Dish Network 2005 Annual Report Download - page 123

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–38
• A Canadian DBS satellite (“Ciel 2”) which is currently expected to launch during 2009 and commence
commercial operation at the 129 degree orbital location. Our initial ten-year term lease for at least 50%
capacity on the satellite will be accounted for as a capital lease.
In certain circumstances the dates on which we are obligated to make these payments could be delayed. These
amounts will increase to the extent we procure insurance for our satellites or contract for the construction, launch or
lease of additional satellites. Further, as of December 31, 2006, we had not procured launches for six of the above
satellites. Our obligations will increase as we procure launches for these satellites.
Purchase Obligations
Our 2007 purchase obligations primarily consist of binding purchase orders for EchoStar receiver systems and
related equipment, and for products and services related to the operation of our DISH Network. Our purchase
obligations also include certain guaranteed fixed contractual commitments to purchase programming content.
Programming Contracts
In the normal course of business, we have also entered into numerous contracts to purchase programming content
whereby our payment obligations are fully contingent on the number of subscribers to which we provide the
respective content. These programming commitments are not included in the table above. The terms of our
contracts typically range from one to ten years. Our programming expenses will continue to increase to the extent we
are successful growing our subscriber base. Programming expenses are included in “Subscriber-related expenses” in
the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).
Rent Expense
Total rent expense for operating leases approximated $69.2 million, $67.6 million and $59.1 million in 2006, 2005
and 2004, respectively.
Patents and Intellectual Property
Many entities, including some of our competitors, now have and may in the future obtain patents and other intellectual
property rights that cover or affect products or services directly or indirectly related to those that we offer. We may not
be aware of all patents and other intellectual property rights that our products may potentially infringe. Damages in
patent infringement cases can include a tripling of actual damages in certain cases. Further, we cannot estimate the
extent to which we may be required in the future to obtain licenses with respect to patents held by others and the
availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights
with respect to components within our direct broadcast satellite system. We cannot be certain that these persons do not
own the rights they claim, that our products do not infringe on these rights, that we would be able to obtain licenses
from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be
able to redesign our products to avoid infringement.
Contingencies
Distant Network Litigation
On October 20, 2006, a District Court in Florida entered a permanent nationwide injunction prohibiting us from
offering distant network channels to consumers effective December 1, 2006. Distant networks are ABC, NBC, CBS
and Fox network channels which originate outside the community where the consumer who wants to view them,
lives. We have turned off all of our distant network channels and are no longer in the distant network business.
Termination of these channels resulted in, among other things, a small reduction in average monthly revenue per
subscriber and free cash flow, and a temporary increase in subscriber churn. The plaintiffs in that litigation allege