DIRECTV 2009 Annual Report Download - page 90

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of Business
DIRECTV, 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. 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. Beginning
November 19, 2009 we also operate three regional sports networks 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.
•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.
•DIRECTV Sports Networks. DIRECTV Sports Networks LLC and its subsidiaries is comprised
primarily of three regional sports television networks based in Seattle, Washington, Denver,
Colorado and Pittsburgh, Pennsylvania, currently known as FSN Rocky Mountain, FSN
Northwest and FSN Pittsburgh, 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 related series of equity collars became
wholly-owned subsidiaries of DIRECTV.
DIRECTV Group has been treated as the acquiring corporation in the Liberty Transaction for
accounting and financial reporting purposes and accordingly, the historical financial statements of
DIRECTV Group are reported as the historical financial statements of DIRECTV in the
accompanying Consolidated Financial Statements.
As a result of the Liberty Transaction, Liberty’s 57% ownership interest in DIRECTV Group has
been effectively distributed to certain of Liberty’s shareholders. DIRECTV has two classes of common
stock outstanding, Class A common stock and Class B common stock. The DIRECTV Class A common
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