Dish Network 1997 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 1997 Dish Network annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 87

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87

1
PART I
Item 1. BUSINESS
All statements contained herein, as well as statements made in press releases and oral statements that may be
made by EchoStar or by officers, directors or employees of EchoStar acting on its behalf, that are not statements of
historical fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that
could cause the actual results of EchoStar to be materially different from historical results or from any future results
expressed or implied by such forward-looking statements. Among the factors that could cause actual results to differ
materially are the following: the unavailability of sufficient capital on satisfactory terms to finance EchoStar’s business
plan; increased competition from cable, direct broadcast satellite (“DBS”), other satellite system operators and other
providers of subscription television services; the introduction of new technologies and competitors into the subscription
television business; increased subscriber acquisition costs and subscriber promotion subsidies; the inability of
EchoStar to obtain necessary shareholder and bondholder approval of any strategic transactions; the inability of
EchoStar to obtain and retain necessary authorizations from the Federal Communication Commission (“FCC”); the
outcome of any litigation in which EchoStar may be involved; general business and economic conditions; and other
risk factors described from time to time in EchoStar’s reports filed with the Securities and Exchange Commission
(“SEC”). In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider
statements that include the terms “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends” or the like to be
uncertain and forward-looking. All cautionary statements made herein should be read as being applicable to all
forward-looking statements wherever they appear. In this connection, investors should consider the risks described
herein.
GENERAL
The operations of EchoStar Communications Corporation (“ ECC,” and together with its subsidiaries,
“ EchoStar” or the “ Company”) include three interrelated business units:
• The DISH Network – a DBS subscription television service in the United States. As of December 31,
1997, EchoStar had approximately 1,040,000 DISH Network subscribers.
• Technology – the design, manufacture, distribution and sale of DBS set-top boxes, antennae and other
digital equipment for the DISH Network (“ EchoStar Receiver Systems”), and the design, manufacture
and distribution of similar equipment for direct-to-home (“ DTH” ) projects of others internationally,
together with the provision of uplink center design, construction oversight, and other project
integration services for international DTH ventures.
• Satellite Services – the turn-key delivery of video, audio and data services to business television
customers and other satellite users. These services include satellite uplink services, satellite
transponder space usage, and other services.
Business Overview and Strategy
Since 1994, EchoStar has deployed substantial resources to develop the “ EchoStar DBS System.” The
EchoStar DBS System consists of EchoStar’s FCC-allocated DBS orbital spectrum, three operational DBS satellites, a
fourth DBS satellite expected to be launched this Spring, digital satellite receivers, a digital broadcast operations center,
customer service facilities, and other assets utilized in its operations. EchoStar’s principal business strategy is to
continue developing its subscription television service in the U.S. to provide consumers with a fully viable alternative
to cable television service.
EchoStar’s future success in the subscription television industry is dependent upon its ability to acquire and
retain DISH Network subscribers, among other factors. During 1996, in order to stimulate subscriber growth, EchoStar
made a strategic decision to reduce the price charged to consumers for EchoStar Receiver Systems. Accordingly,
EchoStar began selling its EchoStar Receiver Systems below its manufactured cost. EchoStar’s marketing programs