Dish Network 2007 Annual Report Download - page 49

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Table of Contents
EXPLANATION OF KEY METRICS AND OTHER ITEMS
Subscriber
-related revenue . “Subscriber-related revenue” consists principally of revenue from basic, movie, local, pay-per-view, and
international subscription television services, equipment rental fees, additional outlet fees from subscribers with multiple receivers, digital
video recorder (“DVR”) fees, advertising sales, fees earned from our DishHOME Protection Plan, equipment upgrade fees, HD programming
and other subscriber revenue. Therefore, not all of the amounts we include in “Subscriber-related revenue” are recurring on a monthly basis.
“Subscriber-related revenue” also includes revenue from equipment sales, installation and other services related to our original agreement with
AT&T. Revenue from equipment sales to AT&T is deferred and recognized over the estimated average co-branded subscriber life. Revenue
from installation and certain other services performed at the request of AT&T is recognized upon completion of the services. All prior period
amounts were reclassified to conform to current period presentation.
Development and implementation fees received from AT&T are being recognized in “Subscriber-related revenue” over the next several years.
In order to estimate the amount recognized monthly, we first divide the number of subscribers activated during the month under the AT&T
agreement by total estimated subscriber activations during the life of the contract. We then multiply this percentage by the total development
and implementation fees received from AT&T. The resulting estimated amount is recognized monthly as revenue over the estimated average
subscriber life.
During the fourth quarter 2005, we modified and extended our distribution and sales agency agreement with AT&T. We believe our overall
economic return is similar under both arrangements. However, the impact of subscriber acquisition on many of our line item business metrics
was substantially different under the original AT&T agreement, compared to most other sales channels (including the revised AT&T
agreement).
41
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS —
Continued