Dish Network 2011 Annual Report Download - page 121

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-27
FCC Authorizations. We currently do not have any satellites positioned at the 148 degree orbital location as a result of
the retirement of EchoStar V. While we have requested the necessary approval from the FCC for the continued use of
this orbital location, there can be no assurance that the FCC will determine that our proposed future use of this orbital
location complies fully with all licensing requirements. If the FCC decides to revoke this license, we may be required to
write-off its $68 million carrying value.
8. 700 MHz Wireless Licenses
In 2008, we paid $712 million to acquire certain 700 MHz wireless licenses, which were granted to us by the FCC in
February 2009. To commercialize these licenses and satisfy the associated FCC build-out requirements, we will be
required to make significant additional investments or partner with others. Depending on the nature and scope of such
commercialization and build-out, any such investment or partnership could vary significantly. Part or all of these
licenses may be terminated if the associated FCC build-out requirements are not satisfied. In conducting our annual
impairment test in 2011, we determined that the estimated fair value of the FCC licenses, calculated using a market
based approach, exceeded their carrying amount. Based on this assessment, this asset was not impaired as of December
31, 2011.
9. Acquisitions
When we acquire a business we recognize the assets acquired, liabilities assumed and any noncontrolling interests at fair
value. We expense all transaction costs related to the acquisition as incurred.
Blockbuster Acquisition
On April 26, 2011, we completed the Blockbuster Acquisition. We acquired Blockbuster operations in the United States
and in certain foreign countries. Our winning bid in the bankruptcy court auction was valued at $321 million. We paid
$238 million, including $226 million in cash and $12 million in certain assumed liabilities. Of the $226 million paid in
cash, $20 million was placed in escrow. Subsequent to this payment, we received a $4 million refund from escrow,
resulting in a net purchase price of $234 million. Blockbuster primarily offers movies and video games for sale and
rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website
and the BLOCKBUSTER On Demand service. The Blockbuster Acquisition complements our core business of
delivering high-quality video entertainment to consumers.
From the acquisition date of April 26, 2011 through December 31, 2011, Blockbuster operations contributed $975 million in
revenue and $4 million in net income to our consolidated results of operations. As of December 31, 2011, Blockbuster
operated over 1,500 retail stores in the United States. We expect to close over 500 domestic stores during the first half of
2012 as a result of weak store-level financial performance. Over 900 of our retail store leases, including the leases for the
majority of the stores we expect to close, include favorable early termination rights for us. We continue to evaluate the
impact of certain factors, including, among other things, competitive pressures, the scale of our Blockbuster retail
operations and other issues impacting the store-level financial performance of our Blockbuster retail stores. These
factors, or other reasons, could lead us to close additional Blockbuster retail stores.