DIRECTV 2005 Annual Report Download - page 15

THE DIRECTV GROUP, INC.
PART I
ITEM 1. BUSINESS
The DIRECTV Group, Inc., which we refer to as the company, we or us, was incorporated in
Delaware in 1977 and was subsequently acquired by General Motors Corporation, or GM, in 1985.
From 1985 to 2003, we were a subsidiary of GM.
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 then remaining 19.8% economic
interest in us to News Corporation. Immediately after the split-off, News Corporation acquired an
additional 14.2% of outstanding common stock from our common stockholders, which provided News
Corporation with a total of approximately 34% of our outstanding common stock, which was
subsequently contributed to its subsidiary, Fox Entertainment Group, Inc. In addition, we paid to GM a
special cash dividend of $275 million in connection with the transactions. As a result of these
transactions, we became a publicly-traded company.
Following our February 2004 announcement of our intent to restructure our company to focus on
the direct-to-home, or DTH, satellite businesses, during 2004 and 2005 we sold substantially all of our
non-strategic businesses, investments and assets, including our approximately 80.4% interest in
PanAmSat Corporation, or PanAmSat, and the businesses and assets of Hughes Network Systems, Inc.,
or HNS. We also announced a series of transactions designed to reorganize our DTH businesses in
Latin America. See below for further discussion of these strategic transactions. On March 16, 2004, we
changed our corporate name from Hughes Electronics Corporation to The DIRECTV Group, Inc.
Effective on March 17, 2004, we changed our ticker symbol on the New York Stock Exchange, or
NYSE, from ‘‘HS’’ to ‘‘DTV.’’ This name change had no impact on our common stock or the rights of
our stockholders. The name of our company was changed to better reflect our commitment to building
our business around our DTH businesses.
On February 7, 2006, our Board of Directors authorized a share repurchase program. Under the
repurchase program, we are authorized to spend up to $3.0 billion to repurchase outstanding shares of
our common stock. The source of funds for the proposed purchases is from our existing cash on hand
and cash from operations. We implemented the repurchase program on February 10, 2006. There is no
fixed termination date for the repurchase program and purchases may be made in the open market,
through block trades and other negotiated transactions. The program may be suspended, discontinued
or accelerated at any time.
We are a leading provider of digital television entertainment in the United States and Latin
America. Our two continuing business segments, DIRECTV U.S. and DIRECTV Latin America, which
are differentiated by their geographic location, are engaged in acquiring, promoting, selling and/or
distributing digital entertainment programming via satellite to residential and commercial subscribers.
Through April 22, 2005 we also operated the Network Systems segment, which was a provider of
satellite-based private business networks, or VSATs, and consumer broadband Internet access. On
April 22, 2005, we completed the contribution of the HNS net assets to HNS LLC and the sale of a
50% interest in HNS LLC to SkyTerra Communications, Inc., or SkyTerra. Subsequent to the sale we
accounted for our investment in HNS under the equity method of accounting. In January 2006, we
completed the sale of our remaining 50% interest in HNS LLC to SkyTerra. Please refer to Part II
Item 7 of this Annual Report for more information related to the HNS transactions.
•DIRECTV U.S. DIRECTV Holdings LLC and its subsidiaries, which we refer 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
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