Dish Network 2013 Annual Report Download - page 40

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the satellite’s functions, the efficiency of the launch vehicle used, and the remaining on-board fuel following orbit
insertion. Generally, the minimum design life of each of our satellites ranges from 12 to 15 years. We can provide
no assurance, however, as to the actual useful lives of any of these satellites. Our operating results could be
adversely affected if the useful life of any of our satellites were significantly shorter than the minimum design life.
In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity
or relocate one of our other satellites and use it as a replacement for the failed or lost satellite, any of which could
have a material adverse effect on our business, financial condition and results of operations. Such a failure could
result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as
necessary to remain competitive. A relocation would require FCC approval and, among other things, a showing to
the FCC that the replacement satellite would not cause additional interference compared to the failed or lost satellite.
We cannot be certain that we could obtain such FCC approval. If we choose to use a satellite in this manner, this
use could adversely affect our ability to satisfy certain operational conditions associated with our authorizations.
Failure to satisfy those conditions could result in the loss of such authorizations, which would have an adverse effect
on our ability to generate revenues.
Our satellites are subject to construction, launch, operational and environmental risks that could limit our ability
to utilize these satellites.
Construction and launch risks. A key component of our business strategy is our ability to expand our offering of
new programming and services. To accomplish this goal, from time to time, new satellites need to be built and
launched. Satellite construction and launch is subject to significant risks, including construction and launch delays,
launch failure and incorrect orbital placement. Certain launch vehicles that may be used by us have either unproven
track records or have experienced launch failures in the recent past. The risks of launch delay and failure are usually
greater when the launch vehicle does not have a track record of previous successful flights. Launch failures result in
significant delays in the deployment of satellites because of the need both to construct replacement satellites, which
can take more than three years, and to obtain other launch opportunities. Significant construction or launch delays
could materially and adversely affect our ability to generate revenues. If we were unable to obtain launch insurance,
or obtain launch insurance at rates we deem commercially reasonable, and a significant launch failure were to occur,
it could impact our ability to fund future satellite procurement and launch opportunities.
In addition, the occurrence of future launch failures for other operators may delay the deployment of our satellites
and materially and adversely affect our ability to insure the launch of our satellites at commercially reasonable
premiums, if at all. Please see further discussion under the caption “We generally do not carry commercial
insurance for any of the in-orbit satellites that we use, other than certain satellites leased from third parties, and
could face significant impairment charges if one of our satellites fails” below.
Operational risks. Satellites are subject to significant operational risks while in orbit. These risks include
malfunctions, commonly referred to as anomalies that have occurred in our satellites and the satellites of other
operators as a result of various factors, such as satellite manufacturers’ errors, problems with the power systems or
control systems of the satellites and general failures resulting from operating satellites in the harsh environment of
space.
Although we work closely with the satellite manufacturers to determine and eliminate the cause of anomalies in new
satellites and provide for redundancies of many critical components in the satellites, we may experience anomalies
in the future, whether of the types described above or arising from the failure of other systems or components.
Any single anomaly or series of anomalies could materially and adversely affect our operations and revenues and
our relationship with current customers, as well as our ability to attract new customers for our pay-TV services. In
particular, future anomalies may result in the loss of individual transponders on a satellite, a group of transponders
on that satellite or the entire satellite, depending on the nature of the anomaly. Anomalies may also reduce the
expected useful life of a satellite, thereby reducing the channels that could be offered using that satellite, or create
additional expenses due to the need to provide replacement or back-up satellites. You should review the disclosures
relating to satellite anomalies set forth under Note 8 in the Notes to our Consolidated Financial Statements in Item
15 of this Annual Report on Form 10-K.