Dish Network 2014 Annual Report Download - page 48

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We generally do not carry commercial insurance for any of the in-orbit satellites that we use, other than certain
satellites leased from third parties, and could face significant impairment charges if any of our owned satellites
fail.
Generally, we do not carry launch or in-orbit insurance on any of the satellites we use. We currently do not carry in-
orbit insurance on any of our owned or leased satellites, other than certain satellites leased from third parties, and
generally do not use commercial insurance to mitigate the potential financial impact of launch or in-orbit failures
because we believe that the cost of insurance premiums is uneconomical relative to the risk of such failures. We
lease substantially all of our satellite capacity from third parties, including the vast majority of our transponder
capacity from EchoStar, and we do not carry commercial insurance on any of the satellites we lease from them.
While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup
capacity to recover the transmission of certain critical programming, our backup capacity is limited. In the event of
a failure or loss of any of our owned or leased satellites, we may need to acquire or lease additional satellite capacity
or relocate one of our other owned or leased satellites and use it as a replacement for the failed or lost satellite. If
one or more of our owned in-orbit satellites fail, we could be required to record significant impairment charges.
We may have potential conflicts of interest with EchoStar due to our common ownership and management.
Questions relating to conflicts of interest may arise between EchoStar and us in a number of areas relating to our
past and ongoing relationships. Areas in which conflicts of interest between EchoStar and us could arise include,
but are not limited to, the following:
 Cross officerships, directorships and stock ownership. We have certain overlap in directors and executive
officers with EchoStar. These individuals may have actual or apparent conflicts of interest with respect to
matters involving or affecting each company. Our Board of Directors and executive officers include
persons who are members of the Board of Directors of EchoStar, including Charles W. Ergen, who serves
as the Chairman of EchoStar and us. The executive officers and the members of our Board of Directors
who overlap with EchoStar have fiduciary duties to EchoStar’s shareholders. For example, there is the
potential for a conflict of interest when we or EchoStar look at acquisitions and other corporate
opportunities that may be suitable for both companies. In addition, certain of our directors and officers
own EchoStar stock and options to purchase EchoStar stock. Mr. Ergen owns approximately 36.5% of
EchoStar’s total equity securities (assuming conversion of all Class B Common Stock into Class A
Common Stock) and beneficially owns approximately 43.6% of EchoStar’s total equity securities
(assuming conversion of only the Class B Common Stock held by Mr. Ergen into Class A Common Stock).
Under either a beneficial or equity calculation method, Mr. Ergen controls approximately 62.4% of the
voting power of EchoStar. Mr. Ergen’s ownership of EchoStar excludes 15,188,445 shares of its Class A
Common Stock issuable upon conversion of shares of its Class B Common Stock currently held by certain
trusts established by Mr. Ergen for the benefit of his family. These trusts own approximately 16.6% of
EchoStar’s total equity securities (assuming conversion of all Class B Common Stock into Class A
Common Stock) and beneficially own approximately 25.7% of EchoStar’s total equity securities (assuming
conversion of only the Class B Common Stock held by such trusts into Class A Common Stock). Under
either a beneficial or equity calculation method, these trusts possess approximately 29.2% of EchoStar’s
total voting power. These ownership interests could create actual, apparent or potential conflicts of interest
when these individuals are faced with decisions that could have different implications for us and EchoStar.
Furthermore, Charles W. Ergen, our Chairman, is employed by both us and EchoStar. In addition, as a
result of the Satellite and Tracking Stock Transaction discussed in Note 20 in the Notes to our Consolidated
Financial Statements in this Annual Report on Form 10-K, we own shares of a series of preferred tracking
stock issued by EchoStar and shares of a series of preferred tracking stock issued by Hughes Satellite
Systems Corporation (“HSSC”), a subsidiary of EchoStar (collectively, the “Tracking Stock”). The
Tracking Stock generally tracks the residential retail satellite broadband business of Hughes Network
Systems, LLC (“HNS”), a wholly-owned subsidiary of HSSC, including without limitation the operations,
assets and liabilities attributed to the Hughes residential retail satellite broadband business (collectively, the
“Hughes Retail Group”). The shares of the Tracking Stock issued to us represent an aggregate 80%
economic interest in the Hughes Retail Group. Although our investment in the Tracking Stock represents
an aggregate 80% economic interest in the Hughes Retail Group, we have no operational control or
significant influence over the Hughes Retail Group business, and currently there is no public market for the