DIRECTV 2003 Annual Report Download - page 9

THE DIRECTV GROUP, INC.
PART I
ITEM 1. BUSINESS
On March 16, 2004, we changed our corporate name from Hughes Electronics Corporation to The
DIRECTV Group, Inc. Effective on March 17, 2004, our ticker symbol on the New York Stock Exchange, or
NYSE, was changed to “DTV.” This name change has no impact on our common stock or the rights of our
stockholders. The name of the Company was changed to better reflect our commitment to building our business
around the DIRECTV businesses. When we refer to the “Company” in this document, we are referring to The
DIRECTV Group, Inc.
We were incorporated in Delaware in 1977 and were subsequently acquired by General Motors Corporation,
or GM, in 1985. From 1985 to 2003, we were a wholly-owned subsidiary of GM. Upon GM’s acquisition of us,
GM issued GM Class H common stock as a “tracking stock” designed to provide holders with financial returns
based on the financial performance of the Company. Holders of GM Class H common stock had no direct rights
in the equity or assets of the Company, but rather had rights in the equity and assets of GM (which included
100% of the stock of the Company).
On December 22, 2003, GM, the Company and The News Corporation Limited, or News Corporation,
completed a series of transactions that resulted in the split-off of the Company from GM and the simultaneous
sale of GM’s 19.8% interest in the Company to News Corporation. GM received approximately $3.1 billion in
cash and 28.6 million News Corporation Preferred American Depository Shares, or ADSs, in these transactions.
GM split-off the Company by distributing our common stock to the holders of the GM Class H common stock in
exchange for their GM Class H common shares on a one-for-one basis. Immediately after the split-off, News
Corporation acquired an additional 14.2% of outstanding common stock from the former GM Class H common
stockholders, which provided News Corporation with a total of 34% of our outstanding common stock. GM
Class H common stockholders received about 0.8232 shares of our common stock and about 0.09207 News
Corporation Preferred ADSs for each share of GM Class H common stock held immediately prior to the closing
of the transactions. In addition, we paid to GM a special cash dividend of $275 million in connection with the
transactions. Upon completing these transactions, News Corporation transferred its 34% interest in the Company
to its 82% owned subsidiary, Fox Entertainment Group, Inc., or Fox. As a result of these transactions, we are
now a publicly-traded company.
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 businesses include:
•DIRECTV, the world’s leading digital multi-channel entertainment service, based on the number of
subscribers. DIRECTV, which includes businesses in the U.S. and Latin America, constitutes our
Direct-To-Home Broadcast segment. As of December 31, 2003, DIRECTV Holdings LLC, referred to
as DIRECTV U.S., had approximately 12.2 million subscribers in the U.S., of which approximately
10.7 million were owned and operated subscribers and approximately 1.5 million were subscribers who
received their service from members and affiliates of the National Rural Telecommunications
Cooperative, or NRTC. DIRECTV Latin America, or DLA, had approximately 1.5 million subscribers
in Latin America.
•PanAmSat, the owner and operator of one of the world’s largest commercial satellite
fleets. PanAmSat Corporation, or PanAmSat, a publicly-held company of which we own
approximately 80.5%, constitutes our Satellite Services segment. Currently, PanAmSat owns and
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