Dish Network 2010 Annual Report Download - page 140

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-55
The management services agreement automatically renewed on January 1, 2011 for an additional one-year
period until January 1, 2012 and renews automatically for successive one-year periods thereafter, unless
terminated earlier: (i) by EchoStar at any time upon at least 30 days prior notice; (ii) by us at the end of any
renewal term, upon at least 180 days notice; or (iii) by us upon notice to EchoStar, following certain
changes in control.
Satellite Capacity Leased to EchoStar. During 2009, we entered into a satellite capacity agreement
pursuant to which EchoStar leases certain satellite capacity from us on EchoStar I. The fee for the services
provided under this satellite capacity agreement depends, among other things, upon the orbital location of
the satellite and the length of the lease. The lease generally terminates upon the earlier of: (i) the end of
life or replacement of the satellite (unless EchoStar determines to renew on a year-to-year basis); (ii) the
date the satellite fails; (iii) the date the transponder on which service is being provided fails; or (iv) a
certain date, which depends, among other things, upon the estimated useful life of the satellite, whether the
replacement satellite fails at launch or in orbit prior to being placed into service, and the exercise of certain
renewal options. EchoStar generally has the option to renew this lease on a year-to-year basis through the
end of the satellite’s life. There can be no assurance that any options to renew this agreement will be
exercised.
Real Estate Lease Agreement. During 2008, we entered into a sublease for space at 185 Varick Street,
New York, New York to EchoStar for a period of approximately seven years. The rent on a per square
foot basis for this sublease was comparable to per square foot rental rates of similar commercial property in
the same geographic area at the time of the sublease, and EchoStar is responsible for its portion of the
taxes, insurance, utilities and maintenance of the premises.
Packout Services Agreement. In connection with the Spin-off, we entered into a packout services
agreement with EchoStar, whereby EchoStar had the right, but not the obligation, to engage us to package
and ship satellite receivers to customers that are not associated with us. This agreement expired on January
1, 2010.
“Satellite and transmission expenses – EchoStar”
Broadcast Agreement. In connection with the Spin-off, we entered into a broadcast agreement pursuant to
which EchoStar provides certain broadcast services to us, including teleport services such as transmission
and downlinking, channel origination services, and channel management services for a period ending on
January 1, 2012. We may terminate channel origination services and channel management services for any
reason and without any liability upon at least 60 days notice to EchoStar. If we terminate teleport services
for a reason other than EchoStar’s breach, we are obligated to pay EchoStar the aggregate amount of the
remainder of the expected cost of providing the teleport services. The fees for services provided under the
broadcast agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the
products and services provided.
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we entered into a
broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection
with our carriage of certain sports related programming. The term of this agreement is for ten years. If we
terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse
EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably
mitigate. The fees for the broadcast services provided under this agreement depend, among other things,
upon the cost to develop and provide such services.
Satellite Capacity Leased from EchoStar. In connection with the Spin-off and subsequent to the Spin-off,
we entered into certain satellite capacity agreements pursuant to which we lease certain satellite capacity on
certain satellites owned or leased by EchoStar. The fees for the services provided under these satellite
capacity agreements depend, among other things, upon the orbital location of the applicable satellite and
the length of the lease. The term of each of the leases is set forth below: