Dish Network 2013 Annual Report Download - page 121

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-11
DBS FCC Licenses. We combine all of our indefinite lived DBS FCC licenses that we currently utilize or plan to
utilize in the future into a single unit of accounting. The analysis encompasses future cash flows from satellites
transmitting from such licensed orbital locations, including revenue attributable to programming offerings from
such satellites, the direct operating and subscriber acquisition costs related to such programming, and future capital
costs for replacement satellites. Projected revenue and cost amounts include projected subscribers. In conducting
our annual impairment test in 2013, we determined that the estimated fair value of the DBS FCC licenses, calculated
using a discounted cash flow analysis, exceeded their carrying amounts.
Wireless Spectrum Licenses. In conducting our annual impairment test in 2013 for our 700 MHz and AWS-4
wireless spectrum licenses, we determined that the estimated fair value of these licenses exceeded their carrying
amount. The estimated fair value for the 700 MHz licenses was determined using the market approach and the
estimated fair value for the AWS-4 licenses was determined using a probability weighted analysis considering
estimated future cash flows discounted at a rate commensurate with the risk involved and the market approach.
Changes in circumstances or market conditions including significant changes in our estimates of future cash flows
or available market data could result in a write-down of any of these assets in the future.
Business Combinations
When we acquire a business, we allocate the purchase price to the various components of the acquisition based
upon the fair value of each component using various valuation techniques, including the market approach, income
approach and/or cost approach. The accounting standard for business combinations requires most identifiable
assets, liabilities, noncontrolling interests and goodwill acquired to be recorded at fair value. Transaction costs
related to the acquisition of the business are expensed as incurred. Costs associated with the issuance of debt associated
with a business combination are capitalized and included as a yield adjustment to the underlying debt’s stated rate.
Acquired intangible assets other than goodwill are amortized over their estimated useful lives unless the lives are
determined to be indefinite. Amortization of these intangible assets are recorded on a straight line basis over an average
finite useful life primarily ranging from approximately one to ten years or in relation to the estimated discounted cash
flows over the life of the intangible asset.
Other Investment Securities
Generally, we account for our unconsolidated equity investments under either the equity method or cost method of
accounting. Because these equity securities are generally not publicly traded, it is not practical to regularly estimate the
fair value of the investments; however, these investments are subject to an evaluation for other-than-temporary
impairment on a quarterly basis. This quarterly evaluation consists of reviewing, among other things, company
business plans and current financial statements, if available, for factors that may indicate an impairment of our
investment. Such factors may include, but are not limited to, cash flow concerns, material litigation, violations of debt
covenants and changes in business strategy. The fair value of these equity investments is not estimated unless there are
identified changes in circumstances that may indicate an impairment exists and these changes are likely to have a
significant adverse effect on the fair value of the investment.
Long-Term Deferred Revenue, Distribution and Carriage Payments
Certain programmers provide us up-front payments. Such amounts are deferred and recognized as reductions to
“Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (generally up to ten
years). The current and long-term portions of these deferred credits are recorded in our Consolidated Balance
Sheets in “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and
other long-term liabilities,” respectively.