Dish Network 2014 Annual Report Download - page 173

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-67
20. Related Party Transactions
Related Party Transactions with EchoStar
Following the Spin-off, we and EchoStar have operated as separate publicly-traded companies, and, except for the
Satellite and Tracking Stock Transaction described in Note 6 and below and Sling TV described below, neither
entity has any ownership interest in the other. However, a substantial majority of the voting power of the shares of
both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr.
Ergen for the benefit of his family.
EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a supplier of the vast majority
of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on
pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on
the nature of the products and services provided.
In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to
which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services
and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our
respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is
a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial
condition and results of operations.
“Equipment sales, services and other revenue - EchoStar”
Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar
pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and
accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased.
In November 2014, we and EchoStar extended this agreement until December 31, 2015. EchoStar may terminate
the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate
this agreement if certain entities acquire us.
Professional Services Agreement. Prior to 2010, in connection with the Spin-off, we entered into various
agreements with EchoStar including the Transition Services Agreement, Satellite Procurement Agreement and
Services Agreement, which all expired on January 1, 2010 and were replaced by a Professional Services Agreement.
During 2009, we and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to
receive the following services from us, among others, certain of which were previously provided under the
Transition Services Agreement: information technology, travel and event coordination, internal audit, legal,
accounting and tax, benefits administration, program acquisition services and other support services. Additionally,
we and EchoStar agreed that we shall continue to have the right, but not the obligation, to engage EchoStar to
manage the process of procuring new satellite capacity for us (previously provided under the Satellite Procurement
Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided
under the Services Agreement) and other support services. The Professional Services Agreement automatically
renewed on January 1, 2015 for an additional one-year period until January 1, 2016 and renews automatically for
successive one-year periods thereafter, unless terminated earlier by either party upon at least 60 days notice.
However, either party may terminate the Professional Services Agreement in part with respect to any particular
service it receives for any reason upon at least 30 days notice.
Management Services Agreement. In connection with the Spin-off, we entered into a Management Services
Agreement with EchoStar pursuant to which we have made certain of our officers available to provide services
(which were primarily legal and accounting services) to EchoStar. Effective June 15, 2013, the Management
Services Agreement was terminated by EchoStar. EchoStar made payments to us based upon an allocable portion
of the personnel costs and expenses incurred by us with respect to any such officers (taking into account wages and
fringe 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