DIRECTV 2009 Annual Report Download - page 15

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DIRECTV
PART I
ITEM 1. BUSINESS
DIRECTV, which we also refer to as the company, we or us, is a leading provider of digital
television entertainment in the United States and Latin America. We operate two direct-to-home, or
DTH, operating segments: DIRECTV U.S. and DIRECTV Latin America, which are differentiated by
their geographic location and are engaged in acquiring, promoting, selling and/or distributing digital
entertainment programming via satellite to residential and commercial subscribers. In addition,
beginning November 19, 2009, we own and operate three regional sports networks, or RSNs, and own a
65% interest in Game Show Network, LLC, or GSN, a basic television network dedicated to
game-related programming and Internet interactive game playing. We account for our investment in
GSN using the equity method of accounting.
•DIRECTV U.S. DIRECTV Holdings LLC and its subsidiaries, which we refer to as DIRECTV
U.S., is the largest provider of 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, 2009, DIRECTV U.S. had over 18.5 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, 2009, PanAmericana had approximately 2.7 million subscribers, Sky Brazil had
approximately 1.9 million subscribers and Sky Mexico had approximately 1.9 million subscribers.
•DIRECTV Sports Networks. DIRECTV Sports Networks LLC and its subsidiaries, or DSN, is
comprised primarily of three regional sports television networks based in Seattle, Washington,
Denver, Colorado and Pittsburgh, Pennsylvania, currently known as FSN NorthwestTM, FSN
Rocky MountainTM and FSN PittsburghTM, respectively. The operating results of DSN beginning
November 19, 2009 are reported as part of the ‘‘Sports Networks, Eliminations and Other’’
operating segment.
Liberty Transaction
On November 19, 2009, The DIRECTV Group, Inc., or DIRECTV Group, and Liberty Media
Corporation, which we refer to as Liberty or Liberty Media, obtained shareholder approval of and
closed a series of related transactions which we refer to collectively as the Liberty Transaction. The
Liberty Transaction included the split-off of certain of the assets of the Liberty Entertainment group
into Liberty Entertainment, Inc., or LEI, which was then split-off from Liberty. Following the split-off,
DIRECTV Group and LEI merged with subsidiaries of DIRECTV. As a result of the Liberty
Transaction, DIRECTV Group, which is comprised of the DIRECTV U.S. and DIRECTV Latin
America businesses, and LEI, which held Liberty’s 57% interest in DIRECTV Group, a 100% interest
in three regional sports networks, a 65% interest in GSN, approximately $120 million in cash and cash
equivalents and approximately $2.1 billion of indebtedness and a series of related equity collars,
became wholly-owned subsidiaries of DIRECTV.
The holders of outstanding shares of DIRECTV Group common stock (other than direct or
indirect subsidiaries of LEI) received one share of DIRECTV Class A common stock for each share of
DIRECTV Group common stock held. The holders of outstanding shares of LEI Series A common
3