Dish Network 2010 Annual Report Download - page 98

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-13
Revenue Recognition
We recognize revenue when an arrangement exists, prices are determinable, collectibility is reasonably
assured and the goods or services have been delivered. Revenue from our subscription television services
is recognized when programming is broadcast to subscribers. Payments received from subscribers in
advance of the broadcast or service period are recorded as “Deferred revenue and other” in our
Consolidated Balance Sheets until earned.
For certain of our promotions relating to our receiver systems and HD programming, subscribers are charged
an upfront fee. A portion of this fee may be deferred and recognized over the estimated subscriber life for
new subscribers or the estimated remaining life for existing subscribers ranging from 18 months to five years.
Revenue from advertising sales is recognized when the related services are performed.
Subscriber fees for equipment rental, including DVRs, additional outlets and fees for receivers with
multiple tuners, and our in-home service operations are recognized as revenue as earned. Revenue from
equipment sales and equipment upgrades are recognized upon shipment to customers.
Certain of our existing and new subscriber promotions include programming discounts. Programming
revenues are recorded as earned at the discounted monthly rate charged to the subscriber. See “Subscriber
Acquisition Costs” below for discussion regarding the accounting for costs under these promotions.
Subscriber-Related Expenses
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. Recently, we entered into long-term flat rate programming contracts that are charged to
expense using the straight-line method over the term of the agreement. In addition, 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. “Subscriber-related expenses”
in the Consolidated Statements of Operations and Comprehensive Income (Loss) principally include
programming expenses, costs incurred in connection with our in-home service and call center operations,
billing costs, refurbishment and repair costs related to receiver systems, subscriber retention and other
variable subscriber expenses. These costs are recognized as the services are performed or as incurred.
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 sales distribution
channel. Subscriber acquisition costs include the following line items from our Consolidated Statements of
Operations and Comprehensive Income (Loss):
• “Cost of sales – subscriber promotion subsidies - EchoStar” includes the cost of our 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 promotional incentives and
costs related to installation.
• “Subscriber acquisition advertising” includes advertising and marketing expenses related to the
acquisition of new DISH Network subscribers. Advertising costs are expensed as incurred.