Dish Network 2014 Annual Report Download - page 37

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Item 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones facing us. If any of the following events occur,
our business, financial condition or results of operations could be materially and adversely affected.
Competition and Economic Risks Affecting our Business
We face intense and increasing competition from satellite television providers, cable companies and
telecommunications companies, especially as the pay-TV industry has matured, which may require us to further
increase subscriber acquisition and retention spending or accept lower subscriber activations and higher
subscriber churn.
Our business is primarily focused on providing pay-TV services and we have traditionally competed against satellite
television providers and cable companies, some of whom have greater financial, marketing and other resources than
we do. Many of these competitors offer video services bundled with broadband, telephony services, HD offerings,
interactive services and video on demand services that consumers may find attractive. We and our competitors
increasingly must seek to attract a greater proportion of new subscribers from each other’s existing subscriber bases
rather than from first-time purchasers of pay-TV services. In addition, because other pay-TV providers may be
seeking to attract a greater proportion of their new subscribers from our existing subscriber base, we may be
required to increase retention spending or we may provide greater discounts or credits to acquire and retain
subscribers who may spend less on our services. If our Pay-TV ARPU decreases or does not increase commensurate
with increases in programming or other costs, our margins may be reduced and the long-term value of a subscriber
would then decrease.
Competition has intensified in recent years as the pay-TV industry has matured and the growth of fiber-based pay-
TV services offered by telecommunications companies such as Verizon and AT&T continues. These fiber-based
pay-TV services have significantly greater capacity, enabling the telecommunications companies to offer substantial
HD programming content as well as bundled services. This increasingly competitive environment may require us to
increase subscriber acquisition and retention spending or accept lower subscriber activations and higher subscriber
churn. Further, as a result of this increased competitive environment and the maturation of the pay-TV industry,
future growth opportunities of our core pay-TV business may be limited and our margins may be reduced, which
could have a material adverse effect on our business, results of operations, financial condition and cash flow.
Moreover, mergers and acquisitions, joint ventures and alliances among cable television providers,
telecommunications companies and others may result in, among other things, greater financial leverage and increase
the availability of offerings from providers capable of bundling television, broadband and telephone services in
competition with our services, and may exacerbate the risks described above. For example, during February 2014,
Comcast announced its pending acquisition of Time Warner Cable, which would combine the largest and second
largest cable television providers in the U.S. This acquisition is currently undergoing regulatory review and has not
been completed. We filed a petition to deny the transaction with the FCC, in which we stated, among other things,
that the proposed transaction poses serious harm to competition and consumers and runs counter to U.S. antitrust
and communications laws, that no set of conditions can alleviate these harms, and that the FCC and Department of
Justice should reject the transaction. If Time Warner Cable ultimately is acquired by Comcast, the combined
company would be able to, among other things, foreclose or degrade our online video offerings at various points in
the broadband pipe; impose anti-competitive data caps on consumers who access our online video offerings;
foreclose access to, or raise the prices of, its own affiliated programming to us; pressure third-party content owners
and programmers to withhold online rights from us; and utilize its increased leverage over third-party content
owners and programmers to reduce the price it pays for programming at the expense of other MVPDs, including us.
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In addition, during May 2014, AT&T announced its pending acquisition of DirecTV, our direct competitor and the
largest satellite TV provider in the U.S. This acquisition is currently undergoing regulatory review and has not been
completed. We filed a petition to impose conditions on the transaction with the FCC, to remedy potential threats to
consumers and competition in the video and broadband markets. If DirecTV ultimately is acquired by AT&T,
DirecTV will, among other things, have increased access to capital, access to AT&T’s nationwide platform for
wireless mobile video, and the ability to more seamlessly bundle its video services with AT&T’s broadband Internet
access and voice services. The combined company would also be able to, among other things, pressure third-party