The DirecTV Group (DTV)

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        As a result of the divestitures of the HNS businesses described above, there were no operating results for the Network Systems segment during 2006. The operating loss before depreciation and amortization and operating loss for the year ended December 31, 2005 included a $25 million impairment charge related to the sale of 50% of HNS LLC in April 2005.

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        As
a result of the divestitures of the HNS businesses described above, there were no operating results for the Network Systems segment during 2006. The operating loss before depreciation
and amortization and operating loss for the year ended December 31, 2005 included a $25 million impairment charge related to the sale of 50% of HNS LLC in April 2005.

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        The decrease in revenues, operating loss before depreciation and amortization and operating loss resulted primarily from the divestitures of the HNS businesses. Operating loss before depreciation and

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amortization and operating loss in 2004 include asset impairment charges of $1,466.1 million related to SPACEWAY and $190.6 million for the SkyTerra transactions, as well as $25.6 million in severance charges associated with the HNS related transactions discussed above in "Divestitures."

On April 22, 2005, The DIRECTV Group completed the sale of a 50% interest in HNS LLC, an entity that owns substantially all of the assets of HNS, to SkyTerra Communications, Inc. As of the date of this sale until January 2006, The DIRECTV Group accounted for 50% of HNS’ net income or loss as an equity investment in “Other, net” in the Consolidated Statements of Operations. In January 2006, The DIRECTV Group completed the sale of the remaining 50% interest in HNS LLC to SkyTerra and received $110 million in cash. In the first quarter of 2006, The DIRECTV Group recorded a gain of $14 million related to the sale, and equity earnings of $11 million in “Other, net” in the Consolidated Statements of Operations.

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        As a result of the divestitures of the HNS businesses described above, there were no operating results for the Network Systems segment during 2006. The $60.8 million operating loss before depreciation and amortization and operating loss for the nine months ended September 30, 2005 included a $25.3 million impairment charge related to the sale of 50% of HNS LLC in April, 2005.

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Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        As a result of the divestitures of the HNS businesses described above, there were no operating results for the Network Systems segment during the first half of 2006. The $60.8 million operating loss before depreciation and amortization and operating loss for the six months ended June 30, 2005 included a $25.3 million impairment charge related to the sale of 50% of HNS LLC in April, 2005.

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Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        As a result of the divestitures of the HNS businesses described above, there were no operating results for the Network Systems segment during the first quarter of 2006. The $52.8 million operating loss before depreciation and amortization and operating loss for the first quarter of 2005 included a $20.9 million impairment charge related to the sale of 50% of HNS LLC in April, 2005.

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        The decrease in revenues resulted primarily from lower sales of DIRECTV set-top receivers as a result of the sale of the set-top receiver manufacturing operations to Thomson in June 2004. As we expect to have significant continuing cash flows with the set-top receiver manufacturing operations resulting from the five year supply agreement, the financial results of the set-top receiver manufacturing operations prior to June 2004 are reported in continuing operations, and not as discontinued operations. See Note 3 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for more information related to the set-top receiver manufacturing operations.

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        The increase in operating loss before depreciation and amortization and operating loss in 2004 compared with 2003 is primarily due to the $1,466.1 million and the $190.6 million in asset impairment charges related to SPACEWAY and the SkyTerra transaction, respectively, as well as the $25.6 million in severance charges associated with the sale of the set-top box receiver manufacturing operations and substantially all of the remaining assets of HNS, discussed above in "Strategic Developments."

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        The decrease in revenues, operating loss before depreciation and amortization and operating loss resulted primarily from the divestitures of the HNS businesses. Operating loss before depreciation and amortization and operating loss in the third quarter include the $1.466 billion asset impairment charge related to Spaceway discussed above in "Strategic Developments."

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        The decrease in revenues, operating profit before depreciation and amortization and operating loss resulted primarily from the divestitures of the HNS businesses. In addition, operating loss for the six months ended June 30, 2005 includes $25.3 million of impairment charges associated with the SkyTerra transaction, which is partially offset by $17.0 million of charges for severance costs associated with the June 2004 sale of HNS' set-top receiver manufacturing operations to Thomson and an inventory write-down.

Network Systems Segment

        The following table provides operating results for the Network Systems segment:

        The decrease in revenues resulted primarily from lower sales of DIRECTV set-top receivers as a result of the sale of the set-top receiver manufacturing operations to Thomson in June 2004. As we expect to have significant continuing cash flows with the set-top receiver manufacturing operations resulting from the five year supply agreement, the financial results of the set-top receiver manufacturing operations prior to June 2004 are reported in continuing operations, and not as discontinued operations. See Note 3 of the Notes to the Consolidated Financial Statements in Item 1, Part I, for more information on revenues related to the set-top receiver manufacturing operations.

        The increase in operating loss before depreciation and amortization and operating loss in the first quarter of 2005 compared with the first quarter of 2004 is primarily due to the $20.9 million in asset impairment charges related to sale of substantially all of the remaining assets of HNS discussed above in "Strategic Developments" and to the sale of the set-top receiver manufacturing operations in June 2004.

Network Systems Segment

Hughes Network Systems, Inc., or HNS, constitutes our Network Systems segment. HNS is a leader in the market for satellite-based private business networks (commonly known as VSATs) and consumer broadband Internet access, both marketed under the DIRECWAY^® brand. In 2004, we completed the sale of HNS’ set-top receiver manufacturing operations to Thomson Inc., or Thomson, and the sale of HNS’ 55% ownership interest in Hughes Software Systems Limited, or HSS, to Flextronics Sales & Marketing (L-A) Ltd., or Flextronics. Also in December 2004, we announced an agreement to sell a 50% interest in a new entity that will own substantially all of the remaining net assets of HNS. See Note 3 for more information related to these transactions.

Discontinued Operations

During 2004, we completed the sale of our approximately 80.4% interest in PanAmSat Corporation, or PanAmSat. We announced, in December of 2002, that DIRECTV Broadband, Inc., or DIRECTV Broadband,

THE DIRECTV GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

would close its high-speed Internet service business. Revenues, operating costs and expenses, and other non-operating results for the discontinued operations of PanAmSat, which formerly comprised the Satellite Services segment, HSS, which was a component of the Network Systems segment, and DIRECTV Broadband have been excluded from our results from continuing operations for all periods presented herein. Consequently, the financial results of PanAmSat, HSS and DIRECTV Broadband are presented in our Consolidated Statements of Operations in a single line item entitled “Income (loss) from discontinued operations, net of taxes.” The related assets and liabilities of PanAmSat and HSS are presented in the Consolidated Balance Sheets in line items entitled “Assets of businesses held for sale” and “Liabilities of businesses held for sale” as of December 31, 2003. “Assets of businesses held for sale” and “Liabilities of businesses held for sale” in the Consolidated Balance Sheets as of December 31, 2004 include substantially all of the remaining assets and liabilities of HNS.

News Corporation Transactions

On December 22, 2003, we, General Motors Corporation, or GM, and News Corporation completed a series of transactions that resulted in the split-off of the Company from GM and the simultaneous sale of GM’s 19.8% interest in us to News Corporation. GM received approximately $3.1 billion in cash and 28.6 million News Corporation Preferred American Depository Shares, or ADSs, in these transactions. GM split-off the Company by distributing the Company’s common stock to the holders of the GM Class H common stock in exchange for their GM Class H common shares on a one-for-one basis. Immediately after the split-off, News Corporation acquired an additional 14.2% of our outstanding common stock from the former GM Class H common stockholders, which provided News Corporation with a total of 34% of our outstanding common stock. GM Class H common stockholders received about 0.8232 shares of our common stock and about 0.09207 News Corporation Preferred ADSs for each share of GM Class H common stock held immediately prior to the closing of the transactions. In addition, we paid to GM a special cash dividend of $275 million in connection with the transactions. Upon completing these transactions, News Corporation transferred its 34% interest in us to its 82% owned subsidiary, Fox Entertainment Group, Inc.

For us, the transactions represented an exchange of equity interests by investors. As such, we continue to account for our assets and liabilities at historical cost and did not apply purchase accounting. We recorded the $275 million special cash dividend payment to GM as a reduction to additional paid-in capital. We also recorded a $25.1 million decrease to additional paid-in capital representing the difference between our consolidated tax receivable from GM as determined on a separate return basis and the receivable determined pursuant to the amended income tax allocation agreement between GM and us. See Note 10 for additional discussion regarding the amended income tax allocation agreement.

Upon completion of the transactions in 2003, we expensed related costs of about $132 million that primarily included investment advisor fees of about $49 million, retention benefits of about $65 million and severance benefits of about $15 million. In addition, certain of our employees earned about $36 million in additional retention benefits during 2004 subsequent to the completion of the News Corporation transactions. See Note 16 for more information about retention benefits.