DIRECTV 2004 Annual Report Download - page 13

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THE DIRECTV GROUP, INC.
subscribers in 28 countries throughout the region of which approximately 86% are located in Brazil, Mexico,
Venezuela, Argentina and Puerto Rico. Whenever we refer to DTVLA, we are referring to a group of companies that
combine to provide the DIRECTV ® service throughout Latin America. The most significant DTVLA companies
include DIRECTV Latin America, LLC, or DLA LLC, which was approximately 85.9% owned by us as of December
31, 2004, as well as the consolidated local operating companies, or LOCs, selling the DIRECTV service to subscribers
in Latin America. On October 8, 2004, we entered into a series of transactions with News Corporation, Grupo
Televisa, S.A., or Televisa, Globo Comunicacoes e Participacoes S.A., or Globo, and Liberty Media International, Inc.,
or Liberty, which we refer to as the Sky Transactions. The Sky Transactions are designed to strengthen the operating
and financial performance of DTVLA by consolidating the DTH platforms of DTVLA and Sky Latin America into a
single platform in each of the major territories served in the region.
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Network Systems. HNS constitutes our Network Systems segment. HNS is a leader in the market for VSATs and
consumer broadband Internet access marketed under the DIRECWAY® brand. In 2004, we completed the sale of HNS’
set-top receiver manufacturing operations to Thomson Inc., or Thomson, and the sale of HNS’ approximately 55%
ownership interest in Hughes Software Systems Limited, or HSS, to Flextronics Sales & Marketing (L-A) Ltd., or
Flextronics. In December 2004, we announced an agreement to sell a 50% interest in a new entity that will own
substantially all of the remaining net assets of HNS to SkyTerra Communications, Inc., or SkyTerra, an affiliate of
Apollo Management. See Item. 7: Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Significant Events Affecting the Comparability of our Results of Operations—Strategic Developments in
Part II for more information related to these transactions.
DIRECTV U.S.
DIRECTV U.S. is the largest provider of DTH digital television services and the second largest MVPD provider in the United
States, 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 pictures and CD-quality sound programming that are transmitted directly to its customers’
homes or businesses via high-powered geosynchronous satellites.
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 1,200 digital video and audio channels, including about 130
basic entertainment channels, 31 premium movie channels, over 35 regional and specialty sports networks, an aggregate of over
1,000 local channels, over 50 Spanish and other foreign language special interest channels, up to 55 pay-per-view movie and
event choices and seven national high-definition television, or HDTV, channels as well as network high-definition
programming in certain local markets. Although DIRECTV U.S. distributes over 1,000 local channels, a customer generally
receives only the local channels in the customer’s home market. DIRECTV U.S. currently provides local channel coverage to
approximately 130 markets, or about 92% of U.S. television households.
DIRECTV U.S. also provides premium professional and collegiate sports programming such as the NFL SUNDAY TICKET™
package, which allows subscribers to view the biggest selection of NFL games available each Sunday during the regular season.
Under its contract with the NFL, DIRECTV U.S. has exclusive rights to provide this service through 2010, including rights to
provide related high-definition and interactive services.
To subscribe to the DIRECTV® service, customers acquire receiving equipment from DIRECTV U.S. or through one of
DIRECTV U.S.’ national retailers as well as independent satellite television retailers, dealers and regional Bell operating
companies, or RBOCs.
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