Dish Network 2008 Annual Report Download - page 51

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
41
The Spin-off. Effective January 1, 2008, we completed the separation of the assets and businesses we owned and
operated historically into two companies (the “Spin-off”):
x DISH Network, through which we retain our pay-TV business, and
x EchoStar Corporation (“EchoStar”) which operates the digital set-top box business, and holds certain
satellites, uplink and satellite transmission assets, real estate and other assets and related liabilities formerly
held by DISH Network.
DISH Network and EchoStar now operate as separate public companies, and neither entity has any ownership
interest in the other. However, a majority of the voting power of the shares of both companies is controlled by our
Chairman, President and Chief Executive Officer, Charles W. Ergen. In connection with the Spin-off, DISH
Network entered into certain agreements with EchoStar to define responsibility for obligations relating to, among
other things, set-top box sales, transition services, taxes, employees and intellectual property, which impact several
of our key operating metrics. We have entered into certain agreements with EchoStar subsequent to the Spin-off and
we may enter into additional agreements with EchoStar in the future.
Prior to the Spin-off, our set-top boxes and other subscriber equipment as well as satellite, uplink and transmission
services were provided internally at cost. Following the Spin-off, we purchase set-top boxes from EchoStar at its
cost plus a fixed margin, which varies depending on a number of factors including the types of set-top boxes that we
purchase. In addition, we now purchase and/or lease satellite, uplink and transmission services from EchoStar at its
cost plus a fixed margin. The prices that we pay for these services depend upon the nature of the services that we
obtain from EchoStar and the market competition for these services. Furthermore, as part of the Spin-off, certain
real estate was contributed to EchoStar and leased back to us and we now incur additional costs in the form of rent
paid on these leases. These additional costs are not reflected in our historical consolidated financial statements for
periods prior to January 1, 2008.