Dish Network 2010 Annual Report Download - page 145

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-60
International Programming Rights Agreement. During the years ended December 31, 2010, 2009 and
2008, we purchased approximately $2 million, $8 million and $8 million, respectively, of certain
international rights for sporting events from EchoStar, included in “Subscriber-related expenses” on the
Consolidated Statements of Operations and Comprehensive Income (Loss), of which EchoStar only
retained a certain portion.
Acquisition of South.com, L.L.C. During October 2010, we purchased all of South.com, L.L.C. from
EchoStar and another party for $5 million. South.com, L.L.C. is an entity that holds certain authorizations
for multichannel video and data distribution service (MVDDS) spectrum in the United States.
Other Agreements
In November 2009, Mr. Roger Lynch became employed by both us and EchoStar as Executive Vice
President. Mr. Lynch is responsible for the development and implementation of advanced technologies
that are of potential utility and importance to both us and EchoStar. Mr. Lynch’s compensation consists of
cash and equity compensation and is borne by both EchoStar and us.
Related Party Transactions with NagraStar L.L.C.
Prior to the Spin-off, we owned 50% of NagraStar L.L.C. (“NagraStar”), which was contributed to
EchoStar in connection with the Spin-off. NagraStar is a joint venture between EchoStar and Nagra USA,
Inc. that is our provider of encryption and related security systems intended to assure that only paying
customers have access to our programming. During the years ended December 31, 2010, 2009 and 2008,
we incurred security access and other fees and purchased security access devices at an aggregate cost to us
of $80 million, $82 million and $59 million, respectively, from NagraStar. As of December 31, 2010 and
2009, amounts payable to NagraStar totaled $13 million and $17 million, respectively.
18. Subsequent Events
DBSD North America
On February 1, 2011, we entered into a commitment to provide the Credit Facility to DBSD North America
and certain of its affiliates in connection with filings by DBSD North America and such affiliates for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Credit Facility, which remains subject to
approval by the Bankruptcy Court, will consist of a non-revolving, multiple draw term loan in the
aggregate principal amount of $87.5 million, with drawings subject to the terms and conditions set forth in
the Credit Facility.
On February 1, 2011, we also entered into an investment agreement pursuant to which we have committed
to acquire 100% of the equity of reorganized DBSD North America for approximately $1.0 billion subject
to certain adjustments, including interest accruing on DBSD North America’s existing debt. This
transaction is to be completed upon satisfaction of certain conditions, including approval by the FCC and
DBSD North America’s emergence from bankruptcy. Under the investment agreement, which remains
subject to approval by the Bankruptcy Court, we have also committed to support DBSD North America’s
plan of reorganization under which: (i) all claims under their 7.5% Convertible Senior Secured Notes due
2009, issued under that certain indenture dated August 15, 2005, as supplemented and amended, among
DBSD North America, the guarantors named therein, and The Bank of New York Mellon (f/k/a The Bank
of New York), as trustee, will be paid in full; (ii) all of DBSD North America’s obligations under the
Credit Facility will be paid in full; (iii) the holders of general unsecured claims of DBSD North America
shall receive partial payment; and (iv) certain additional claims in bankruptcy will also be paid in full.
As of December 31, 2010, we held $56 million of DBSD North America’s 7.5% Convertible Senior
Secured Notes due 2009 and a $47 million line of credit pursuant to the Amended and Restated Revolving
Credit Agreement, dated as of April 7, 2008 between DISH Network and DBSD North America, both of
which are included in “Marketable and other investment securities” on our Consolidated Balance Sheets.