News Corp in 2005: Consolidating the DirecTV Acquisition
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Background Note Contd...
In early 2000, Hughes sold its satellite
manufacturing business to Boeing in an effort to focus on its faster
growing communications services businesses. GM also issued a tracking
stock for Hughes but retained ownership of all the company's assets.
Also that year, GM announced that it would try to sell Hughes. |
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In a sudden turn of events, GM sold its 19.8% interest in Hughes Electronics to News Corp in 2003. News Corp acquired another 14.2% from common stockholders, amounting to a 34% stake in Hughes Electronics, which it quickly transferred to its 82%-owned Fox Entertainment Group. In 2004, Hughes Electronics changed its name to The DirecTV Group, declaring its focus and commitment to the DirecTV brand.
DirecTV' s Business
DirecTV, the first entertainment service in the US to deliver
all digital-quality, multi-channel TV programming to an 18-inch satellite dish,
provided people across the US with a much-needed alternative to cable. For the
first time, rural consumers who were not being served by cable, had access to
programming like their urban and suburban counterparts. DirecTV' s business
included:
DirecTV US, which was the largest provider of direct broadcast satellite (DBS), television services and the second largest MVPD provider in the US behind Comcast. DirecTV provided its customers with access to hundreds of channels of digital-quality video and audio programming that was transmitted directly to its customers' homes or businesses via high-powered geosynchronous satellites. As of December 31, 2003, DirecTV had about 12.2 million subscribers, of whom about 10.7 million were DirecTV' s subscribers. The remaining subscribers received DirecTV service from members and affiliates of the National Rural Telecommunications Cooperative. DirecTV also provided premium professional and collegiate sports programming such as the NFL SUNDAY TICKET package, which allowed subscribers to view as many as 14 NFL games played each Sunday during the regular season.
PanAmSat, which owned and operated 25 satellites that were capable of transmitting signals to geographic areas covering over 98% of the world' s population. PanAmSat provided satellite capacity for the transmission of cable and broadcast television programming from the content source to the cable operator or to the consumer' s home. PanAmSat' s satellites were able to reach nearly 100% of all cable subscribers in the US. In addition, PanAmSat provided satellite services to telecommunications carriers, government agencies, corporations and Internet service providers.
Hughes Network Systems provided broadband satellite networks and services to both consumers and enterprises. Hughes Network Systems (HNS) constituted the DirecTV Network Systems segment. HNS was a leader in the global market for VSAT private business networks with more than 500,000 terminals shipped or ordered. SPACEWAY, a more advanced satellite broadband communications platform under development would provide customers with highspeed, two-way data communications on a more cost-efficient basis than systems that were currently available. The first SPACEWAY satellite service was expected to be introduced in 2005.
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