Dish Network 2015 Annual Report Download - page 158

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-54
FCC SNR Guaranty and the date such guaranteed payments are paid: (i) SNR Wireless’ payment obligations to
American III under the SNR Credit Agreement will be subordinated to such guaranteed payments; and (ii) DISH
Network or American III will withhold exercising certain rights as a creditor of SNR Wireless.
Northstar Wireless is a wholly-owned subsidiary of Northstar Spectrum. Through American II, we own an 85%
non-controlling interest in Northstar Spectrum. Northstar Manager owns a 15% controlling interest in, and is the
sole manager of, Northstar Spectrum. Northstar Spectrum is governed by a limited liability company agreement by
and between American II and Northstar Manager (the “Northstar Spectrum LLC Agreement”). Pursuant to the
Northstar Spectrum LLC Agreement, American II and Northstar Manager made pro-rata equity contributions in
Northstar Spectrum. As of October 1, 2015, the total equity contributions from American II and Northstar Manager
to Northstar Spectrum were approximately $750 million and $133 million, respectively. As of October 1, 2015, the
total loans from American II to Northstar Wireless under the Northstar Credit Agreement for payments to the FCC
related to the Northstar Licenses were approximately $5.070 billion.
SNR Wireless is a wholly-owned subsidiary of SNR HoldCo. Through American III, we own an 85% non-
controlling interest in SNR HoldCo. SNR Management, owns a 15% controlling interest in, and is the sole manager
of, SNR HoldCo. SNR HoldCo is governed by a limited liability company agreement by and between American III
and SNR Management (the “SNR HoldCo LLC Agreement”). Pursuant to the SNR HoldCo LLC Agreement,
American III and SNR Management made pro-rata equity contributions in SNR HoldCo. As of October 1, 2015, the
total equity contributions from American III and SNR Management to SNR HoldCo were approximately $524
million and $93 million, respectively. As of October 1, 2015, the total loans from American III to SNR Wireless
under the SNR Credit Agreement for payments to the FCC related to the SNR Licenses were approximately $3.847
billion.
After Northstar Wireless and SNR Wireless satisfied their respective payments to the FCC on October 1, 2015 for
the Northstar Licenses and the SNR Licenses, and the Northstar Interim Payment and the SNR Interim Payment
(which included an additional bid withdrawal payment), our total non-controlling debt and equity investments in the
Northstar Entities and the SNR Entities for payments to the FCC related to the AWS-3 Licenses were approximately
$10.191 billion. Under the applicable accounting guidance in ASC 810, Northstar Spectrum and SNR HoldCo are
considered variable interest entities and, based on the characteristics of the structure of these entities and in
accordance with the applicable accounting guidance, we have consolidated these entities into our financial
statements beginning in the fourth quarter 2014. See Note 2 for further information.
On October 27, 2015, the FCC granted the Northstar Licenses to Northstar Wireless and the SNR Licenses to SNR
Wireless, respectively, which are recorded in “FCC authorizations” on our Consolidated Balance Sheets. The AWS-
3 Licenses are subject to certain interim and final build-out requirements. By October 2021, Northstar Wireless and
SNR Wireless must provide reliable signal coverage and offer service to at least 40% of the population in each area
covered by an individual AWS-3 License (the “AWS-3 Interim Build-Out Requirement”). By October 2027,
Northstar Wireless and SNR Wireless must provide reliable signal coverage and offer service to at least 75% of the
population in each area covered by an individual AWS-3 License (the “AWS-3 Final Build-Out Requirement”). If
Northstar Wireless or SNR Wireless fails to meet the AWS-3 Interim Build-Out Requirement, the AWS-3 License
term and the AWS-3 Final Build-Out Requirement may be accelerated by two years (from October 2027 to October
2025) for each AWS-3 License area in which it fails to meet the requirement. If Northstar Wireless or SNR
Wireless fails to meet the AWS-3 Final Build-Out Requirement, its authorization for each AWS-3 License area in
which it fails to meet the requirement may terminate.
We may need to make significant additional loans to the Northstar Entities and to the SNR Entities, or they may
need to partner with others, so that the Northstar Entities and the SNR Entities may commercialize, build-out and
integrate the Northstar Licenses and the SNR Licenses, and comply with regulations applicable to the Northstar
Licenses and the SNR Licenses. Depending upon the nature and scope of such commercialization, build-out,
integration efforts, and regulatory compliance, any such loans or partnerships could vary significantly. We may
need to raise significant additional capital in the future, which may not be available on acceptable terms or at all, to
make further investments in the Northstar Entities and the SNR Entities. There can be no assurance that we will be
able to obtain a profitable return on our non-controlling investments in the Northstar Entities and the SNR Entities.