Dish Network 2011 Annual Report Download - page 18

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Satellites Under Construction
We have agreed to lease capacity on one satellite from EchoStar that is currently under construction.
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. EchoStar XVI will replace the
satellites currently at the 61.5 degree orbital location and will allow us to offer other value-added services.
We will lease certain satellite capacity from EchoStar on EchoStar XVI after its service commencement
date and this lease generally terminates upon the earlier of: (i) the end of life or replacement of the
satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on which service is being provided
under the agreement fails; or (iv) ten years following the actual service commencement date. Upon
expiration of the initial term, we have the option to renew on a year-to-year basis through the end of life of
the satellite. There can be no assurance that any options to renew this agreement will be exercised.
EchoStar XVI is expected to be launched during the second half of 2012.
Satellite Anomalies
Operation of our pay-TV service requires that we have adequate satellite transmission capacity for the programming
we offer. Moreover, current competitive conditions require that we continue to expand our offering of new
programming, particularly by expanding local HD coverage and offering more HD national channels. While we
generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity
to recover the transmission of certain critical programming, our backup capacity is limited.
In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity
or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could
result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as
necessary to remain competitive and thus may have a material adverse effect on our business, financial condition
and results of operations.
Prior to 2011, certain satellites in our fleet experienced anomalies, some of which have had a significant adverse
impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies
will not further impact the remaining useful life and/or commercial operation of any of these satellites. See “Long-
Lived Satellite Assets” below for further discussion of evaluation of impairment and Note 7 in the Notes to our
Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K. There can be no assurance that
we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. We do
not anticipate carrying insurance for any of the in-orbit satellites that we use, and we will bear the risk associated
with any in-orbit satellite failures. Recent developments with respect to certain of our satellites are discussed below.
Owned Satellites
EchoStar XIV. EchoStar XIV was designed to meet a minimum 15-year useful life. During September 2011, we
determined that EchoStar XIV experienced a solar array anomaly that reduced the total power available for use by
the spacecraft. While this anomaly did not reduce the estimated useful life of the satellite to less than 15 years or
impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its
useful life or impact its commercial operation.