DIRECTV 2004 Annual Report Download - page 12

THE DIRECTV GROUP, INC.
PART I
ITEM 1.BUSINESS
The DIRECTV Group, Inc., which is referred to as the company, we or us, was incorporated in Delaware in 1977 and was
subsequently acquired by 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
our company’s financial performance. Holders of GM Class H common stock had no direct rights in our equity or assets, but
rather had rights in the equity and assets of GM (which included 100% of the stock of our company).
On December 22, 2003, we, GM and News Corporation completed a series of transactions that resulted in our split-off from
GM and the simultaneous sale of GM’s 19.8% interest in us 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 us off
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 us to its 82% owned
subsidiary, Fox Entertainment Group, Inc., or Fox. As a result of these transactions, we became a publicly-traded company.
In February 2004, we announced our intent to restructure our company to focus on the direct-to-home, or DTH, satellite
businesses. 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 from
“HS” 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. Also in 2004
and consistent with this strategy to focus on the DTH satellite businesses, we sold or agreed to sell substantially all of our non-
strategic businesses, investments and assets, including our approximately 80.4% interest in PanAmSat Corporation, or
PanAmSat, and certain businesses and assets of Hughes Network Systems, Inc., or HNS, and announced a series of transactions
designed to reorganize our DTH businesses in Latin America. See below for further discussion of these strategic transactions.
We are a leading provider of digital television entertainment in the United States and Latin America. Our three business
segments, which are differentiated by their products and services as well as geographic location, are DIRECTV U.S. and
DIRECTV Latin America, which are engaged in acquiring, promoting, selling and/or distributing digital entertainment
programming via satellite to residential and commercial customers, and the Network Systems segment, which is a provider of
satellite-based private business networks, or VSAT, and consumer broadband Internet access.
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DIRECTV U.S. DIRECTV Holdings LLC and its subsidiaries, referred to as DIRECTV U.S., is the largest provider
of DTH digital television services and the second largest provider in the multi-channel video programming
distribution, or MVPD, industry in the United States. As of December 31, 2004, DIRECTV U.S. had approximately
13.9 million subscribers with an average monthly revenue per subscriber, or ARPU, of approximately $66.95.
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DIRECTV Latin America. DTVLA is a leading provider of DTH digital television services throughout Latin
America. As of December 31, 2004, DTVLA had approximately 1.6 million
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