Dish Network 2015 Annual Report Download - page 176

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-72
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
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 “Pay-TV Satellites” in Note 8 for further information. The term of each lease is set forth
below:
x 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. The satellite capacity agreement for EchoStar I expired on November 30, 2015.
x 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. This lease terminated in November 2015.
x 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.
x 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.
x 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