DIRECTV 2009 Annual Report Download - page 91

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
stock is entitled to one vote per share and the Class B common stock is entitled to 15 votes per share.
The DIRECTV Class A common stock trades on the NASDAQ Global Select Market, or NASDAQ,
under the ticker ‘‘DTV’’. DIRECTV Group common stock has been delisted and no longer trades on
the NASDAQ. The DIRECTV Class B common stock will not be listed on any stock exchange or
automated dealer quotation system. Dr. John Malone and his family, or the Malones, own all
outstanding Class B common stock, and have agreed to limit their Class B voting rights to 24% of the
total voting power of DIRECTV’s common stock. Including their Class A and Class B ownership
interests, the Malones hold an approximate 2.7% economic interest and an approximate 24.3% voting
interest in DIRECTV.
See Note 3 for additional information regarding these transactions.
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 noncontrolling interests only to the extent of a
noncontrolling 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. We recognize revenues to be received under contractual commitments on
a straight line basis over the minimum contractual period.
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
for a season or tournament to expense using the straight-line method over the course of the season or
tournament. However, we charge the cost of multi-year programming contracts for live sporting events
with minimum guarantee payments, such as DIRECTV U.S.’ agreement with the NFL, based on the
contractual rates in the contract per season, unless the contractual rates are inconsistent with the
relative value of the programming from season to season, in which case we record the expense based
on the ratio of each period’s sports programming package revenues to the estimated total package
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