DIRECTV 2007 Annual Report Download - page 12

THE DIRECTV GROUP, INC.
PART I
ITEM 1. BUSINESS
The DIRECTV Group, Inc. is a leading provider of digital television entertainment in the United
States and Latin America. Our two 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.
•DIRECTV U.S. DIRECTV Holdings LLC and its subsidiaries, which we refer to as DIRECTV
U.S., is the largest provider of direct-to-home, or 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, 2007, DIRECTV U.S. had over 16.8 million subscribers.
•DIRECTV Latin America. DIRECTV Latin America, or DTVLA, is a leading provider of DTH
digital television services throughout Latin America. DTVLA is comprised of: PanAmericana,
which provides services in Venezuela, Argentina, Chile, Colombia, Puerto Rico and certain other
countries in the region through our wholly-owned subsidiary, DIRECTV Latin America, LLC, or
DLA LLC; our 74% owned subsidiary, Sky Brasil Servicos Ltda., which we refer to as Sky
Brazil; and our 41% equity method investment in Innova, S. de R.L. de C.V., or Sky Mexico. As
of December 31, 2007, PanAmericana had approximately 1.7 million subscribers, Sky Brazil had
approximately 1.5 million subscribers and Sky Mexico had approximately 1.6 million subscribers.
In January 2007, we acquired Darlene Investments LLC’s 14% minority interest in DLA LLC for
$325 million in cash and resolved all outstanding disputes with Darlene. During 2006, we completed a
series of transactions that reorganized our DTH satellite businesses in Latin America and in 2005 we
completed the restructuring of our company to focus on the DTH satellite businesses by selling the last
of our non-strategic businesses and investments, Hughes Network Systems, Inc., or HNS.
We were incorporated in Delaware in 1977, and our common stock trades on the The NASDAQ
Global Select Market under the ticker symbol ‘‘DTV.’’
On December 23, 2006, News Corporation and Liberty Media Corporation, or Liberty, entered
into an agreement to exchange Liberty’s 16.3% ownership interest in News Corporation for News
Corporation’s approximately 41% ownership in us, three regional sports networks and a cash payment.
The transaction has been approved by the stockholders of News Corporation and is subject to
regulatory approval from the Federal Communications Commission and antitrust clearance. It is
expected that the transaction will close in the first quarter of 2008.
DIRECTV U.S.
Through DIRECTV U.S., we provide over 16.8 million subscribers with access to hundreds of
channels of digital-quality video pictures and CD-quality audio programming that we transmit directly
to subscribers’ homes or businesses via high-powered geosynchronous satellites.
We believe we provide one of the most extensive collections of programming available in the
MVPD industry. We currently distribute to our subscribers more than 1,800 digital video and audio
channels, including about 190 basic entertainment channels including over 70 XM Satellite Radio music
channels, 33 premium movie channels, over 36 regional and specialty sports networks, an aggregate of
over 1,400 local channels, over 101 Spanish and other foreign language special interest channels, and
over 31 pay-per-view movie and event choices. Although we distribute over 1,400 local channels, a
subscriber generally receives only the local channels in the subscriber’s home market. As of
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