Dish Network 2014 Annual Report Download - page 87

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
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will be successful in reducing or controlling theft of our programming content and we may incur additional costs in
the future if our system’s security is compromised.
Stock Repurchases
Our Board of Directors previously authorized the repurchase of up to $1.0 billion of our Class A common stock. On
October 30, 2014, our Board of Directors extended this authorization such that we are currently authorized to
repurchase up to $1.0 billion of outstanding shares of our Class A common stock through and including December
31, 2015. As of December 31, 2014, we may repurchase up to $1.0 billion of our Class A common stock under this
plan. During the years ended December 31, 2014, 2013 and 2012, there were no repurchases of our Class A
common stock.
Subscriber Acquisition and Retention Costs
We incur significant upfront costs to acquire subscribers, including advertising, retailer incentives, equipment
subsidies, installation services, and new customer promotions. While we attempt to recoup these upfront costs over
the lives of their subscription, there can be no assurance that we will. We employ business rules such as minimum
credit requirements for prospective customers and we strive to provide outstanding customer service, to increase the
likelihood of customers keeping their DISH service over longer periods of time. Our subscriber acquisition costs
may vary significantly from period to period.
We incur significant costs to retain our existing customers, mostly by upgrading their equipment to HD and DVR
receivers and by providing retention credits. As with our subscriber acquisition costs, our retention upgrade
spending includes the cost of equipment and installation services. In certain circumstances, we also offer
programming at no additional charge and/or promotional pricing for limited periods for existing customers in
exchange for a contractual commitment to receive service for a minimum term. A component of our retention
efforts includes the installation of equipment for customers who move. Our subscriber retention costs may vary
significantly from period to period.
Covenants and Restrictions Related to our Senior Notes
The indentures related to our outstanding senior notes contain restrictive covenants that, among other things, impose
limitations on the ability of DISH DBS and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) enter
into sale and leaseback transactions; (iii) pay dividends or make distributions on DISH DBS’ capital stock or
repurchase DISH DBS’ capital stock; (iv) make certain investments; (v) create liens; (vi) enter into certain
transactions with affiliates; (vii) merge or consolidate with another company; and (viii) transfer or sell assets.
Should we fail to comply with these covenants, all or a portion of the debt under the senior notes could become
immediately payable. The senior notes also provide that the debt may be required to be prepaid if certain change-in-
control events occur. As of the date of filing of this Annual Report on Form 10-K, DISH DBS was in compliance
with the covenants.
Other
We are also vulnerable to fraud, particularly in the acquisition of new subscribers. While we are addressing the
impact of subscriber fraud through a number of actions, there can be no assurance that we will not continue to
experience fraud, which could impact our subscriber growth and churn. Economic weakness may create greater
incentive for signal theft, piracy and subscriber fraud, which could lead to higher subscriber churn and reduced
revenue.