Dish Network 2014 Annual Report Download - page 175

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-69
direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the
broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide
such services.
Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity
agreements pursuant to which we lease certain capacity on certain satellites owned or leased by EchoStar. 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. See “DBS Satellites” in Note 8 for further information. The term of each lease is set forth
below:
 EchoStar I, VII, X, XI and XIV. On March 1, 2014, we began leasing all available capacity from EchoStar
on the EchoStar I, VII, X, XI and XIV satellites. The term of each satellite capacity agreement generally
terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a
certain date, which depends upon, among other things, the estimated useful life of the satellite. We
generally have the option to renew each satellite capacity agreement on a year-to-year basis through the
end of the respective satellite’s life. There can be no assurance that any options to renew such agreements
will be exercised.
 EchoStar VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-
orbit spare. 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.
 EchoStar IX. We lease certain satellite capacity from EchoStar on EchoStar IX. Subject to availability, we
generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-
to-month basis.
 EchoStar XII. The lease for EchoStar XII generally terminates upon the earlier of: (i) the end-of-life or
replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite
fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which
depends upon, among other things, the estimated useful life of the satellite, whether the replacement
satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal
options. We generally have the option to renew the lease on a year-to-year basis through the end of the
satellite’s life. There can be no assurance that any options to renew this agreement will be exercised.
 EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to
lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar
XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and
is currently in service. Under the original transponder service agreement, the initial term generally expired
upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii)
the date the transponder(s) on which service was being provided under the agreement failed; or (iv) ten
years following the actual service commencement date. Prior to expiration of the initial term, we also had
the option to renew on a year-to-year basis through the end-of-life of the satellite. Effective December 21,
2012, we and EchoStar amended the transponder service agreement to, among other things, change the
initial term to generally expire upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the
date the satellite fails; (iii) the date the transponder(s) on which service is being provided under the
agreement fails; or (iv) four years following the actual service commencement date. Prior to expiration of
the initial term, we have the option to renew for an additional six-year period. Prior to expiration of the
initial term, EchoStar also has the right, upon certain conditions, to renew for an additional six-year period.
If either we or EchoStar exercise our respective six-year renewal options, then we have the option to renew
for an additional five-year period prior to expiration of the then-current term. There can be no assurance
that any options to renew this agreement will be exercised.
Nimiq 5 Agreement. During 2009, EchoStar entered into a fifteen-year satellite service agreement with Telesat
Canada (“Telesat”) to receive service on all 32 DBS transponders on the Nimiq 5 satellite at the 72.7 degree orbital