Dish Network 2015 Annual Report Download - page 76

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During the years ended December 31, 2015 and 2014, the amount of equipment capitalized under our lease program for
new DISH branded pay-TV subscribers totaled $429 million and $543 million, respectively. This decrease in capital
expenditures under our lease program for new DISH branded pay-TV subscribers resulted primarily from a decrease in
hardware costs per activation, discussed above.
To remain competitive we upgrade or replace subscriber equipment periodically as technology changes, and the costs
associated with these upgrades may be substantial. To the extent technological changes render a portion of our existing
equipment obsolete, we would be unable to redeploy all returned equipment and consequently would realize less benefit
from the Pay-TV SAC reduction associated with redeployment of that returned lease equipment.
Our “Subscriber acquisition costs” and “Pay-TV SAC” may materially increase in the future to the extent that we, among
other things, transition to newer technologies, introduce more aggressive promotions, or provide greater equipment
subsidies. See further information under “Liquidity and Capital Resources — Subscriber Acquisition and Retention
Costs.”
FCC auction expense. On October 1, 2015, Northstar Wireless and SNR Wireless notified the FCC that they would not
be paying the gross winning bid amounts on certain AWS-3 Licenses. As a result, the FCC retained those AWS-3
Licenses and Northstar Wireless and SNR Wireless owed the FCC an additional interim payment of approximately $516
million. See Note 15 in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for
further information.
Depreciation and amortization. “Depreciation and amortization” expense totaled $1.000 billion during the year ended
December 31, 2015, a $78 million or 7.2% decrease compared to the same period in 2014. During the year ended
December 31, 2015, we had a decrease in depreciation expense from equipment leased to new and existing DISH
branded pay-TV subscribers and from certain assets that support the DISH branded pay-TV service, which became fully
depreciated during 2015. In addition, depreciation expense was lower in 2015 as a result of certain satellites transferred
to EchoStar as part of the Satellite and Tracking Stock Transaction.
Impairment of long-lived assets. “Impairment of long-lived assets” of $123 million during the year ended December 31,
2015 resulted from an impairment of the D1 satellite and related ground equipment. See Note 8 in the Notes to our
Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” totaled $494 million during
the year ended December 31, 2015, a decrease of $117 million or 19.2% compared to the same period in 2014. This
decrease was primarily related to an increase in capitalized interest principally associated with wireless spectrum and a
reduction in interest expense from debt redemptions during 2015 and 2014, partially offset by interest expense associated
with the issuance in November 2014 of our 5 7/8% Senior Notes due 2024. On October 27, 2015, the FCC granted the
Northstar Licenses to Northstar Wireless and the SNR Licenses to SNR Wireless. We began capitalizing interest
expense related to the commercialization of these wireless spectrum licenses in the fourth quarter 2015. See Note 2 in
the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for further information.
Other, net. “Other, net” income was $278 million during the year ended December 31, 2015, compared to expense of
$69 million for the same period in 2014. The year ended December 31, 2015 was positively impacted by net realized
and/or unrealized gains on our marketable investment securities and derivative financial instruments. The year ended
December 31, 2014 was negatively impacted primarily by unrealized losses on our derivative financial instruments. See
Note 6 in the Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K for further
information.