Dish Network 2012 Annual Report Download - page 28

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Item 2. PROPERTIES
The following table sets forth certain information concerning our principal properties related to our business segments.
We currently do not have any material properties related to our wireless segment.
Description/Use/Location
Segment(s) Using
Property Owned
EchoStar (1)
Other
Third Party
Corporate headquarters, Englewood, Colorado.......................................... DISH/Blockbuste
r
X
Customer call center and general offices, Pine Brook, New Jersey............ DISH X
Customer call center and general offices, Tulsa, Oklahoma....................... DISH X
Customer call center, Alvin, Texas............................................................. DISH X
Customer call center, Bluefield, West Virginia.......................................... DISH X
Customer call center, Christiansburg, Virginia........................................... DISH X
Customer call center, College Point, New York......................................... DISH X
Customer call center, Harlingen, Texas...................................................... DISH X
Customer call center, Hilliard, Ohio........................................................... DISH X
Customer call center, Littleton, Colorado................................................... DISH X
Customer call center, Phoenix, Arizona...................................................... DISH X
Customer call center, Thornton, Colorado.................................................. DISH X
Customer call center, warehouse and service center, El Paso, Texas......... DISH X
Service center, Englewood, Colorado......................................................... DISH X
Service center, Spartanburg, South Carolina.............................................. DISH X
Warehouse and distribution center, Denver, Colorado............................... DISH X
Warehouse and distribution center, Sacramento, California....................... DISH X
Warehouse, Denver, Colorado.................................................................... DISH X
Warehouse, distribution and service center, Atlanta, Georgia.................... DISH X
Leased From
(1) See Note 20 in the Notes to our Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K
for further discussion of our Related Party Transactions with EchoStar.
In addition to the principal properties listed above, we operate numerous DISH service centers strategically located
in regions throughout the United States. Furthermore, we own or lease capacity on 15 satellites which are a major
component of our DISH pay-TV service. See further discussion under “Item 1. Business – Satellites” in this Annual
Report on Form 10-K.
Item 3. LEGAL PROCEEDINGS
We are involved in a number of legal proceedings (including those described below) concerning matters arising in
connection with the conduct of our business activities. Many of these proceedings are at preliminary stages, and
many of these proceedings seek an indeterminate amount of damages. We regularly evaluate the status of the legal
proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a
loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not
appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of
possible loss can be made.
For certain cases described on the following pages, management is unable to provide a meaningful estimate of the
possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii)
damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the
outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are
novel legal issues or unsettled legal theories to be presented or a large number of parties (as with many patent-
related cases). For these cases, however, management does not believe, based on currently available information,
that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the
outcomes could be material to our operating results for any particular period, depending, in part, upon the operating
results for such period.
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c4cast.com, Inc.
On May 7, 2012, c4cast.com, Inc. filed a complaint against us and our wholly-owned subsidiary, Blockbuster
L.L.C., in the United States District Court for the Eastern District of Texas alleging infringement of United States
Patent No. 7,958,204 (the “204 patent”), which is entitled “Community-Selected Content.” The 204 patent relates to
systems, methods and techniques for providing resources to participants over an electronic network.
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the
asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction
that could require us to materially modify certain features that we currently offer to consumers. We cannot predict
with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.
Channel Bundling Class Action
During 2007, a purported class of cable and satellite subscribers filed an antitrust action against our wholly-owned
subsidiary, DISH Network L.L.C., in the United States District Court for the Central District of California. The suit
also names as defendants DirecTV, Comcast, Cablevision, Cox, Charter, Time Warner, Inc., Time Warner Cable,
NBCUniversal, Viacom, Fox Entertainment Group and Walt Disney Company. The suit alleges, among other
things, that the defendants engaged in a conspiracy to provide customers with access only to bundled channel
offerings as opposed to giving customers the ability to purchase channels on an “a la carte” basis. On October 16,
2009, the District Court entered an order granting the defendants’ motion to dismiss with prejudice. On June 3,
2011, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s order. The plaintiff class sought
rehearing en banc. On October 31, 2011, the Ninth Circuit issued an order vacating the previous June 3, 2011 order,
directing that a 3-judge panel be reconstituted, and denying the plaintiff class’ motion for rehearing. On March 30,
2012, the reconstituted panel of the Ninth Circuit again affirmed the District Court’s order. On April 10, 2012, the
plaintiff class again filed a petition for rehearing en banc, which was denied on May 4, 2012. On August 2, 2012,
the plaintiff class filed a petition seeking review by the United States Supreme Court, which was denied on
November 5, 2012. The matter is now concluded.
Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC)
On September 15, 2011, LVL Patent Group, LLC filed a complaint against our wholly-owned subsidiary, DISH
Network L.L.C., as well as EchoStar, EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar, and
DirecTV in the United States District Court for the District of Delaware alleging infringement of United States
Patent No. 6,044,382, which is entitled “Data Transaction Assembly Server.” DirecTV was dismissed from the case
on January 4, 2012. On July 12, 2012, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed the operative
second amended complaint making the same claim. On January 24, 2013, Cyberfone Systems, LLC voluntarily
dismissed the action against us and the EchoStar entities without prejudice, and the matter is now concluded.
ESPN
During 2008, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit against ESPN, Inc., ESPN
Classic, Inc., ABC Cable Networks Group, Soapnet L.L.C. and International Family Entertainment (collectively,
“ESPN”) for breach of contract in New York State Supreme Court. Our complaint alleges that ESPN failed to
provide us with certain HD feeds of the Disney Channel, ESPN News, Toon and ABC Family. In October 2011, the
jury returned a verdict in favor of the defendants. We have appealed.
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation
agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary
judgment on the counterclaim, finding that we are liable for some of the amount alleged to be owing but that the
actual amount owing is disputed. On December 29, 2010, the New York State Supreme Court, Appellate Division,
First Department affirmed the partial grant of ESPN’s motion on the counterclaim. After the partial grant of ESPN’s
motion for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements.
On March 15, 2010, the New York State Supreme Court affirmed the prior grant of ESPN’s motion and ruled that
we owe the full amount of approximately $66 million under the applicable affiliation agreements. As of December
31, 2010, we had $42 million recorded as a “Litigation accrual” on our Consolidated Balance Sheets.