DIRECTV 2007 Annual Report Download - page 75

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of Business
The DIRECTV Group, Inc., which we sometimes refer to as the company, we, or us, was
incorporated in Delaware in 1977. We are 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.
•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. In January
2007, we acquired Darlene Investments LLC’s 14% minority interest in DLA LLC for
$325 million in cash.
Through April 22, 2005 we also operated the Network Systems segment, which was a provider of
satellite-based private business networks and consumer broadband Internet access. Subsequent to the
April 22, 2005 sale of a 50% interest in our former Hughes Network Systems, or HNS, business to
SkyTerra Communications, Inc., we accounted for our investment in HNS under the equity method of
accounting until the sale of the remaining 50% interest in January 2006.
See Note 3 for additional information regarding acquisitions and divestitures.
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
We present our accompanying financial statements on a consolidated basis and include our
accounts and those of our domestic and foreign subsidiaries that we control through equity ownership
or for which we are deemed to be the primary beneficiary, after elimination of intercompany accounts
and transactions. We allocate earnings and losses to minority interests only to the extent of a minority
investor’s investment in a subsidiary.
Use of Estimates in the Preparation of the Consolidated Financial Statements
We prepare our consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America, which requires us to make estimates and
assumptions that affect amounts reported herein. Management bases its estimates and assumptions on
historical experience and on various other factors that are believed to be reasonable under the
circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in
future periods may be affected by changes in those estimates.
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