DIRECTV 2003 Annual Report Download - page 34

THE DIRECTV GROUP, INC.
BUSINESS OVERVIEW
We are a world-leading provider of digital television entertainment, broadband satellite networks and
services, and global video and data broadcasting. We provide advanced communication services on a global basis
and have developed a wide range of entertainment, information and communication services for home and
business use, including video, data, voice, multimedia and Internet services. Our principal operations are carried
out through four businesses organized in three segments:
Direct-To-Home Broadcast Segment
The Direct-To-Home Broadcast segment consists of the DIRECTV digital multi-channel entertainment
businesses located in the U.S. and Latin America.
• DIRECTV U.S. launched its direct-to-home service in 1994. DIRECTV U.S. is the largest provider
of DBS television services and the second largest MVPD provider in the U.S., in each case based
on the number of subscribers. 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. currently has a fleet of seven satellites, enabling it to
distribute 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 HDTV channels.
Although DIRECTV U.S. distributes over 600 local channels, a customer receives only the local
channels in the customer’s home market.
• DLA is a provider of digital direct-to-home satellite television entertainment in Latin America,
which includes South America, Central America, Mexico and the Caribbean. When we refer to
DLA, we are referring to a group of companies that combine to provide the DIRECTV service
throughout Latin America. The most significant companies include DLA LLC, which was 74.7%
owned by us as of December 31, 2003, as well as the LOCs selling the DIRECTV service in Latin
America. As of December 31, 2003, DLA LLC owned, directly or indirectly and along with certain
affiliates, sixteen subsidiaries, including the LOCs in the largest Latin American countries. DLA
provides a wide selection of high-quality, local and international programming under the
DIRECTV brand to approximately 1.5 million subscribers in 28 countries through the LOCs
located in the various countries. Approximately 91% of the Latin American DIRECTV subscribers
are in Brazil, Mexico, Venezuela, Argentina and Puerto Rico, and receive their service from
consolidated LOCs. The DIRECTV service is provided to DLA’s customers via the Galaxy 3C
satellite that was placed into service in September 2002. DLA LLC leases the satellite transponder
capacity on Galaxy 3C from PanAmSat. On March 18, 2003, DLA LLC filed a voluntary petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to address its financial
and operational challenges. In February 2004, DLA LLC announced the confirmation of its Plan of
Reorganization by the Bankruptcy Court and its emergence from Chapter 11. See “DLA LLC
Reorganization” below for further information.
The Company records 100% of the net losses incurred by DLA LLC and certain other consolidated
LOCs due to the accumulation of net losses in excess of the minority investors’ investments and
our continued funding of those businesses.
27