Dish Network 2013 Annual Report Download - page 117

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
1. Organization and Business Activities
Principal Business
DISH Network Corporation is a holding company. Its subsidiaries (which together with DISH Network
Corporation are referred to as “DISH Network,” the “Company,” “we,” “us” and/or “our,” unless otherwise
required by the context) operate two primary business segments.
x DISH. The DISH branded pay-TV service (“DISH”) had 14.057 million subscribers in the United States as of
December 31, 2013. The DISH branded pay-TV service consists of Federal Communications Commission
(“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”)
spectrum, our satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased
fiber network, in-home service and call center operations, and certain other assets utilized in our operations. In
addition, we market broadband services under the dishNET™ brand.
x Wireless. In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were
granted to us by the FCC in February 2009 subject to certain interim and final build-out requirements. On
March 9, 2012, we completed the acquisitions of 100% of the equity of reorganized DBSD North America, Inc.
(“DBSD North America”) and substantially all of the assets of TerreStar Networks, Inc. (“TerreStar”), pursuant
to which we acquired, among other things, 40 MHz of AWS-4 wireless spectrum licenses held by DBSD North
America (the “DBSD Transaction”) and TerreStar (the “TerreStar Transaction”). The financial results of
DBSD North America and TerreStar are included in our financial results beginning March 9, 2012. The total
consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion. The
FCC issued an order, which became effective on March 7, 2013, modifying our AWS-4 licenses to expand our
terrestrial operating authority. That order imposed certain limitations on the use of a portion of the spectrum
and also mandated certain interim and final build-out requirements for the licenses. As we review our options
for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have
to make significant investments related to, among other things, research and development, wireless testing and
wireless network infrastructure. See Note 16 for further discussion.
Discontinued Operations - Blockbuster. On April 26, 2011, we completed the acquisition of most of the assets of
Blockbuster, Inc. (the “Blockbuster Acquisition”). Blockbuster primarily offered movies and video games for sale
and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com
website and the BLOCKBUSTER On Demand® service. Since the Blockbuster Acquisition, we continually
evaluated the impact of certain factors, including, among other things, competitive pressures, the ability of
significantly fewer company-owned domestic retail stores to continue to support corporate administrative costs, and
other issues impacting the store-level financial performance of our company-owned domestic retail stores. These
factors, among others, previously led us to close a significant number of company-owned domestic retail stores
during 2012 and 2013. On November 6, 2013, we announced that Blockbuster would close all of its remaining
company-owned domestic retail stores and discontinue the Blockbuster by-mail DVD service. As of December 31,
2013, Blockbuster had ceased all material operations. See Note 10 for further discussion.