Dish Network 2011 Annual Report Download - page 39

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We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to
us than if we were dealing with an unaffiliated party.
We do not have any agreements with EchoStar that would prevent either company from competing with the other.
We rely on key personnel and the loss of their services may negatively affect our businesses.
We believe that our future success will depend to a significant extent upon the performance of Charles W. Ergen,
our Chairman, and certain other executives. The loss of Mr. Ergen or of certain other key executives could have a
material adverse effect on our business, financial condition and results of operations. Although all of our executives
have executed agreements limiting their ability to work for or consult with competitors if they leave us, we do not
have employment agreements with any of them. Paul W. Orban, our Senior Vice President and Controller, provides
services to EchoStar pursuant to a management services agreement with EchoStar. In addition, Roger J. Lynch also
serves as Executive Vice President, Advanced Technologies of EchoStar. To the extent these and other officers are
performing services for EchoStar, this may divert their time and attention away from our business and may therefore
adversely affect our business.
Acquisition and Capital Structure Risks Affecting our Business
We have agreed to acquire certain spectrum and other assets from DBSD North America and TerreStar and we
have paid substantially all of the purchase price for these acquisitions. If we are unable to obtain certain
regulatory approvals and waivers, or they are granted in a manner that varies from the form we have requested,
the value of these assets may be impaired. To the extent we receive these approvals and waivers, we will be
required to make significant additional investments or partner with others to commercialize these assets.
During the first half of 2011, we entered into a transaction to acquire 100% of the equity of reorganized DBSD
North America for approximately $1.4 billion upon DBSD North America’s emergence from bankruptcy, which
included capital stock and convertible securities of, and certain claims related to, DBSD North America. In
addition, in June 2011, we entered into the TerreStar Transaction for a purchase price of $1.375 billion. We have
paid all but $30 million of the purchase price for the TerreStar Transaction, which will be paid upon closing of the
TerreStar Transaction, or upon certain other conditions being met under the asset purchase agreement. Additionally,
during the fourth quarter 2011, we and Sprint entered into the Sprint Settlement Agreement pursuant to which all
disputed issues relating to our acquisition of DBSD North America and the TerreStar Transaction were resolved
between us and Sprint, including, but not limited to, issues relating to costs allegedly incurred by Sprint to relocate
users from the spectrum now licensed to DBSD North America and TerreStar. Pursuant to the Sprint Settlement
Agreement, we made a net payment of approximately $114 million to Sprint. Our ultimate acquisition of 100% of
the equity of reorganized DBSD North America and consummation of the TerreStar Transaction are subject to
certain conditions, including approval by the FCC.
Under our agreements to acquire DBSD North America and purchase TerreStar’s assets, we paid substantially all of
the purchase price for both transactions prior to the receipt of certain regulatory approvals (the FCC with respect to
DBSD North America, and the FCC and Industry Canada with respect to TerreStar). On February 7, 2012, Industry
Canada approved the transfer of the Canadian spectrum licenses held by TerreStar to us. If the remaining required
approvals are not obtained, subject to certain exceptions, we have the right to require and direct the sale of some or
all of the assets of the relevant company to a third party and we would be entitled to the proceeds from such a sale.
These proceeds could, however, be substantially less than amounts we have paid in the respective transactions.
In addition, our consolidated FCC applications for approval of the license transfers from DBSD North America and
TerreStar were accompanied by requests for waiver of the integrated service requirement, the spare satellite
requirement and various technical provisions. Waiver of the integrated service requirement would allow DISH to
offer single-mode terrestrial terminals to customers who do not desire satellite functionality. The spectrum licenses
currently held by DBSD North America and TerreStar do not include a waiver of this integrated service
requirement. Our integrated service requirement waiver request has been opposed by certain parties, and there can
be no assurance that the FCC will approve it. If our FCC applications and waiver requests are not granted by the
FCC, or are granted in a manner that varies from the form we have requested, it could cause the value of these assets
to be impaired, potentially requiring us to take significant write-downs on these assets. We assess potential