Dish Network 1997 Annual Report Download - page 32

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Results of Operations
Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996.
Revenue. Total revenue in 1997 was $477 million, an increase of 140%, or $278 million, as compared to total
revenue of $199 million in 1996. The increase in total revenue in 1997 was primarily attributable to the operation of
the DISH Network during the entirety of 1997, combined with DISH Network subscriber growth. EchoStar expects
this trend to continue as the number of DISH Network subscribers increases, and as EchoStar develops its
Technology and Satellite Services businesses. Consistent with the increases in total revenue during 1997, EchoStar
experienced a corresponding increase in trade accounts receivable at December 31, 1997.
DISH Network subscription television services revenue totaled $299 million during 1997, an increase of
$249 million compared to 1996. This increase was directly attributable to the operation of the DISH Network during
the entirety of 1997, combined with the increase in the number of DISH Network subscribers. Average monthly
revenue per subscriber approximated $39 during 1997 compared to approximately $36 in 1996. The increase in
monthly revenue per subscriber was primarily due to additional channels added upon commencement of operations
of EchoStar II. DISH Network subscription television services revenue consists primarily of revenue from basic,
premium and pay-per-view subscription television services.
Other DISH Network revenue totaled $45 million in 1997, an increase of $35 million compared to 1996.
Other DISH Network revenue primarily consists of incremental revenues over advertised subscription rates realized
from the 1996 Promotion, as well as installation revenue and loan origination and participation income. In 1997,
EchoStar recognized incremental revenues related to the 1996 Promotion of approximately $40 million, an increase
of $35 million over 1996. EchoStar expects incremental revenue related to the 1996 Promotion to decline at an
accelerated rate in future periods and to cease during the third quarter of 1998.
During 1997, DTH equipment sales and integration services totaled $92 million. EchoStar currently has
agreements for the sale of digital satellite broadcasting equipment using EchoStar technology to two international
DTH service operators. EchoStar realized revenues of $74 million related to these agreements during 1997. Of this
amount, $59 million related to sales of digital set-top boxes and other DTH equipment while $15 million resulted
from the provision of integration services (revenue from uplink center design, construction oversight, and other
project integration services). DBS accessory sales totaled $11 million during 1997, an $8 million increase compared
to 1996.
While EchoStar continues to actively pursue other distribution and integration service opportunities, no
assurance can be given that any such additional negotiations will be successful. EchoStar’s future revenue from the
sale of DTH equipment and integration services in international markets depends largely on the success of the DBS
operator in that country, which, in turn, depends on other factors, such as the level of consumer acceptance of DBS
products and the intensity of competition for international subscription television subscribers. No assurance can be
given regarding the level of expected future revenues which may be generated from EchoStar’s alliances with
foreign DTH operators.
DTH equipment sales and integration services revenue totaled $78 million during 1996. These revenues
consisted primarily of sales of EchoStar Receiver Systems and related accessories prior to the August 1996
nationwide rollout of the 1996 Promotion.
Satellite services revenue totaled $11 million during 1997, an increase of $5 million, or 91%, compared to
1996. These revenues include, among other things, fees charged to content providers for signal carriage and
revenues earned from business television (BTV) customers for the broadcast of organizationally specific
programming. The increase in satellite services revenue was primarily attributable to an increase in the number of
content providers, increased usage by EchoStar’s BTV customers, and an entire year of operation in 1997.
Other revenue totaled $30 million for 1997, a decrease of $25 million compared to $55 million in 1996.
Other revenue principally related to domestic and international sales of C-band products and net domestic C-band
programming revenues. This decrease resulted from the world-wide decrease in demand for C-band products and
services. Effective January 1, 1998, EchoStar ceased operation of its C-band programming business.