DIRECTV 2008 Annual Report Download - page 113

THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
resulting in an increase in goodwill of $15 million during 2008. We expect the recorded goodwill to be
deductible for tax purposes.
Darlene Transaction
On January 30, 2007, we acquired Darlene’s 14% equity interest in DLA LLC for $325 million in
cash. We accounted for the acquisition of this interest using the purchase method of accounting.
The following table set forth the final allocation of the excess purchase price over the book value
of the minority interest acquired:
Goodwill ......................................................... $187
Intangible assets .................................................... 75
Total assets acquired ................................................. 262
Net assets acquired .............................................. $262
Intangible assets that are included in ‘‘Intangible assets, net’’ in our Consolidated Balance Sheets
include a subscriber related intangible asset to be amortized over six years and a trade name intangible
asset to be amortized over 20 years from the Darlene Transaction.
Sky Transactions
During 2006 we completed the last in a series of transactions with News Corporation, Grupo
Televisa, S.A., or Televisa, Globo and Liberty Media International, which we refer to as the Sky
Transactions as further described below. The Sky Transactions resulted in the combination of the DTH
satellite platforms of DIRECTV and SKY in Latin America into a single platform in each of the major
territories in the region.
Brazil. On August 23, 2006, we completed the merger of our Brazil business, Galaxy Brasil Ltda.,
or GLB, with and into Sky Brazil, and completed the purchase of News Corporation’s and Liberty
Media International’s interests in Sky Brazil. As a result of these transactions, we hold a 74% interest
in the combined business. The purchase consideration for the transactions amounted to $670 million,
including $396 million in cash paid, of which we paid $362 million to News Corporation and Liberty
Media International in 2004 and $30 million to News Corporation in August 2006, the $64 million fair
value of the reduction of our interest in GLB resulting from the merger and the assumption of Sky
Brazil’s $210 million bank loan.
We accounted for the Sky Brazil acquisition using the purchase method of accounting, and began
consolidating the results of Sky Brazil from the date of acquisition. We also accounted for the
reduction of our interest in GLB resulting from the merger as a partial sale pursuant to EITF
No. 90-13 ‘‘Accounting for Simultaneous Common Control Mergers,’’ which resulted in us recording a
one-time pre-tax gain during the third quarter of 2006 of $61 million in ‘‘Gain from disposition of
businesses’’ in the Consolidated Statements of Operations.
The following selected unaudited pro forma information is being provided to present a summary of
the combined results of The DIRECTV Group and Sky Brazil for the year ended December 31, 2006
as if the acquisition had occurred as of the beginning of 2006, giving effect to purchase accounting
adjustments. The pro forma data is presented for informational purposes only and may not necessarily
reflect our results of operations had Sky Brazil operated as part of us for the period presented, nor are
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