DIRECTV 2004 Annual Report Download - page 68

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of Business
We are a leading provider of digital television entertainment in the United States and Latin America. 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 was changed from “HS” to “DTV.” Our name was changed to better reflect
our commitment to building our business around the DIRECTV businesses and had no impact on our common stock or the
rights of stockholders.
Our principal operations are carried out through the following three segments:
DIRECTV U.S. Segment
The DIRECTV Holdings LLC and subsidiaries, or DIRECTV U.S., segment consists of the DIRECTV digital multi-
channel entertainment business located in the United States. DIRECTV U.S. launched its direct-to-home, or DTH, service
in 1994 and is the largest provider of DTH digital television services and the second largest multi-channel video
programming distribution, or MVPD, provider in the United States.
DIRECTV Latin America Segment
DIRECTV Latin America, or DTVLA, is a leading provider of DTH digital television services throughout Latin America,
which includes South America, Central America, Mexico and the Caribbean. DTVLA provides a wide selection of high-
quality, local and international programming under the DIRECTV brand. When we refer to DTVLA, we refer 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 we own approximately 85.9% of 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 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 U.S. Bankruptcy Court and its emergence from Chapter 11. 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 consolidate our DTH platforms with those of Sky Latin America
in each of the major territories served in that region. Total cash consideration for the equity interests in the Sky Latin
America platforms is approximately $580 million, of which we paid $398 million in October 2004. The remainder is
subject to adjustment and will be paid at the completion of the transactions. See Notes 3 and 18 for more information
related to these events.
Network Systems Segment
Hughes Network Systems, Inc., or HNS, constitutes our Network Systems segment. HNS is a leader in the market for
satellite-based private business networks (commonly known as VSATs) and consumer broadband Internet access, both
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’ 55% ownership interest in Hughes Software Systems
Limited, or HSS, to Flextronics Sales & Marketing (L-A) Ltd., or Flextronics. Also 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. See Note
3 for more information related to these transactions.
Discontinued Operations
During 2004, we completed the sale of our approximately 80.4% interest in PanAmSat Corporation, or PanAmSat. We
announced, in December of 2002, that DIRECTV Broadband, Inc., or DIRECTV Broadband,