Dish Network 2015 Annual Report Download - page 45

35
Officer, is employed by both us and EchoStar. In addition, as a result of the Satellite and Tracking Stock
Transaction discussed in Note 19 in the Notes to our Consolidated Financial Statements in this Annual Report
on Form 10-K, we own shares of a series of preferred tracking stock issued by EchoStar and shares of a series
of preferred tracking stock issued by Hughes Satellite Systems Corporation (“HSSC”), a subsidiary of EchoStar
(collectively, the “Tracking Stock”). The Tracking Stock generally tracks the residential retail satellite
broadband business of Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of HSSC,
including without limitation the operations, assets and liabilities attributed to the Hughes residential retail
satellite broadband business (collectively, the “Hughes Retail Group”). The shares of the Tracking Stock issued
to us represent an aggregate 80% economic interest in the Hughes Retail Group. Although our investment in
the Tracking Stock represents an aggregate 80% economic interest in the Hughes Retail Group, we have no
operational control or significant influence over the Hughes Retail Group business, and currently there is no
public market for the Tracking Stock. Further, effective July 1, 2012, we and EchoStar formed Sling TV
Holding L.L.C. (“Sling TV Holding,” formerly known as DISH Digital Holding L.L.C.), which was owned
two-thirds by us and one-third by EchoStar. Sling TV Holding was formed to develop and commercialize
certain advanced technologies. Effective August 1, 2014, EchoStar and Sling TV Holding entered into an
Exchange Agreement pursuant to which, among other things, Sling TV Holding distributed certain assets to
EchoStar and EchoStar reduced its interest in Sling TV Holding to a ten percent non-voting interest. We now
have a ninety percent equity interest and a 100% voting interest in Sling TV Holding. During 2015, we
launched our Sling domestic and Sling Latino services. See Note 19 in the Notes to our Consolidated Financial
Statements in this Annual Report on Form 10-K for additional information.
x Intercompany agreements with EchoStar. In connection with and following the Spin-off, we and EchoStar have
entered into certain agreements pursuant to which we obtain certain products, services and rights from
EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have
indemnified each other against certain liabilities arising from our respective businesses. See Note 19 in the
Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for further information on
our Related Party Transactions with EchoStar. The terms of certain of these agreements were established while
EchoStar was a wholly-owned subsidiary of us and were not the result of arm’s length negotiations. The
allocation of assets, liabilities, rights, indemnifications and other obligations between EchoStar and us under the
separation and other intercompany agreements we entered into with EchoStar, in connection with the Spin-off,
may have been different if agreed to by two unaffiliated parties. Had these agreements been negotiated with
unaffiliated third parties, their terms may have been more favorable, or less favorable, to us. In addition,
conflicts could arise between us and EchoStar in the interpretation or any extension or renegotiation of these
existing agreements.
x Additional intercompany transactions. EchoStar and its subsidiaries have and will continue to enter into
transactions with us and our subsidiaries. Although the terms of any such transactions will be established based
upon negotiations between EchoStar and us and, when appropriate, subject to the approval of a committee of
the non-interlocking directors or in certain instances non-interlocking management, there can be no assurance
that the terms of any such transactions will be as favorable to us or our subsidiaries or affiliates as may
otherwise be obtained between unaffiliated parties.
x Business opportunities. We have historically retained, and in the future may acquire, interests in various
companies that have subsidiaries or controlled affiliates that own or operate domestic or foreign services that
may compete with services offered by EchoStar. We may also compete with EchoStar when we participate in
auctions for spectrum or orbital slots for our satellites. In addition, EchoStar may in the future use its satellites,
uplink and transmission assets to compete directly against us in the subscription television business.
We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to us
than if we were dealing with an unaffiliated party.
Other than certain arrangements with EchoStar that we entered into in connection with Sling TV Holding, which, subject
to certain exceptions, limit EchoStar’s and our ability to operate an IPTV service other than operated by Sling TV
Holding, we do not have agreements with EchoStar that would prevent either company from competing with the other.