Dish Network 2001 Annual Report Download - page 39

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37
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
We expect that consummation of the Hughes merger and related transactions and consummation of the
PanAmSat acquisition described in “Business – Recent Developments – The Proposed Merger with Hughes” would
have material effects on our results of operations and liquidity and capital resources. Our historical financial
information contained in this document does not give effect to either of these transactions, on a pro forma or any
other basis, and our liquidity and capital resources discussions do not take that transaction into account. The
EchoStar information statement, which we expect to file with the Securities and Exchange Commission in mid-
March and distribute to our common stockholders this summer, will include pro forma financial information of the
combined company as if the Hughes merger was consummated and for us as if the Pan AmSat acquisition was
consummated, each in accordance with the rules and regulations of the Securities and Exchange Commission.
Please see “Business – Recent Developments – The Proposed Merger with Hughes” for a description of how you
can obtain a copy of the EchoStar information statement once we file it with the Securities and Exchange
Commission.
Results of Operations
Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000.
Revenue. Total revenue for the year ended December 31, 2001 was $4.001 billion, an increase of
$1.286 billion compared to total revenue for the year ended December 31, 2000 of $2.715 billion. The increase in total
revenue was primarily attributable to continued DISH Network subscriber growth and higher average revenue per
subscriber. Assuming a continued slow economy, we expect that our revenues will increase 20% to 25% in 2002 as the
number of DISH Network subscribers increases.
DISH Network subscription television services revenue totaled $3.588 billion for the year ended
December 31, 2001, an increase of $1.241 billion compared to the same period in 2000. DISH Network subscription
television services revenue principally consists of revenue from basic, premium and pay-per-view subscription
television services. This increase was directly attributable to continued DISH Network subscriber growth and higher
average revenue per subscriber. DISH Network added approximately 1.57 million net new subscribers for the year
ended December 31, 2001 compared to approximately 1.85 million net new subscriber additions during the same
period in 2000. We believe the reduction in net new subscribers for the year ended December 31, 2001 primarily
resulted from the slowing economy and increased churn. As of December 31, 2001, we had approximately
6.83 million DISH Network subscribers compared to approximately 5.26 million at December 31, 2000, an increase of
approximately 30%. DISH Network subscription television services revenue will continue to increase to the extent we
are successful in increasing the number of DISH Network subscribers and maintaining or increasing revenue per
subscriber. While there can be no assurance, notwithstanding our expectation of a continued slow U.S. economy, we
expect to end 2002 with more than 8 million DISH Network subscribers.
Monthly average revenue per subscriber was approximately $49.32 during the year ended December 31, 2001
and approximately $45.33 during the same period in 2000. The increase in monthly average revenue per subscriber is
primarily attributable to $1.00 price increases in both May 2000 and February 2001, the increased availability of local
channels by satellite, the introduction of our high-end America’s Top 150 basic programming package during April
2000, together with an increase in subscriber penetration in our higher priced Digital Home Plans. This increase is also
attributable to a change in marketing promotions from 2000 to 2001. From August 2000 to January 31, 2001, we
marketed a promotion offering consumers free premium movie channels. Under this promotion, all new subscribers
who ordered certain qualifying programming packages and any or all of our four premium movie packages between
August 1, 2000 and January 31, 2001, received those premium movie packages free for three months. This promotion
had a negative impact on monthly average revenue per subscriber during 2000 since no premium movie package
revenue was received from participating subscribers for the term of each participating subscriber’s free service. The
increase from discontinuing our free premium movie channel promotion was partially offset by the introduction of our I
Like 9 promotion, discussed below, during August 2001. While there can be no assurance, we expect a modest
increase in monthly average revenue per subscriber during 2002.