, government agencies, corporations and Internet service
providers, or ISPs, for the provision of satellite-based communication networks, including private
business networks employing very small aperture terminals, or VSATs.
•Hughes Network Systems, the world’s leading provider of broadband satellite networks and services
to both consumers and enterprises. Hughes Network Systems, Inc., or HNS, constitutes our Network
Systems segment. HNS is a leader in the global market for VSAT private business networks with more
than 500,000 terminals shipped or ordered. HNS operates a satellite-based consumer broadband Internet
access service marketed under the DIRECWAY®brand, which had approximately 180,000 subscribers
as of December 31, 2003. In addition, HNS is one of the two largest manufacturers of DIRECTV®set-
top receivers, having shipped over 14 million units. HNS is also developing SPACEWAY®,amore
advanced satellite broadband communications platform that is expected to provide customers with high-
speed, two-way data communications on a more cost-efficient basis than systems that are currently
available. The first SPACEWAY satellite is expected to be launched in 2004 and service is expected to
be introduced in 2005.
In February 2004, we announced our intent to restructure the Company from a corporate conglomerate to
one focused on the direct-to-home satellite businesses. As a result, during the first quarter of 2004, the Company
announced the reduction of corporate office headcount by over half and the consolidation of corporate and
DIRECTV U.S. support functions. We are also considering strategic alternatives with regard to HNS and our
ownership interest in PanAmSat. With the emergence of DIRECTV Latin America LLC, or DLA LLC, from
bankruptcy in February 2004, we are turning our attention to potential combinations, alliances or other initiatives
with respect to that business. DLA LLC also announced headcount reductions, subsequent to its emergence from
bankruptcy and the completion of certain transactions that were anticipated under its Plan of Reorganization. We
view 2004 as a transitional year for the Company, and expect additional changes in both the way our businesses
are managed and in our overall structure.
DIRECTV U.S.
Overview
DIRECTV U.S. is the largest provider of direct broadcast satellite, or DBS, television services and the
second largest MVPD provider in the U.S., in each case based on the number of subscribers. DIRECTV U.S.
provides its customers with access to hundreds of channels of digital-quality video and audio programming that
are transmitted directly to its customers’ homes or businesses via high-powered geosynchronous satellites. As of
December 31, 2003, DIRECTV U.S. had approximately 12.2 million subscribers, of which approximately 10.7
million were owned and operated subscribers and approximately 1.5 million were subscribers who received
DIRECTV®service from members and affiliates of the NRTC.
DIRECTV U.S. believes it provides one of the most extensive collections of programming available in the
MVPD industry. DIRECTV U.S. currently distributes to its customers more than 850 digital video and audio
channels, including about 125 basic entertainment channels, 31 premium movie channels, over 25 regional and
specialty sports networks, an aggregate of over 600 local channels, over 35 Spanish and Chinese language special
interest channels, up to 55 pay-per-view movie and event choices and seven high-definition television, or HDTV,
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