Dish Network 2011 Annual Report Download - page 37

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used by us have either unproven track records or have experienced launch failures in the recent past. The risks of
launch delay and failure are usually greater when the launch vehicle does not have a track record of previous
successful flights. Launch failures result in significant delays in the deployment of satellites because of the need
both to construct replacement satellites, which can take more than three years, and to obtain other launch
opportunities. Significant construction or launch delays could materially and adversely affect our ability to generate
revenues. If we were unable to obtain launch insurance, or obtain launch insurance at rates we deem commercially
reasonable, and a significant launch failure were to occur, it could have a material adverse effect on our ability to
fund future satellite procurement and launch opportunities.
In addition, the occurrence of future launch failures for other operators may delay the deployment of our satellites
and materially and adversely affect our ability to insure the launch of our satellites at commercially reasonable
premiums, if at all. Please see further discussion under the caption “We generally do not have commercial
insurance coverage on the satellites we use and could face significant impairment charges if one of our satellites
fails” below.
Operational risks. Satellites are subject to significant operational risks while in orbit. These risks include
malfunctions, commonly referred to as anomalies, that have occurred in our satellites and the satellites of other
operators as a result of various factors, such as satellite manufacturers’ errors, problems with the power systems or
control systems of the satellites and general failures resulting from operating satellites in the harsh environment of
space.
Although we work closely with the satellite manufacturers to determine and eliminate the cause of anomalies in new
satellites and provide for redundancies of many critical components in the satellites, we may experience anomalies
in the future, whether of the types described above or arising from the failure of other systems or components.
Any single anomaly or series of anomalies could materially and adversely affect our operations and revenues and
our relationship with current customers, as well as our ability to attract new customers for our pay-TV services. In
particular, future anomalies may result in the loss of individual transponders on a satellite, a group of transponders
on that satellite or the entire satellite, depending on the nature of the anomaly. Anomalies may also reduce the
expected useful life of a satellite, thereby reducing the channels that could be offered using that satellite, or create
additional expenses due to the need to provide replacement or back-up satellites. You should review the disclosures
relating to satellite anomalies set forth under Note 7 in the Notes to our Consolidated Financial Statements in Item
15 of this Annual Report on Form 10-K.
Environmental risks. Meteoroid events pose a potential threat to all in-orbit satellites. The probability that
meteoroids will damage those satellites increases significantly when the Earth passes through the particulate stream
left behind by comets. Occasionally, increased solar activity also poses a potential threat to all in-orbit satellites.
Some decommissioned spacecraft are in uncontrolled orbits that pass through the geostationary belt at various
points, and present hazards to operational spacecraft, including our satellites. We may be required to perform
maneuvers to avoid collisions and these maneuvers may prove unsuccessful or could reduce the useful life of the
satellite through the expenditure of fuel to perform these maneuvers. The loss, damage or destruction of any of our
satellites as a result of an electrostatic storm, collision with space debris, malfunction or other event could have a
material adverse effect on our business, financial condition and results of operations.
We generally do not have commercial insurance coverage on the satellites we use and could face significant
impairment charges if one of our satellites fails.
Generally, we do not carry launch or in-orbit insurance on the satellites we use. We currently do not carry in-orbit
insurance on any of our satellites and generally do not use commercial insurance to mitigate the potential financial
impact of launch or in-orbit failures because we believe that the cost of insurance premiums is uneconomical relative
to the risk of such failures. If one or more of our in-orbit satellites fail, we could be required to record significant
impairment charges.