The DirecTV Group (DTV)

Brazil

        On August 23, 2006, we completed the merger of our Brazil business, Galaxy Brasil Ltda., or GLB, with and into Sky Brazil and completed the purchase of News Corporation and Liberty's interests in Sky Brazil. As a result of these transactions, we hold a 74% interest in the combined business. The purchase consideration for the transaction amounted to $670.0 million, represented by $396.4 million in cash paid, of which we paid $362.0 million to News Corporation and Liberty in 2004, the $63.6 million fair value of the reduction of our interest in GLB resulting from the merger and the assumption of $210.0 million of Sky Brazil's debt.

        We accounted for the Sky Brazil acquisition using the purchase method of accounting, and began consolidating the results from the date of acquisition. We also accounted for the reduction of our interest in GLB resulting from the merger as a partial sale, which resulted in us recording a one-time pre-tax gain during the third quarter of 2006 of approximately $60.7 million in "Gain from disposition of businesses, net" in the Consolidated Statements of Operations.

Brazil

        The pending merger of Sky Brasil with DIRECTV Brasil is subject to local regulatory approval, which we expect to receive in the third quarter of 2006. Upon completion of this transaction we expect to owe $30.0 million to News Corporation, which is in addition to the $362.0 million that we prepaid in October 2004 for the equity interests of News Corporation and Liberty in Sky Brasil, and will thereafter own a 72% interest in the merged businesses. We also expect to incur incremental costs and charges resulting from the merger of DIRECTV Brasil with Sky Brasil, and the transfer of our DIRECTV subscribers to the Sky Brasil platform. At the close of the Sky Brasil transaction, we expect to receive a payment of approximately $97.0 million from News Corporation, subject to adjustment, which represents a $127.0 million payment for our assumption of certain liabilities of Sky Multi-Country Partners, net of the $30.0 million closing payment due for the Sky Brasil acquisition.

Brazil

        The pending merger of Sky Brasil with DIRECTV Brasil is subject to local regulatory approval, which we expect to receive in the second half of 2006. Upon completion of the DIRECTV Brasil transactions we expect to pay $30 million to News Corporation, which is in addition to the $368 million that we prepaid in 2004 for the equity interests of News Corporation and Liberty in Sky Brasil, and will thereafter own in excess of 70% of the merged platform. Upon completion of this transaction, we expect to incur incremental costs and charges resulting from the merger of DIRECTV Brasil with Sky Brasil, and the transfer of our DIRECTV subscribers to the Sky Brasil platform.