Step 1: Concept
Gravitational potential energy ($V$) is given by $- \frac{GMm}{r}$.
Step 2: Meaning
The potential energy is negative and its magnitude depends inversely on the distance ($r$) from the center of the Earth.
Step 3: Analysis
As the satellite moves closer ($r$ decreases), the value of $V$ becomes "more negative," which means the potential energy decreases.
Step 4: Conclusion
Hence, the gravitational potential energy decreases.
Final Answer: (D)