Dish Network 2013 Annual Report Download - page 178

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-68
benefits). These allocations were based upon the estimated percentages of time spent by our executive officers
performing services for EchoStar under the Management Services Agreement. EchoStar also reimbursed us for
direct out-of-pocket costs incurred by us for management services provided to EchoStar. We and EchoStar
evaluated all charges for reasonableness at least annually and made any adjustments to these charges as we and
EchoStar mutually agreed upon.
Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity
agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The fees
for the services provided under these satellite capacity agreements depend, among other things, upon the orbital
location of the applicable satellite and the length of the lease. The term of each lease is set forth below:
EchoStar I. During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leased
certain satellite capacity from us on EchoStar I. We and EchoStar mutually agreed to terminate this satellite
capacity agreement effective as of July 1, 2012.
D1. Effective November 1, 2012, we entered into a satellite capacity agreement pursuant to which Hughes
Network Systems, LLC (“HNS”), a wholly-owned subsidiary of Hughes Communications, Inc. (“Hughes”),
leases certain satellite capacity from us on D1 for research and development. This lease generally terminates
upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; (iii) the date the spectrum
capacity on which service is being provided under the agreement fails; or (iv) June 30, 2014.
EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and
relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location.
Effective March 1, 2014, this lease will be converted to a month-to-month lease. Both parties have the right to
terminate this lease with 30 days notice. Upon termination, EchoStar is responsible, among other things, for
relocating this satellite from the 45 degree orbital location back to the 61.5 degree orbital location.
Real Estate Lease Agreements. Since the Spin-off, we have entered into lease agreements pursuant to which we
lease certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per
square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for
its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth
below:
El Paso Lease Agreement.During 2012, we leased certain space at 1285 Joe Battle Blvd., El Paso, Texas to
EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four
consecutive three-year terms.
American Fork Occupancy License Agreement. During 2013, we subleased certain space at 796 East Utah
Valley Drive, American Fork, Utah to EchoStar for a period ending on July 31, 2017.
“Satellite and transmission expenses – EchoStar”
Broadcast Agreement. In connection with the Spin-off, we and EchoStar entered into a broadcast agreement
pursuant to which EchoStar provided certain broadcast services to us, including teleport services such as
transmission and downlinking, channel origination services, and channel management services for a period ending
on January 1, 2012 (the “Prior Broadcast Agreement”). We had the ability to terminate channel origination services
and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar.
If we terminated teleport services for a reason other than EchoStar’s breach, we were obligated to pay EchoStar the
aggregate amount of the remainder of the expected cost of providing the teleport services. The fees for the services
provided under the Prior Broadcast Agreement were calculated at cost plus a fixed margin, which varied depending
on the nature of the products and services provided.