Dish Network 2009 Annual Report Download - page 131

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-41
Guarantees
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the
guarantor under those capital leases for payments totaling approximately $422 million over the next five years that are
not included in the table above.
In addition, during the third quarter of 2009, EchoStar entered into a new satellite transponder service agreement for
Nimiq 5 through 2024. We sublease this capacity from EchoStar and also guarantee a certain portion of its obligation
under this agreement through 2019. As of December 31, 2009, the remaining obligation under this agreement was
$595 million and is included in the table above.
As of December 31, 2009, we have not recorded a liability on the balance sheet for any of these guarantees.
Purchase Obligations
Our 2010 purchase obligations primarily consist of binding purchase orders for receiver systems and related
equipment, digital broadcast operations, satellite and transponder leases, engineering and for products and services
related to the operation of our DISH Network. Our purchase obligations also include certain guaranteed fixed
contractual commitments to purchase programming content. Our purchase obligations can fluctuate significantly
from period to period due to, among other things, management’s control of inventory levels, and can materially
impact our future operating asset and liability balances, and our future working capital requirements.
Programming Contracts
In the normal course of business, we enter into contracts to purchase programming content in which our payment
obligations are fully contingent on the number of subscribers to whom we provide the respective content. These
programming commitments are not included in the “Commitments” table above. The terms of our contracts
typically range from one to ten years with annual rate increases. Our programming expenses will continue to increase
to the extent we are successful growing our subscriber base. In addition, our margins may face further downward
pressure from price increases and the renewal of long term programming contracts on less favorable pricing terms.
Rent Expense
Total rent expense for operating leases was $189 million, $204 million and $75 million in 2009, 2008 and 2007,
respectively. The increase in rent expense from 2007 to 2008 primarily resulted from costs associated with satellite
and transponder capacity leases on satellites that were distributed to EchoStar in connection with the Spin-off.
Patents and Intellectual Property
Many entities, including some of our competitors, now have and may in the future obtain patents and other intellectual
property rights that cover or affect products or services directly or indirectly related to those that we offer. We may not
be aware of all patents and other intellectual property rights that our products may potentially infringe. Damages in
patent infringement cases can include a tripling of actual damages in certain cases. Further, we cannot estimate the
extent to which we may be required in the future to obtain licenses with respect to patents held by others and the
availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights
with respect to components within our direct broadcast satellite system. We cannot be certain that these persons do not
own the rights they claim, that our products do not infringe on these rights, that we would be able to obtain licenses
from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be
able to redesign our products to avoid infringement.