Dish Network 2014 Annual Report Download - page 174

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-68
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, the number of transponders that are leased on the applicable satellite and the
length of the lease. The term of each lease is set forth below:
D1. Effective November 1, 2012, we entered into a satellite capacity agreement pursuant to which HNS leased
certain satellite capacity from us on D1 for research and development. This lease terminated on 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 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. In connection with the
Exchange Agreement, this sublease terminated during the fourth quarter 2014.
“Satellite and transmission expenses”
During the years ended December 31, 2014, 2013 and 2012, we incurred $653 million, $494 million and $425
million, respectively, for satellite and transmission expenses from EchoStar. These amounts are recorded in
“Satellite and transmission expenses” on our Consolidated Statements of Operations and Comprehensive Income
(Loss). The agreements pertaining to these expenses are discussed below.
Broadcast Agreement. Effective January 1, 2012, we and EchoStar entered into a broadcast agreement (the “2012
Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us, including teleport services
such as transmission and downlinking, channel origination services, and channel management services, for the
period from January 1, 2012 to December 31, 2016. The fees for services provided under the 2012 Broadcast
Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee,
which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin,
which will depend on the nature of the services provided. We have 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 terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other
than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs
related to any such termination that it cannot reasonably mitigate.
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a
broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our
carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this
agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any