DIRECTV 2008 Annual Report Download - page 83

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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, 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.
•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.
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. We base our estimates and assumptions on historical
experience and on various other factors that we believe to be reasonable under the circumstances. Due
to the inherent uncertainty involved in making estimates, our actual results reported in future periods
may be affected by changes in those estimates.
Revenue Recognition
We recognize subscription and pay-per-view revenues when programming is broadcast to
subscribers. We recognize subscriber fees for multiple set-top receivers, our published programming
guide, warranty services and equipment rental as revenue, as earned. We recognize advertising revenues
when the related services are performed. We defer programming payments received from subscribers in
advance of the broadcast as ‘‘Unearned subscriber revenues and deferred credits’’ in the Consolidated
Balance Sheets until earned.
Broadcast Programming and Other
We recognize the costs of television programming distribution rights when we distribute the related
programming. We recognize the costs of television programming rights to distribute live sporting events
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