Dish Network 2011 Annual Report Download - page 155

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-61
The management services agreement automatically renewed on January 1, 2012 for an additional one-year period
until January 1, 2013 and renews automatically for successive one-year periods thereafter, unless terminated earlier:
(i) by EchoStar at any time upon at least 30 days 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.
“Satellite and transmission expenses – EchoStar”
Broadcast Agreement. In connection with the Spin-off, we and EchoStar entered into a broadcast agreement
pursuant to which EchoStar provided 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 (the “Prior Broadcast Agreement”). We had the ability to 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 terminated teleport services for a reason other than our breach, we were obligated to pay EchoStar the
aggregate amount of the remainder of the expected cost of providing the teleport services. The fees for the services
provided under the Prior Broadcast Agreement were calculated at cost plus a fixed margin, which varied depending
on the nature of the products and services provided.
Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast
Agreement”) pursuant to which EchoStar will continue to provide broadcast services to us, for the period from
January 1, 2012 to December 31, 2016. The material terms of the 2012 Broadcast Agreement are substantially the
same as the material terms of the Prior Broadcast Agreement, except that: (i) the fees for services provided under
the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a
fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus
a fixed margin, which will depend on the nature of the services provided; and (ii) if we terminate the teleport
services provided under the 2012 Broadcast 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. At the commencement of the 2012 Broadcast Agreement the aggregate pricing for the services
provided thereunder was substantially the same as the aggregate pricing for the services provided under the Prior
Broadcast Agreement at the time of its expiration.
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar 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.