Dish Network 2011 Annual Report Download - page 143

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DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-49
Satellite-Related Obligations
Satellites Under Construction. As of December 31, 2011, we have agreed to lease capacity on one satellite from
EchoStar that is currently under construction. Future commitments related to this satellite are included in the table
above under “Satellite-related obligations.”
x EchoStar XVI. During December 2009, we entered into a ten-year transponder service agreement with
EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, which is expected to be launched during
the second half of 2012.
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 $185 million over approximately the next three years.
In addition, during the third quarter 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, 2011, the remaining obligation under this agreement is the guarantee of $502
million.
As of December 31, 2011, we have not recorded a liability on the balance sheet for any of these guarantees.
Purchase Obligations
Our 2012 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 pay-TV service. 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 $409 million, $263 million and $189 million in 2011, 2010 and 2009,
respectively. The increase in rent expense from 2010 to 2011 was primarily attributable to building rent expense
associated with our Blockbuster operations which commenced April 26, 2011.