Dish Network 2003 Annual Report Download - page 9

Download and view the complete annual report

Please find page 9 of the 2003 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 120

  • 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
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

4
carriage of the TV Guide Channel as well as the extension of an existing distribution agreement for carriage of the
TVG Network. We also signed an agreement to resolve all outstanding litigation between us and Gemstar.
Also on March 2, 2004, we announced an agreement to acquire Gemstar’s Superstar/Netlink Group LLC (“SNG”),
UVTV distribution, and SpaceCom businesses and related assets for approximately $48.0 million in cash. Our
purchase of these businesses is subject to certain regulatory approvals and customary conditions. The effectiveness
of the patent license, distribution agreements and settlement agreement are subject to certain conditions, including
the closing of the SNG sale.
Repurchase and Redemption of the 9 3/8% Senior Notes. During the fourth quarter of 2003, EDBS repurchased in
open market transactions approximately $201.6 million of the original $1.625 billion principal amount of its 9 3/8%
Senior Notes due 2009. The difference between the market price paid and the principal amount of approximately
$12.7 million and unamortized debt issuance costs related to the repurchased notes of approximately $1.6 million
were recorded as charges to earnings during the fourth quarter of 2003. Effective February 2, 2004, EDBS
redeemed the remaining $1.423 billion principal amount of the notes at 104.688%, for a total of approximately
$1.490 billion. The premium paid of approximately $66.7 million and unamortized debt issuance costs of
approximately $10.8 million were recorded as charges to earnings in February 2004.
DISH NETWORK
Programming
Programming Packages. We use a “value-based” strategy in structuring the content and pricing of programming
packages available from the DISH Network. For example, we currently sell our entry-level “America’s Top 60”
programming package to consumers in digital format for $24.99 per month. This programming package includes 60
of the most popular video channels. Satellite-delivered local channels are currently available separately for an
additional $5.99 per month in 110 of the largest markets in the United States, representing over 85% of all of U.S.
television households. We estimate cable operators charge over $35 per month, on average, for their entry-level
expanded basic service that typically consists of approximately 55 analog channels, including local channels. We
believe that our “America’s Top 120” programming package, which is similar to an expanded basic cable package
plus a digital music service and which we currently sell for $34.99 per month, also compares favorably to similar
cable television programming. Based on cable industry statistics, we estimate that cable operators would typically
charge as much as $45.00 per month for a similar package, including local channels. In addition to the above
mentioned programming packages, we also offer our “America’s Top 180” programming package for $44.99 per
month and our “America’s Everything Pak”, which combines our “America’s Top 180” programming package and
all four movie packages, which are discussed below, for $77.99 per month. Certain of our current new subscriber
promotions include local programming in the qualifying programming packages for no additional fee.
Movie Packages. We currently offer each of our four movie packages, which include up to 10 movie channels per
package, starting at $11.99 per month. We believe we currently offer more movie channels than cable typically
offers at a comparable price.
DISH Latino Programming Packages. We also offer Spanish-language programming packages. For example, we
believe that our “DISH Latino” package, which includes more than 30 Spanish-language programming channels for
$24.99 per month, is one of the most attractive Spanish-language packages available in the United States. We also
offer “DISH Latino Dos,” which includes 120 English and Spanish-language programming channels for $34.99 per
month. Additionally, we offer DISH Latino Max with more than 160 Spanish and English-language channels for
$44.99 per month.
International Programming. Currently, we offer approximately 60 foreign-language channels including Arabic,
South Asian, Hindi, Russian, Chinese, Greek and many others. DISH Network remains the pay-TV leader in
delivering foreign-language programming to customers in the United States at superior values. We believe foreign-
language programming is a valuable niche product that attracts a number of new subscribers who are unable to get
similar programming elsewhere.