Dish Network 2011 Annual Report Download - page 160

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-66
incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant
to any provision of Section 355 or Section 361 of the Code because of: (i) a direct or indirect acquisition of any of
EchoStar’s stock, stock options or assets; (ii) any action that EchoStar takes or fails to take; or (iii) any action that
EchoStar takes that is inconsistent with the information and representations furnished to the IRS in connection with
the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with
respect to the Spin-off or certain related transactions. In such case, EchoStar is solely liable for, and will indemnify
us for, any resulting taxes, as well as any losses, claims and expenses. The tax sharing agreement will only
terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all
rights and obligations are fully effectuated or performed.
TiVo. On April 29, 2011, we and EchoStar entered into a settlement agreement with TiVo Inc. See Note 16 for further
discussion.
EchoStar XV Launch Service. During 2009, EchoStar assigned certain of its rights under a launch contract to us for
EchoStar’s fair value of $103 million. This amount was paid to EchoStar during the first quarter 2010. We
recorded these rights at EchoStar’s net book value of $89 million and recorded the $14 million difference between
EchoStar’s net book value and our purchase price as a capital transaction with EchoStar. We used these rights to
launch EchoStar XV in July 2010.
Weather Related Programming Agreement. During May 2010, we entered into an agreement pursuant to which,
among other things, EchoStar agreed to develop certain weather related programming and we received the right to
distribute such programming. This agreement was terminated during June 2010. In July 2010, we purchased
EchoStar’s interest in the entity that was developing such weather related programming for $5 million.
International Programming Rights Agreement. During the year ended December 31, 2011 we made no purchases
and for the years ended December 31, 2010 and 2009 we purchased $2 million and $8 million, respectively, of
certain international rights for sporting events from EchoStar, included in “Subscriber-related expenses” on the
Consolidated Statements of Operations and Comprehensive Income (Loss), of which EchoStar only retained a
certain portion.
Acquisition of South.com, L.L.C. During October 2010, we purchased all of South.com, L.L.C. from EchoStar and
another party for $5 million. South.com, L.L.C. is an entity that holds certain authorizations for multichannel video
and data distribution service (“MVDDS”) spectrum in the United States.
Patent Cross-License Agreements. During December 2011, we and EchoStar entered into separate patent cross-
license agreements with the same third party whereby: (i) EchoStar and such third party licensed their respective
patents to each other subject to certain conditions; and (ii) we and such third party licensed our respective patents to
each other subject to certain conditions (each, a “Cross-License Agreement”). Each Cross License Agreement
covers patents acquired by the respective party prior to January 1, 2017 and aggregate payments under both Cross-
License Agreements total less than $10 million. Each Cross License Agreement also contains an option to extend
each Cross-License Agreement to include patents acquired by the respective party prior to January 1, 2022. If both
options are exercised, the aggregate additional payments to such third party would total less than $3 million.
However, we and EchoStar may elect to extend our respective Cross-License Agreement independent of each other.
Since the aggregate payments under both Cross-License Agreements were based on the combined annual revenues
of us and EchoStar, we and EchoStar agreed to allocate our respective payments to such third party based on our
respective percentage of combined total revenue.
Sprint Settlement Agreement. On November 3, 2011, we and Sprint entered into the Sprint Settlement Agreement
pursuant to which all disputed issues relating to our acquisition of DBSD North America and the TerreStar
Transaction were resolved between us and Sprint, including, but not limited to, issues relating to the Sprint Clearing
Costs. EchoStar was a party to the Sprint Settlement Agreement solely for the purposes of executing a mutual
release between it and Sprint relating to the Sprint Clearing Costs. As of December 31, 2011, EchoStar is currently
a holder of certain TerreStar debt instruments. Pursuant to the terms of the Sprint Settlement Agreement, we made a
net payment of approximately $114 million to Sprint, which is included on our Consolidated Balance Sheets under
the caption “Other noncurrent assets, net.” As this payment relates directly to our acquisitions of DBSD North