Dish Network 2003 Annual Report Download - page 83

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–16
Accounting for our new subscriber promotions which include programming discounts falls under the scope of EITF
Issue No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s
Capital Products)” (“EITF 01-9”). In accordance with EITF 01-9, programming revenues under these promotions are
recorded at the discounted monthly rate charged to the subscriber. See Subscriber Acquisition Costs below for
discussion regarding the accounting for costs under these promotions.
Programming and Other Costs
The cost of television programming distribution rights is generally incurred on a per subscriber basis and various
upfront carriage payments are recognized when the related programming is distributed to subscribers. The cost of
television programming rights to distribute live sporting events for a season or tournament is charged to expense
using the straight-line method over the course of the season or tournament. Programming costs are included in
“Subscriber-related expenses” in the consolidated statements of operations and comprehensive income (loss).
Subscriber Acquisition Costs
Subscriber acquisition costs in our consolidated statements of operations and comprehensive income (loss) consist of
costs incurred to acquire new subscribers through third parties and our direct customer acquisition distribution channel.
Total subscriber acquisition costs include the following line items from our consolidated statements of operations and
comprehensive income (loss):
• “Cost of sales – subscriber promotion subsidies” includes the cost of EchoStar receiver systems sold to
retailers and other distributors of our equipment and receiver systems sold directly by us to subscribers.
• “Other subscriber promotion subsidies” includes net costs related to various installation promotions and other
promotional incentives.
• “Subscriber acquisition advertising” includes advertising and marketing expenses related to the acquisition of
new DISH Network subscribers. Advertising costs generally are expensed as incurred.
During the year ended December 31, 2003, our significant new subscriber promotions were as follows:
Free Dish – Effective February 1, 2003, our Free DISH promotion provides new subscribers with a choice of up to two
EchoStar receivers, including one premium model system, and free installation for $49.99. The subscriber receives a
$49.99 credit on their first month’s bill. To be eligible, subscribers must provide a valid major credit card, their social
security number, pass a credit score, and make a one-year commitment to subscribe to a qualified programming
package. Effective August 24, 2003, we expanded the above offer to include up to three EchoStar receivers and require
either a one or two year programming commitment, depending on the set-top box models selected by the subscriber.
Although there can be no assurance as to the ultimate duration of the Free Dish promotion, we expect it to continue
through at least June 30, 2004.
Free for All – Effective February 1, 2003, our Free for All promotion provides new subscribers who purchase up to two
receivers for $149 or more, depending on the models chosen, and subscribe to a qualifying programming package, free
installation, together with credits of $12.50 or $17.00 applied to their programming bill each month for a year.
Effective August 24, 2003, under our Free for All promotion new subscribers who purchase one or two receiver
systems and subscribe to a qualifying programming package receive a monthly credit of $10.00 for 15 or 20 months,
respectively. Although there can be no assurance as to the ultimate duration of the Free for All promotion, we expect it
to continue through at least June 30, 2004.
Digital Home Plan – Effective February 1, 2003, our Digital Home Plan promotion offered new subscribers up to
four EchoStar receivers, including various models, with a minimum required programming package subscription.
Each plan includes in-home service, and the consumer must agree to a one-year commitment, provide a valid major
credit card, have an acceptable credit score, incur a one-time set-up fee of $49.99, and an optional $50.00 upgrade fee.
The subscriber receives a $49.99 credit on their first month’s bill. Effective November 15, 2003, for an optional $99.00