Dish Network 1998 Annual Report Download - page 28

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All statements contained herein, as well as statements made in press releases and oral statements that may
be made by us or by officers, directors or employees acting on our 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
our actual results 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 our actual results to differ materially are the
following: a total or partial loss of a satellite due to operational failures, space debris or otherwise; a decrease in
sales of digital equipment and related services to international direct-to-home service providers; a decrease in
DISH Network subscriber growth; an increase in subscriber acquisition costs; impediments to the retransmission of
local or distant broadcast network signals which could result from pending litigation or legislation; lower than
expected demand for our delivery of local broadcast network signals; an unexpected business interruption due to the
failure of third-parties to remediate Year 2000 issues; our inability to retain necessary authorizations from the
FCC; an increase in competition from cable, direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; the introduction of new technologies and competitors into the
subscription television business; a merger of existing DBS competitors; a change in the regulations governing the
subscription television service industry; the outcome of any litigation in which we may be involved; failure to
consummate the 110 acquisition; general business and economic conditions; and other risk factors described from
time to time in our reports filed with the Securities and Exchange Commission. 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 and should not place
undue reliance on any forward-looking statements.
Results of Operations
Year Ended December 31, 1998 Compared to the Year Ended December 31, 1997.
Revenue. Total revenue for the year ended December 31, 1998 was $983 million, an increase of $506 million
compared to total revenue for the year ended December 31, 1997 of $477 million. The increase in total revenue was
primarily attributable to DISH Network subscriber growth combined with increased revenue from our ETC and
Satellite Services business units. We expect that our revenues will continue to increase as the number of DISH
Network subscribers increases.
DISH Network subscription television services revenue totaled $669 million for the year ended
December 31, 1998, an increase of $370 million or 124% compared to 1997. This increase was directly attributable to
the increase in the number of DISH Network subscribers. Average DISH Network subscribers for the year ended
December 31, 1998 increased approximately 120% compared to 1997. As of December 31, 1998, we had
approximately 1.9 million DISH Network subscribers compared to 1.04 million at December 31, 1997. Monthly
revenue per subscriber approximated $39.25 and $38.50 during the years ended December 31, 1998 and 1997,
respectively. DISH Network subscription television services revenue principally consists of revenue from basic,
premium and pay-per-view subscription television services. DISH Network subscription television services will
continue to increase to the extent we are successful in increasing the number of DISH Network subscribers and
maintaining or increasing revenue per subscriber.
For the year ended December 31, 1998, DTH equipment sales and integration services totaled $256 million,
an increase of $164 million compared to 1997. DTH equipment sales consist of sales of digital set-top boxes and other
digital satellite broadcasting equipment by us to international DTH service operators. We currently have agreements to
provide equipment to DTH service operators in Spain and Canada. The increase in DTH equipment sales and
integration services revenue was primarily attributable to an increase in the volume of set-top boxes sold.
Substantially all of our ETC revenues have resulted from sales to two international DTH providers. As a
result, our ETC business currently is economically dependent on these two DTH providers. Our future revenue from