Dish Network 2014 Annual Report Download - page 20

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85% non-controlling interest in SNR Holdco. SNR Wireless Management, LLC (“SNR Management” and
collectively with SNR Holdco and SNR Wireless, the “SNR Entities”) owns a 15% controlling interest in, and is the
sole manager of, SNR Holdco. SNR Holdco is governed by a limited liability company agreement by and between
American III and SNR Management (the “SNR Holdco LLC Agreement”). Pursuant to the SNR Holdco LLC
Agreement, American III and SNR Management agreed to make pro-rata equity contributions in SNR Holdco equal
to approximately 15% of the net purchase price of the SNR Licenses. American III also entered into a Credit
Agreement by and among American III, as Lender, SNR Wireless, as Borrower, and SNR Holdco, as Guarantor (the
“SNR Credit Agreement”). Pursuant to the SNR Credit Agreement, American III agreed to make loans to SNR
Wireless for the amount of the bid withdrawal payment and approximately 85% of the net purchase price of the SNR
Licenses. American III made equity contributions to SNR Holdco of approximately $408 million and a loan to SNR
Wireless of approximately $350 million for SNR Wireless to make the upfront payment for the AWS-3 Auction and
the down payment required for the SNR Licenses. American III is also required to make an equity contribution to
SNR Holdco of approximately $116 million and a loan to SNR Wireless of approximately $3.153 billion for SNR
Wireless to make the final payment required for the SNR Licenses, which is due to the FCC by March 2, 2015.
Consequently, as of March 2, 2015, the total equity contributions from American III to SNR Holdco will be
approximately $524 million and the total loans from American III to SNR Wireless will be approximately $3.503
billion.
After Northstar Wireless and SNR Wireless have made the final payments to the FCC for the Northstar Licenses and
the SNR Licenses, respectively, our total non-controlling equity and debt investments in the Northstar Entities and
the SNR Entities will be approximately $9.778 billion. We have funded and will fund these investments from
existing cash and marketable investment securities. Such funding has included and will include $899 million in total
equity and debt investments in the Northstar Entities and SNR Entities during the fourth quarter 2014, cash and
marketable investment securities as of December 31, 2014, cash generated from operations during 2015, and a $400
million refund from the FCC to one of our wholly-owned subsidiaries related to the AWS-3 Auction. Issuance of
any AWS-3 Licenses to Northstar Wireless and SNR Wireless depends, among other things, upon the FCC’s review
and approval of the applications filed by Northstar Wireless and SNR Wireless. Objections to the applications filed
by Northstar Wireless and SNR Wireless must be submitted to the FCC within ten calendar days following the
release by the FCC of the public notice listing the applications acceptable for filing. We cannot predict the timing or
the outcome of the FCC’s review of the applications filed by Northstar Wireless and SNR Wireless.
In the event that the FCC grants the Northstar Licenses and the SNR Licenses, we may need to make significant
additional loans to the Northstar Entities and the SNR Entities, or they may need to partner with others, so that the
Northstar Entities and the SNR Entities may commercialize, build-out and integrate the Northstar Licenses and the
SNR Licenses, and comply with regulations applicable to the Northstar Licenses and the SNR Licenses. Depending
upon the nature and scope of such commercialization, build-out, integration efforts, and regulatory compliance, any
such loans or partnerships could vary significantly. There can be no assurance that we will be able to obtain a
profitable return on our non-controlling investments in the Northstar Entities and the SNR Entities.
See “Item 1A. Risk Factors - We face certain risks related to our non-controlling investments in the Northstar
Entities and the SNR Entities, which may have a material adverse effect on our business, results of operations and
financial condition” in this Annual Report on Form 10-K for more information.
Relationship with EchoStar
On January 1, 2008, we completed the distribution of our technology and set-top box business and certain
infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar. DISH Network and
EchoStar operate as separate publicly-traded companies and, except for the Satellite and Tracking Stock Transaction
and Sling TV discussed in Note 20 in the Notes to our Consolidated Financial Statements in this Annual Report on
Form 10-K, neither entity has any ownership interest in the other. However, a substantial majority of the voting
power of the shares of both DISH Network and EchoStar is owned beneficially by Charles W. Ergen, our Chairman,
and by certain trusts established by Mr. Ergen for the benefit of his family. EchoStar is our primary supplier of
digital set-top boxes and digital broadcast operations. In addition, EchoStar provides the vast majority of our
transponder capacity, is a key supplier of related services to us, and provides the IPTV streaming technology for our
OTT services. Furthermore, Hughes, a subsidiary of EchoStar, is currently a wholesale provider of our satellite