DIRECTV 2008 Annual Report Download - page 56

THE DIRECTV GROUP, INC.
SIGNIFICANT TRANSACTIONS AFFECTING THE COMPARABILITY OF THE RESULTS OF
OPERATIONS
Acquisitions
180 Connect. On July 8, 2008, we acquired 100% of 180 Connect’s outstanding common stock
and exchangeable shares. Simultaneously, in a separate transaction, UniTek USA, LLC acquired 100%
of 180 Connect’s cable service operating unit and operations in certain of our installation services
markets in exchange for satellite installation operations in certain markets and $7 million in cash.
These transactions provide us with control over a significant portion of DIRECTV U.S.’ home service
provider network. We paid $91 million in cash, net of the $7 million we received from UniTek USA, for
the acquisition, including the equity purchase price, repayment of assumed debt and related transaction
costs.
Darlene Transaction. On January 30, 2007, we acquired Darlene’s 14% equity interest in
DLA LLC for $325 million in cash and resolved all outstanding disputes with Darlene. We accounted
for this acquisition using the purchase method of accounting.
Sky Transactions. During 2006, we completed the last in a series of transactions that were agreed
in October 2004 with News Corporation, Televisa, Globo and Liberty Media International, which we
refer to as the Sky Transactions. These transactions were completed as follows:
• On August 23, 2006, we completed the merger of our Brazil business, Galaxy Brasil Ltda., or
GLB, with Sky Brazil and completed the purchase of News Corporation’s and Liberty Media
International’s interests in Sky Brazil. 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 which resulted in us recording a one-time pre-tax gain during the year
ended December 31, 2006 of approximately $61 million in total operating costs and expenses.
• On February 16, 2006, we completed the acquisition of our equity interest in Sky Mexico, which
included the acquisition of an equity interest in Sky Mexico in exchange for the sale of our
DIRECTV Mexico subscribers to Sky Mexico and the acquisition of News Corporation’s and
Liberty Media International’s equity interests in Sky Mexico for $373 million in cash. As a result
of this transaction, we recorded gains of $57 million during the year ended December 31, 2006
in total operating costs and expenses.
DIRECTV Mexico ceased operations in 2005 upon completion of the migration of its
subscribers to Sky Mexico.
As a result of the Darlene and Sky transactions, we own 100% of PanAmericana, 74% of Sky
Brazil, and 41% of Sky Mexico. Globo owns the other 26% of Sky Brazil and Televisa owns the other
59% of Sky Mexico. The results of PanAmericana and Sky Brazil are consolidated in our results. We
account for our 41% interest in Sky Mexico under the equity method of accounting.
Divestiture
Hughes Network Systems. In January 2006, we completed the sale of our 50% interest in Hughes
Network Systems LLC, or HNS LLC, to SkyTerra, and resolved a working capital adjustment from the
prior transaction, in exchange for $110 million in cash, which resulted in our recording in the first
quarter of 2006 a gain of $14 million related to the sale in ‘‘Other, net’’ in the Consolidated Statements
of Operations.
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