Dish Network 2013 Annual Report Download - page 62

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California, the same venue where the matter against Google Inc., Samsung Telecommunications America, LLC and
HTC America Inc. also was transferred. On December 11, 2013, the Court granted our motion for summary
judgment based on invalidity of the 797 patent. Mr. Tse filed a notice of appeal on January 8, 2014.
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the
asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction
that could require us to materially modify certain features that we currently offer to consumers. We cannot predict
with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.
Voom HD Holdings
In January 2008, Voom HD Holdings LLC (“Voom”) filed a lawsuit against our wholly-owned subsidiary DISH
Network L.L.C., in New York Supreme Court, alleging breach of contract and other claims arising from our
termination of the affiliation agreement governing carriage of certain Voom HD channels on the DISH branded pay-
TV service and seeking over $2.5 billion in damages.
On October 21, 2012, we entered into a confidential settlement agreement and release (the “Voom Settlement
Agreement”) with Voom and CSC Holdings, LLC (“Cablevision”), and for certain limited purposes, MSG Holdings,
L.P., The Madison Square Garden Company and EchoStar. The Voom Settlement Agreement resolved the litigation
between the parties relating to the Voom programming services. Pursuant to the terms of the Voom Settlement
Agreement, among other things: (i) the litigation between the parties relating to the Voom programming services
was dismissed with prejudice and the parties released each other for all claims against each other related thereto; (ii)
we agreed to pay $700 million in cash to Voom; (iii) DISH Media Holdings Corporation, our wholly-owned
subsidiary, agreed to enter into an agreement to transfer its ownership interest in Voom to Rainbow Programming
Holdings, LLC, an affiliate of Voom; and (iv) an affiliate of Cablevision agreed to enter into an agreement to
transfer certain of its wireless multichannel video distribution and data service licenses (the “MVDDS Licenses”) to
us. On October 23, 2012, we paid Voom $700 million.
Separately, we entered into a multi-year affiliation agreement with AMC Network Entertainment LLC, WE:
Women’s Entertainment LLC, The Independent Film Channel, The Sundance Channel L.L.C, each of which are
subsidiaries of AMC Networks Inc., and Fuse Channel LLC, a subsidiary of The Madison Square Garden Company,
for the carriage of AMC, WE, IFC, Sundance Channel and the Fuse channel.
Since the Voom Settlement Agreement and the multi-year affiliation agreement were entered into
contemporaneously, we accounted for all components of both agreements at fair value in the context of the Voom
Settlement Agreement. We determined the fair value of the multi-year affiliation agreement and the MVDDS
Licenses using a market-based approach and a probability-weighted discounted cash flow analysis, respectively.
Based on market data and similar agreements we have with other content providers, we allocated $54 million of the
payments under the multi-year affiliation agreement to the fair value of the Voom Settlement Agreement. The
resulting liability was recorded on our Consolidated Balance Sheets as “Accrued Programming” and is being
amortized as contra “Subscriber-related expenses” on a straight-line basis over the term of the agreement.
Evaluating all potential uses for the MVDDS Licenses, we assessed their fair value at $24 million and recorded
these on our Consolidated Balance Sheets as “FCC Authorizations.” The fair value of the Voom Settlement
Agreement was assessed at $730 million and was recorded as “Litigation expense” on our Consolidated Statement
of Operations and Comprehensive Income (Loss) for the year ended December 31, 2012.
Waste Disposal Inquiry
The California Attorney General and the Alameda County (California) District Attorney are investigating whether
certain of our waste disposal policies, procedures and practices are in violation of the California Business and
Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and
monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal
processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not
believe that the outcome will have a material effect on our results of operations, financial condition or cash flows.