DIRECTV 2011 Annual Report Download - page 98

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
The following table sets forth the components for ‘‘Intangible assets, net’’ in and advertising relationships. We recognized $25 million in each of 2011, 2010 and
the Consolidated Balance Sheets at: 2009 of amortization on definite lived intangibles in equity earnings of Sky Mexico
related to these assets.
December 31, 2011 December 31, 2010
Estimated Game Show Network. As result of the Liberty Transaction on November 19,
Useful 2009, DIRECTV owned 65% of GSN. In March 2011, we sold a 5% ownership
Lives Gross Accumulated Net Gross Accumulated Net
(years) Amount Amortization Amount Amount Amortization Amount interest in GSN for $60 million in cash to our equity partner, reducing our
(Dollars in Millions) ownership interest to 60%. We recognized a $25 million gain, $16 million after
Orbital slots .......... Indefinite $ 432 $ — $432 $ 432 $ — $ 432 tax, on the sale in ‘‘Other, net’’ in the Consolidated Statements of Operations,
Satellite rights ......... 15 110 12 98 124 6 118 which represents the difference between the selling price and the carrying amount
Subscriber related ....... 5-10 402 353 49 443 317 126
Dealer network ........ 15 130 108 22 130 99 31 of the portion of our equity method investment sold. Additionally, we entered into
Trade name and other .... 5-20 367 59 308 384 41 343 an agreement with our equity partner in GSN under which we have the right to
Distribution rights ...... 7 — — — 334 310 24 require them to purchase an additional 18% interest in GSN through 2014 and in
Total intangible assets ..... $1,441 $532 $909 $1,847 $773 $1,074 2014, if we have not exercised that right, our equity partner in GSN has the right
to require us to sell an additional 18% interest in GSN to them, in each case for
Amortization expense of intangible assets was $136 million in 2011, an exercise price which exceeds our carrying value for that portion of the
$190 million in 2010 and $352 million in 2009. investment. Such exercise price is calculated using a formula based on an agreed
upon multiple of the earnings of GSN with a minimum price of $234 million and
Estimated amortization expense for intangible assets in each of the next five a maximum price of $288 million. Due to certain governance arrangements which
years and thereafter is as follows: $83 million in 2012; $42 million in 2013; limit DIRECTV’s ability to control GSN, we account for GSN as an equity
$35 million in 2014; $27 million in 2015, $26 million in 2016 and $264 million method investment.
thereafter.
DIRECTV accounts for the excess of the carrying value for its investment in
We performed our annual impairment tests for goodwill and orbital slots in GSN over DIRECTV’s share of GSN’s equity in memo accounts allocated to
the fourth quarters of 2011, 2010 and 2009. The estimated fair values for each goodwill and definite lived intangibles attributable to affiliate and advertising
reporting unit and the orbital slots exceeded our carrying values, and accordingly, relationships. We recognized $10 million in 2011, $12 million in 2010 and
no impairment losses were recorded during 2011, 2010 or 2009. Additionally, there $1 million in 2009 of amortization on definite lived intangibles in equity earnings
are no accumulated impairment losses as of December 31, 2011 and 2010. of GSN related to these assets.
Note 8: Investments Other. In April 2011, we sold an equity method investment for $55 million
in cash. As a result of this sale, we recognized a $37 million gain, or $23 million
Equity Method Investments
after tax, on the sale in ‘‘Other, net’’ in the Consolidated Statements of Operations,
Sky Mexico. DIRECTV accounts for the excess of the carrying value for its which represents the difference between the selling price and the carrying amount
investment in Sky Mexico over DIRECTV’s share of Sky Mexico’s equity in memo of the equity method investment sold.
accounts allocated to goodwill and definite lived intangibles attributable to affiliate
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