Dish Network 2007 Annual Report Download - page 10

Table of Contents
Sales, Marketing and Distribution
Sales Channels
. While we offer receiver systems and programming directly, a majority of our new subscriber acquisitions are generated by
independent businesses offering our products and services, including small satellite retailers, direct marketing groups, local and regional
consumer electronics stores, nationwide retailers, telecommunications providers and others.
We generally pay these independent businesses an incentive upon activation of each new subscriber they acquire for us. We also typically pay
them a small monthly incentive for up to 60 months provided the customer continuously subscribes to our programming and the retailer
achieves required minimum subscriber acquisition goals.
Marketing
. We use print, radio and television, on a local and national basis, to advertise and promote the DISH Network. We also offer point-
of-sale literature, product displays, demonstration kiosks and signage for retail outlets. We provide guides that describe DISH Network
products and services to our retailers and distributors and conduct periodic educational seminars. Our mobile sales and marketing team visits
retail outlets regularly to reinforce training and ensure that these outlets have proper point-of-sale materials for our current promotions.
Additionally, we dedicate a DISH Network television channel and websites to provide retailers and customers with information about special
services and promotions that we offer from time to time.
Acquisition Strategy
. Our future success in the subscription television industry depends on, among other factors, our ability to acquire and
retain DISH Network subscribers. We provide varying levels of subsidies and incentives to attract customers, including leased, free or
subsidized receiver systems, installations, programming and other items. This marketing strategy emphasizes our long-
term business strategy of
maximizing future revenue by rapidly increasing our subscriber base. Since we subsidize consumer up-front costs, we incur significant costs
each time we acquire a new subscriber. Although there can be no assurance, we believe that, on average, we will be able to fully recoup the up-
front costs of subscriber acquisition from future subscription television services revenue.
DISH Network subscribers have the choice of purchasing or leasing the satellite receiver and other equipment necessary to receive our
programming. As a result of our promotions, most of our new subscribers choose to lease their equipment, including receiver models that
provide HD, DVR, HD DVR and other advanced capabilities for multiple rooms. Many of these lease programs require the consumer to
commit to continue to subscribe to a qualifying programming package for 18 months. Subscribers in our lease programs are required to return
the receivers and certain other equipment to us, or be charged for the equipment, if they terminate service. To the extent we successfully
retrieve and cost-effectively recondition and redeploy leased equipment from subscribers who terminate service, we are able to reduce the cost
of future new subscriber acquisition. However, these cost savings are limited as technological advances and consumer demand for new features
result in the need to replace older equipment for customers over time.
We base our marketing promotions on, among other things, current competitive conditions. In some cases, if competition increases, or we
determine for any other reason that it is necessary to increase our subscriber acquisition costs to attract new customers, our profitability and
costs of operation would be adversely affected.
Bundling Alliances
AT&T, Inc. (“AT&T”) and other telecommunications providers offer DISH Network programming bundled with broadband, telephony and
other services. While these providers in the aggregate currently account for less than 25% of our gross subscriber additions, the loss of certain
of these relationships could have an adverse effect on our new subscriber additions to the extent other distribution channels could not be
developed in those markets. During 2006, AT&T began deploying fiber-optic networks that allow it to offer video services directly to millions
of homes. Other telecommunications companies have announced similar plans. Our net new subscriber additions and certain of our other key
operating metrics could be adversely affected to the extent AT&T de-emphasizes, or discontinues altogether, its efforts to acquire DISH
Network subscribers, and as a result of competition from video services offered by AT&T or other telecommunications companies. Moreover,
there can be no assurance that we will be successful in developing significant new bundling opportunities with other telecommunications
companies.
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