DIRECTV 2009 Annual Report Download - page 95

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Advertising Costs
We expense advertising costs primarily in ‘‘Subscriber acquisition costs’’ in the Consolidated
Statements of Operations as incurred. Advertising expenses, net of payments received from
programming content providers for marketing support, were $317 million in 2009, $301 million in 2008,
and $261 million in 2007.
Market Concentrations and Credit Risk
We sell programming services and extend credit, in amounts generally not exceeding $200 each, to
a large number of individual residential subscribers throughout the United States and most of Latin
America. As applicable, we maintain allowances for anticipated losses.
Accounting Changes
Noncontrolling interests. On January 1, 2009 we adopted new accounting standards for the
accounting and reporting of noncontrolling interests in subsidiaries, also known as minority interests, in
consolidated financial statements. The new standards also provide guidance on accounting for changes
in the parent’s ownership interest in a subsidiary and establishes standards of accounting for the
deconsolidation of a subsidiary due to the loss of control. Reporting entities must now present certain
noncontrolling interests as a component of equity and present net income and consolidated
comprehensive income attributable to the parent and the noncontrolling interest separately in the
consolidated financial statements. These new standards are required to be applied prospectively, except
for the presentation and disclosure requirements, which must be applied retrospectively for all periods
presented. As a result of our adoption of these standards, ‘‘Net income’’ in the Consolidated
Statements of Operations now includes net income attributable to noncontrolling interest as compared
to the previous presentation, where net income attributable to the noncontrolling interest was deducted
in the determination of net income. Additionally, the Consolidated Statements of Cash Flows are now
presented using net income as calculated pursuant to the new accounting requirements.
On January 1, 2009 we adopted the revisions made by the SEC to accounting standards regarding
the financial statement classification and measurement of equity securities that are subject to
mandatory redemption requirements or whose redemption is outside the control of the issuer. The
revisions to the accounting guidance require that redeemable noncontrolling interests, such as Globo
Comunicacoes e Participacoes S.A.’s, or Globo’s, redeemable noncontrolling interest in Sky Brazil
described in Note 19 of the Notes to the Consolidated Financial Statements that are redeemable at the
option of the holder be recorded outside of permanent equity at fair value, and the redeemable
noncontrolling interests be adjusted to their fair value at each balance sheet date. Adjustments to the
carrying amount of a redeemable noncontrolling interest are recorded to retained earnings (or
additional paid-in-capital in the absence of retained earnings). As a result of the adoption of this
accounting requirement, we have reported Globo’s redeemable noncontrolling interest in Sky Brazil in
‘‘Redeemable noncontrolling interest’’ at fair value in the Consolidated Balance for each period
presented. See Note 19 for additional information.
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