Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | DISH DBS CORP | |
Entity Central Index Key | 1,042,642 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 432,119 | $ 419,926 |
Marketable investment securities | 12,656 | 141,335 |
Trade accounts receivable, net of allowance for doubtful accounts of $23,525 and $20,972, respectively | 777,673 | 822,505 |
Inventory | 479,367 | 390,253 |
Other current assets | 107,899 | 115,205 |
Total current assets | 1,809,714 | 1,889,224 |
Noncurrent Assets: | ||
Restricted cash, cash equivalents and marketable investment securities | 82,360 | 82,374 |
Property and equipment, net of accumulated depreciation of $2,870,472 and $2,871,457, respectively | 1,880,090 | 2,150,340 |
FCC authorizations | 635,794 | 635,794 |
Other investment securities | 324,371 | 327,250 |
Other noncurrent assets, net | 219,893 | 219,574 |
Total noncurrent assets | 3,142,508 | 3,415,332 |
Total assets | 4,952,222 | 5,304,556 |
Current Liabilities: | ||
Trade accounts payable | 572,244 | 433,349 |
Deferred revenue and other | 792,312 | 843,638 |
Accrued programming | 1,538,976 | 1,531,389 |
Accrued interest | 230,151 | 224,513 |
Other accrued expenses | 396,965 | 430,820 |
Current portion of long-term debt and capital lease obligations | 934,414 | 1,531,928 |
Total current liabilities | 4,465,062 | 4,995,637 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion | 13,280,326 | 12,206,687 |
Deferred tax liabilities | 949,274 | 1,089,016 |
Long-term deferred revenue and other long-term liabilities | 222,651 | 164,682 |
Total long-term obligations, net of current portion | 14,452,251 | 13,460,385 |
Total liabilities | 18,917,313 | 18,456,022 |
Commitments and Contingencies (Note 8) | ||
Redeemable noncontrolling interests | 11,000 | 18,000 |
Stockholder's Equity (Deficit): | ||
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding | ||
Additional paid-in capital | 1,310,109 | 1,309,138 |
Accumulated other comprehensive income (loss) | 40 | 12,039 |
Accumulated earnings (deficit) | (15,290,010) | (14,492,752) |
Total DISH DBS stockholder's equity (deficit) | (13,979,861) | (13,171,575) |
Noncontrolling interests | 3,770 | 2,109 |
Total stockholder's equity (deficit) | (13,976,091) | (13,169,466) |
Total liabilities and stockholder's equity (deficit) | $ 4,952,222 | $ 5,304,556 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Allowance for doubtful accounts on trade accounts receivable | $ 23,525 | $ 20,972 |
Noncurrent Assets: | ||
Accumulated depreciation on property and equipment, net | $ 2,870,472 | $ 2,871,457 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,015 | 1,015 |
Common stock, shares outstanding | 1,015 | 1,015 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Subscriber-related revenue | $ 3,617,798 | $ 3,595,812 | $ 10,988,263 | $ 10,880,388 |
Equipment sales and other revenue | 14,317 | 28,736 | 35,421 | 89,656 |
Total revenue | 3,632,115 | 3,624,548 | 11,023,684 | 10,970,044 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | ||||
Subscriber-related expenses | 2,150,558 | 2,113,962 | 6,473,663 | 6,386,938 |
Satellite and transmission expenses | 188,517 | 192,741 | 538,432 | 569,977 |
Cost of sales - equipment, services and other | 11,352 | 18,787 | 36,455 | 73,086 |
Subscriber acquisition costs: | ||||
Cost of sales - subscriber promotion subsidies | 36,088 | 47,014 | 133,602 | 144,361 |
Other subscriber acquisition costs | 173,738 | 234,556 | 521,675 | 635,452 |
Subscriber acquisition advertising | 181,258 | 146,458 | 429,813 | 409,268 |
Total subscriber acquisition costs | 391,084 | 428,028 | 1,085,090 | 1,189,081 |
General and administrative expenses | 188,959 | 180,070 | 562,831 | 539,546 |
Depreciation and amortization (Note 6) | 210,532 | 229,922 | 651,749 | 691,065 |
Total costs and expenses | 3,141,002 | 3,163,510 | 9,348,220 | 9,449,693 |
Operating income (loss) | 491,113 | 461,038 | 1,675,464 | 1,520,351 |
Other Income (Expense): | ||||
Interest income | 920 | 83 | 5,301 | 5,028 |
Interest expense, net of amounts capitalized | (222,247) | (210,181) | (605,335) | (651,519) |
Other, net | 47 | 13,903 | 30,434 | 14,386 |
Total other income (expense) | (221,280) | (196,195) | (569,600) | (632,105) |
Income (loss) before income taxes | 269,833 | 264,843 | 1,105,864 | 888,246 |
Income tax (provision) benefit, net | (101,644) | (97,629) | (423,214) | (328,100) |
Net income (loss) | 168,189 | 167,214 | 682,650 | 560,146 |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | (8,925) | (4,940) | (20,092) | (12,053) |
Net income (loss) attributable to DISH DBS | 177,114 | 172,154 | 702,742 | 572,199 |
Comprehensive Income (Loss): | ||||
Net income (loss) | 168,189 | 167,214 | 682,650 | 560,146 |
Other comprehensive income (loss): | ||||
Unrealized holding gains (losses) on available-for-sale securities | (83) | (10,968) | (19,689) | (18,541) |
Deferred income tax (expense) benefit, net | 4,150 | 7,690 | 5,391 | |
Total other comprehensive income (loss), net of tax | (83) | (6,818) | (11,999) | (13,150) |
Comprehensive income (loss) | 168,106 | 160,396 | 670,651 | 546,996 |
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of tax | (8,925) | (4,940) | (20,092) | (12,053) |
Comprehensive income (loss) attributable to DISH DBS | $ 177,031 | $ 165,336 | $ 690,743 | $ 559,049 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ 682,650 | $ 560,146 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 651,749 | 691,065 |
Realized and unrealized losses (gains) on investments | (32,322) | (14,449) |
Non-cash, stock-based compensation | 10,530 | 17,714 |
Deferred tax expense (benefit) | (126,698) | (93,451) |
Other, net | 67,725 | 17,944 |
Changes in current assets and current liabilities, net | 71,660 | 388,483 |
Net cash flows from operating activities | 1,325,294 | 1,567,452 |
Cash Flows From Investing Activities: | ||
(Purchases) Sales and maturities of marketable investment securities, net | 127,348 | 1,344,275 |
Purchases of property and equipment | (418,826) | (505,290) |
Other, net | 10,863 | 2,285 |
Net cash flows from investing activities | (280,615) | 841,270 |
Cash Flows From Financing Activities: | ||
Proceeds from issuance of senior notes | 2,000,000 | |
Dividend to DISH Orbital Corporation | (1,500,000) | (8,250,000) |
Redemption and repurchases of senior notes (Note 7) | (1,500,000) | (650,001) |
Repayment of long-term debt and capital lease obligations | (24,310) | (21,670) |
Debt issuance costs | (7,676) | |
Other, net | (500) | 14,920 |
Net cash flows from financing activities | (1,032,486) | (8,906,751) |
Net increase (decrease) in cash and cash equivalents | 12,193 | (6,498,029) |
Cash and cash equivalents, beginning of period | 419,926 | 6,762,140 |
Cash and cash equivalents, end of period | $ 432,119 | $ 264,111 |
Organization and Business Activ
Organization and Business Activities | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Business Activities | |
Organization and Business Activities | 1. Principal Business DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. We offer pay-TV services under the DISH ® brand and the Sling ® brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, Federal Communications Commission (“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations. The Sling branded pay-TV services consist of, among other things, live, linear streaming over-the-top (“OTT”) Internet-based domestic, international and Latino video programming services (“Sling TV”). The Sling International video programming service (formerly known as DishWorld) was launched prior to 2015, which historically represented a small percentage of our Pay-TV subscribers. During February and June 2015, we launched our Sling domestic and Sling Latino services, respectively. In addition to these Sling TV services that may only be streamed on one device at a time (single-stream services), on April 13, 2016, we launched a live beta multi-stream Sling domestic service, which includes, among other things, the ability to stream on up to three devices simultaneously. During June 2016, our multi-stream Sling domestic service transitioned from its introductory beta period and was re-branded as Sling Blue. Meanwhile, we re-branded our single stream Sling domestic service as Sling Orange. All Sling TV subscribers are included in our Pay-TV subscriber count. As of September 30, 2016, we had 13.643 million Pay-TV subscribers in the United States. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required for complete financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. Certain prior period amounts have been reclassified to conform to the current period presentation. Principles of Consolidation We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. See below for further information. Non-consolidated investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, the cost method is used. All significant intercompany accounts and transactions have been eliminated in consolidation. Redeemable Noncontrolling Interests Sling TV. On May 2, 2014, DISH Network contributed its equity interest in Sling TV Holding L.L.C. (“Sling TV Holding,” formerly known as DISH Digital Holding L.L.C.) to us. As a result, all operating activities of Sling TV Holding are included in our financial results beginning May 2, 2014. Effective August 1, 2014, EchoStar Corporation (“EchoStar”) and Sling TV Holding entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, among other things, Sling TV Holding distributed certain assets to EchoStar and EchoStar reduced its interest in Sling TV Holding to a ten percent non-voting interest. EchoStar’s ten percent non-voting interest is redeemable contingent on a certain performance goal being achieved by Sling TV Holding. In addition, subject to certain conditions, the interest is redeemable at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interests” in the mezzanine section of our Condensed Consolidated Balance Sheets. EchoStar’s redeemable noncontrolling interest in Sling TV Holding was initially accounted for at fair value. The performance goal has been determined to be probable of achievement. Accordingly, the value of EchoStar’s redeemable noncontrolling interest in Sling TV Holding is adjusted each reporting period for any change in redemption value above the initial fair value (adjusted for the operating results of Sling TV Holding attributable to EchoStar subsequent to August 1, 2014), with the offset recorded in “Additional paid-in capital,” net of deferred taxes, on our Condensed Consolidated Balance Sheets. The operating results of Sling TV Holding attributable to EchoStar are recorded as “Redeemable noncontrolling interests” in our Condensed Consolidated Balance Sheets effective August 1, 2014, with the offset recorded in “Net income (loss) attributable to noncontrolling interests, net of tax” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 10 for further information on Sling TV Holding and the Exchange Agreement. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses and subscriber lives. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. Fair Value Measurements We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We apply the following hierarchy in determining fair value: · Level 1, defined as observable inputs being quoted prices in active markets for identical assets; · Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; and quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available. As of September 30, 2016 and December 31, 2015, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. New Accounting Pronouncements Revenue from Contracts with Customers. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). This converged standard on revenue recognition was issued jointly with the International Accounting Standards Board to create common revenue recognition guidance for GAAP and International Financial Reporting Standards. ASU 2014-09 provides a framework for revenue recognition that replaces most existing GAAP revenue recognition guidance when it becomes effective. ASU 2014-09 allows for either a full retrospective or modified retrospective adoption. We are evaluating the effect that ASU 2014-09 will have on our condensed consolidated financial statements and related disclosures. We have not yet selected an adoption method nor have we determined the effect of the standard on our ongoing financial reporting. The new standard could impact revenue and cost recognition for a significant number of our contracts, as well as our business processes and information technology systems. As a result, our evaluation of the effect of the new standard will likely extend over several future periods. On July 9, 2015, the FASB approved a one year deferral on the effective date for implementation of this standard, which changed the effective date for us to January 1, 2018. Recognition and Measurement of Financial Assets and Financial Liabilities . On January 5, 2016, the FASB issued ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) , which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are evaluating the impact the adoption of ASU 2016-01 will have on our condensed consolidated financial statements. Leases. On February 25, 2016, the FASB issued ASU 2016-02 Leases (“ASU 2016-02”), which relates to the accounting of leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are evaluating the impact the adoption of ASU 2016-02 will have on our condensed consolidated financial statements. Financial Instruments – Credit Losses. On June 16, 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures. Statement of Cash Flows - Update . On August 26, 2016, the FASB issued an update to ASC 230 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This update consists of eight provisions that provide guidance on the classification of certain cash receipts and cash payments. If practicable, this update should be applied using a retrospective transition method to each period presented. For the provisions that are impracticable to apply retrospectively, those provisions may be applied prospectively as of the earliest date practicable. This update will become effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-15 will have on our condensed consolidated financial statements. Compensation – Stock Compensation. On March 30, 2016, the FASB issued ASU 2016-09 Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) , which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. During the third quarter 2016, we adopted ASU 2016-09, which had an immaterial impact on our condensed consolidated financial statements. |
Supplemental Data - Statements
Supplemental Data - Statements of Cash Flows | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Data - Statements of Cash Flows | |
Supplemental Data - Statements of Cash Flows | 3. The following table presents our supplemental cash flow and other non-cash data. For the Nine Months Ended September 30, 2016 2015 (In thousands) Cash paid for interest $ $ Cash received for interest Cash paid for income taxes Cash paid for income taxes to DISH Network Satellites and other assets financed under capital lease obligations — Our parent, DISH Network, provides a centralized system for the management of our cash and marketable investment securities as it does for all of its subsidiaries, among other reasons, to maximize yield of the portfolio. As a result, the cash and marketable investment securities included on our Condensed Consolidated Balance Sheets is a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s Condensed Consolidated Balance Sheets and managed by DISH Network. We are reflecting the purchases and sales of marketable investment securities on a net basis for each period presented on our Condensed Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities. |
Marketable Investment Securitie
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 4. Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following: As of September 30, 2016 December 31, 2015 (In thousands) Marketable investment securities: Current marketable investment securities $ $ Restricted marketable investment securities (1) Total marketable investment securities Restricted cash and cash equivalents (1) Other investment securities: Investment in EchoStar preferred tracking stock - cost method Investment in HSSC preferred tracking stock - cost method Other investment securities - cost method Total other investment securities Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ $ (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets. Marketable Investment Securities Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale. Current Marketable Investment Securities Our current marketable investment securities portfolio includes investments in equity securities and various debt instruments including, among others, commercial paper, corporate securities and U.S. treasury and/or agency securities. Commercial paper consists mainly of unsecured short-term, promissory notes issued primarily by corporations with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U. S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies. Restricted Cash, Cash Equivalents and Marketable Investment Securities As of September 30, 2016 and December 31, 2015, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit. Other Investment Securities We have strategic investments in certain debt and equity securities that are included in noncurrent “Other investment securities” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting. Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and to execute their business plans. Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them. Investment in Tracking Stock On February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV (collectively the “Transferred Satellites”), including related in-orbit incentive obligations and cash interest payments of approximately $59 million), and approximately $11 million in cash in exchange for an aggregate of 6,290,499 shares of a series of preferred tracking stock issued by EchoStar and an aggregate of 81.128 shares of a series of preferred tracking stock issued by HSSC (collectively, the “Tracking Stock”); and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites (collectively, the “Satellite and Tracking Stock Transaction”). As of November 30, 2015, we no longer lease satellite capacity on the EchoStar I satellite. 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. Since the Satellite and Tracking Stock Transaction is among entities under common control, we recorded the Tracking Stock at EchoStar’s and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. 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 Tracking Stock. As such, the Tracking Stock is accounted for under the cost method of accounting. On February 20, 2014, DISH Operating L.L.C. (“DOLLC”) and DISH Network L.L.C. (“DNLLC”), each indirect wholly-owned subsidiaries of us, entered into an Investor Rights Agreement with EchoStar and HSSC with respect to the Tracking Stock (the “Investor Rights Agreement”). The Investor Rights Agreement provides, among other things, certain information and consultation rights for us; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate with respect to our interest should we no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. Unrealized Gains (Losses) on Marketable Investment Securities As of September 30, 2016 and December 31, 2015, we had accumulated net unrealized gains of less than $1 million and $20 million, respectively. These amounts, net of related tax effect, were less than $1 million and $12 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. As of September 30, 2016 As of December 31, 2015 Marketable Marketable Investment Unrealized Investment Unrealized Securities Gains Losses Net Securities Gains Losses Net (In thousands) Debt securities (including restricted): U. S. Treasury and agency securities $ $ $ $ $ $ $ $ Corporate securities — Other — — — — — Equity securities — — — — — Total $ $ $ $ $ $ $ $ As of September 30, 2016, restricted and non-restricted marketable investment securities included debt securities of $59 million with contractual maturities within one year and $34 million with contractual maturities extending longer than one year through and including five years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. Fair Value Measurements Our investments measured at fair value on a recurring basis were as follows: As of September 30, 2016 December 31, 2015 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ $ $ $ — $ $ $ $ — Debt securities (including restricted): U. S. Treasury and agency securities $ $ $ — — $ $ $ $ — Corporate securities — — — — Other — — — — — — Equity securities — — — — — — Total $ $ $ $ — $ $ $ $ — During the nine months ended September 30, 2016, we had no transfers in or out of Level 1 and Level 2 fair value measurements. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2016 | |
Inventory | |
Inventory | 5. Inventory consisted of the following: As of September 30, 2016 December 31, 2015 (In thousands) Finished goods $ $ Work-in-process and service repairs Raw materials Total inventory (1) $ $ (1) The change in inventory as of September 30, 2016 primarily related to an increase in Hopper ® and Joey ® set top boxes and associated accessories. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Property and Equipment | 6. Depreciation and amortization expense consisted of the following: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (In thousands) Equipment leased to customers $ $ $ $ Satellites Buildings, furniture, fixtures, equipment and other Total depreciation and amortization $ $ $ $ Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers. Pay-TV Satellites. We currently utilize 13 satellites in geostationary orbit approximately 22,300 miles above the equator, one of which we own and depreciate over its estimated useful life. We currently utilize certain capacity on nine satellites that we lease from EchoStar and one satellite that we lease from DISH Network, which are accounted for as operating leases. We also lease two satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement. As of September 30, 2016, our pay-TV satellite fleet consisted of the following: Estimated Useful Life (Years)/ Degree Lease Launch Orbital Termination Satellites Date Location Date Owned: EchoStar XV July 2010 61.5 15 Leased from DISH Network (1): EchoStar XVIII June 2016 61.5 Month to month Leased from EchoStar (2): EchoStar VII (3) February 2002 119 June 2017 EchoStar IX August 2003 121 Month to month EchoStar X (3) February 2006 110 February 2021 EchoStar XI (3) July 2008 110 September 2021 EchoStar XII (3) July 2003 61.5 September 2017 EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (4) November 2012 61.5 January 2018 Nimiq 5 September 2009 72.7 September 2019 QuetzSat-1 September 2011 77 November 2021 Leased from Other Third Party: Anik F3 April 2007 118.7 April 2022 Ciel II December 2008 129 January 2019 (1) See Note 10 for further information on our Related Party Transactions with DISH Network. (2) See Note 10 for further information on our Related Party Transactions with EchoStar. (3) We generally have the option to renew each lease on a year-to-year basis through the end of the useful life of the respective satellite. (4) We have the option to renew this lease for an additional five-year period. If we exercise our five-year renewal option, we have the option to renew this lease for an additional five years. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Long-Term Debt | |
Long-Term Debt | 7. Fair Value of our Long-Term Debt The following table summarizes the carrying amount and fair value of our debt facilities as of September 30, 2016 and December 31, 2015: As of September 30, 2016 December 31, 2015 Carrying Fair Value Carrying Fair Value (In thousands) 7 1/8% Senior Notes due 2016 (1) $ — $ — $ $ 4 5/8% Senior Notes due 2017 (2) 4 1/4% Senior Notes due 2018 7 7/8% Senior Notes due 2019 5 1/8% Senior Notes due 2020 6 3/4% Senior Notes due 2021 5 7/8% Senior Notes due 2022 5 % Senior Notes due 2023 5 7/8% Senior Notes due 2024 7 3/4% Senior Notes due 2026 — — Other notes payable Subtotal $ $ Unamortized deferred financing costs and debt discounts, net Capital lease obligations (3) Total long-term debt and capital lease obligations (including current portion) $ $ (1) On February 1, 2016, we redeemed the principal balance of our 7 1/8% Senior Notes due 2016. (2) Our 4 5/8% Senior Notes due 2017 mature on July 15, 2017 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2016. (3) Disclosure regarding fair value of capital leases is not required. We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2). 7 3/4% Senior Notes due 2026 On June 13, 2016, we issued $2.0 billion aggregate principal amount of our ten-year 7 3/4% Senior Notes due July 1, 2026. Interest accrues at an annual rate of 7 3/4% and is payable semi-annually in cash, in arrears on January 1 and July 1 of each year, commencing on January 1, 2017. The 7 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to July 1, 2019, we may also redeem up to 35% of the 7 3/4% Senior Notes at a specified premium with the net cash proceeds from certain equity offerings or capital contributions. Our 7 3/4% Senior Notes are: · general unsecured senior obligations of DISH DBS; · ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and · ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. The indenture related to our 7 3/4% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: · incur additional debt; · pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; · make certain investments; · create liens or enter into sale and leaseback transactions; · enter into transactions with affiliates; · merge or consolidate with another company; and · transfer or sell assets. In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 3/4% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments DISH Network Spectrum DISH Network has invested over $5.0 billion since 2008 to acquire certain wireless spectrum licenses and related assets. DISH Network will need to make significant additional investments or partner with others to, among other things, commercialize, build-out, and integrate these licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to such licenses. Depending on the nature and scope of such commercialization, build-out, integration efforts, and regulatory compliance, any such investments or partnerships could vary significantly. DISH Network may also determine that additional wireless spectrum licenses may be required to commercialize its wireless business and to compete with other wireless service providers. Auction 1000. On February 10, 2016, DISH Network filed an application with the FCC to potentially participate as a bidder in the forward auction phase of the broadcast television spectrum incentive auction in the 600 MHz frequency range (“Auction 1000”). The available spectrum in each licensed geographic area in Auction 1000 is generally comprised of certain paired 5x5 spectrum blocks (5 MHz uplink spectrum and 5 MHz downlink spectrum). As a result, a nationwide footprint may be obtained by aggregating a single 5x5 spectrum block in each available licensed geographic area. Auction 1000 has had multiple stages, with each stage having two phases. With respect to each stage, in the first phase, or reverse auction phase, participating television broadcasters “sell” their rights to use certain broadcast television spectrum in the 600 MHz frequency range to the FCC. Then following the first phase of a stage, in the second phase, or forward auction phase, the FCC will “resell” that spectrum to auction participants. In the event that certain criteria are not met within a particular stage for Auction 1000 to conclude, Auction 1000 then proceeds to a subsequent stage with less available spectrum than the immediately preceding stage and lower spectrum clearing targets. Before the forward auction phase of Stage 1 of Auction 1000 began, a qualified bidder in the forward auction phase could make an upfront deposit of up to approximately $5.4 billion. On July 15, 2016, the FCC announced that a subsidiary of DISH Network and 61 other applicants were qualified to participate in the forward auction phase of Auction 1000. The FCC determined that bidding in Auction 1000 will be “anonymous,” which means that prior to and during the course of the auction, the FCC will not make public any information about a specific applicant’s upfront deposits or its bids. In addition, FCC rules restrict information that bidders may disclose about their participation in Auction 1000. · Stage 1: The reverse auction phase of Stage 1 began on March 29, 2016 and concluded on June 29, 2016. Pursuant to the FCC’s procedures for Auction 1000 and based on the results of the reverse auction phase of Stage 1, in order for Auction 1000 to have concluded, the aggregate bids in the forward auction phase of Stage 1 would have had to have exceeded approximately $88.4 billion. The forward auction phase of Stage 1 included 100 MHz of spectrum in over 90% of the available licensed geographic areas, based on the broadcasters’ indicated availability of spectrum in the reverse auction phase. The forward auction phase of Stage 1 commenced on August 16, 2016 and concluded on August 30, 2016, but the aggregate bids of approximately $23.1 billion did not exceed the approximately $88.4 billion required for Auction 1000 to conclude. As a result, Auction 1000 moved to Stage 2. · Stage 2: The reverse auction phase of Stage 2 began on September 13, 2016 and concluded on October 13, 2016. Pursuant to the FCC’s procedures for Auction 1000 and based on the results of the reverse auction phase of Stage 2, in order for Auction 1000 to have concluded, the aggregate bids in the forward auction phase of Stage 2 would have had to have exceeded approximately $56.5 billion. The forward auction phase of Stage 2 included 90 MHz of spectrum in over 90% of the available licensed geographic areas, based on the broadcasters’ indicated availability of spectrum in the reverse auction phase. The forward auction phase of Stage 2 commenced and concluded on October 19, 2016, but the aggregate bids of approximately $21.5 billion did not exceed the approximately $56.5 billion required for Auction 1000 to conclude. As a result, Auction 1000 moved to Stage 3. · Stage 3: The reverse auction phase of Stage 3 commenced on November 1, 2016. In connection with the development of DISH Network’s wireless business, including without limitation the efforts described above, we have made cash distributions to partially finance these efforts to date and may make additional cash distributions to finance in whole or in part DISH Network’s future efforts. See Note 10 for further information regarding our dividends to DOC. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on these wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these wireless spectrum licenses. DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses Through its wholly-owned subsidiaries American AWS-3 Wireless II L.L.C. (“American II”) and American AWS-3 Wireless III L.L.C. (“American III”), DISH Network has made over $10.0 billion in certain non-controlling investments in Northstar Spectrum, LLC (“Northstar Spectrum”), the parent company of Northstar Wireless, LLC (“Northstar Wireless,” and collectively with Northstar Spectrum, the “Northstar Entities”), and in SNR Wireless HoldCo, LLC (“SNR HoldCo”), the parent company of SNR Wireless LicenseCo, LLC (“SNR Wireless,” and collectively with SNR HoldCo, the “SNR Entities”), respectively. On October 27, 2015, the FCC granted certain AWS-3 wireless spectrum licenses (the “AWS-3 Licenses”) to Northstar Wireless (the “Northstar Licenses”) and to SNR Wireless (the “SNR Licenses”), respectively. DISH Network may need to make significant additional loans to the Northstar Entities and to 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. In connection with certain funding obligations related to the investments by American II and American III discussed above, in February 2015, we paid a dividend of $8.250 billion to DOC for, among other things, general corporate purposes, which included such funding obligations, and to fund other DISH Network cash needs. We may make additional cash distributions to finance in whole or in part loans that DISH Network may make to the Northstar Entities and the SNR Entities in the future related to DISH Network’s non-controlling investments in these entities. There can be no assurance that DISH Network will be able to obtain a profitable return on its non-controlling investments in the Northstar Entities and the SNR Entities. We may need to raise significant additional capital in the future, which may not be available on acceptable terms or at all, to among other things, make additional cash distributions to DISH Network, continue investing in our business and to pursue acquisitions and other strategic transactions. See Note 10 “Commitments and Contingencies – Commitments” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 for further information. Guarantees During the third quarter 2009, EchoStar entered into a satellite transponder service agreement for Nimiq 5 through 2024. We sublease this capacity from EchoStar and DISH Network guarantees a certain portion of EchoStar’s obligation under its satellite transponder service agreement through 2019. As of September 30, 2016, the remaining obligation of the DISH Network guarantee was $206 million. As of September 30, 2016, DISH Network has not recorded a liability on the balance sheet for this guarantee. Contingencies Separation Agreement On January 1, 2008, DISH Network completed the distribution of its technology and set-top box business and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar. In connection with the Spin-off, DISH Network entered into a separation agreement with EchoStar that provides, among other things, for the division of certain liabilities, including liabilities resulting from litigation. Under the terms of the separation agreement, EchoStar has assumed certain liabilities that relate to its business, including certain designated liabilities for acts or omissions that occurred prior to the Spin-off. Certain specific provisions govern intellectual property related claims under which, generally, EchoStar will only be liable for its acts or omissions following the Spin-off and DISH Network will indemnify EchoStar for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off, as well as our acts or omissions following the Spin-off. Litigation We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities. Many of these proceedings are at preliminary stages, and many of these proceedings seek an indeterminate amount of damages. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made. For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties (as with many patent-related cases). For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. California Institute of Technology On October 1, 2013, the California Institute of Technology (“Caltech”) filed complaints against DISH Network and its wholly-owned subsidiaries DISH Network L.L.C. and dishNET Satellite Broadband L.L.C., as well as Hughes Communications, Inc. and Hughes Network Systems, LLC, which are subsidiaries of EchoStar, in the United States District Court for the Central District of California. The complaint alleged infringement of United States Patent Nos. 7,116,710; 7,421,032; 7,916,781 and 8,284,833, each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech alleged that encoding data as specified by the DVB-S2 standard infringed each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claimed that our Hopper ® set-top box, as well as the Hughes defendants’ satellite broadband products and services, infringed the asserted patents by implementing the DVB-S2 standard. On May 5, 2015, the Court granted summary judgment in our favor as to the Hopper set-top box alleged in the complaint. On February 17, 2015, Caltech filed a new complaint in the United States District Court for the Central District of California, asserting the same patents against the same defendants. Caltech alleged that certain broadband equipment, including without limitation the HT1000 and HT1100 modems, gateway hardware, software and/or firmware that the Hughes defendants provide to, among others, us for our use in connection with the dishNET branded broadband service, infringed these patents. Pursuant to a settlement agreement between the parties, on May 31, 2016, Caltech dismissed with prejudice all of its claims in these actions. ClearPlay, Inc. On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799 (the “799 patent”), entitled “Multimedia Content Navigation and Playback”; 7,526,784 (the “784 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,543,318 (the “318 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,577,970 (the “970 patent”), entitled “Multimedia Content Navigation and Playback”; and 8,117,282 (the “282 patent”), entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums.” ClearPlay alleges that the AutoHop ™ feature of our Hopper set-top box infringes the asserted patents. On February 11, 2015, the case was stayed pending various third-party challenges before the United States Patent and Trademark Office regarding the validity of certain of the patents asserted in the action. In those third-party challenges, the United States Patent and Trademark Office found that all claims of the 282 patent are unpatentable, and that certain claims of the 784 patent and 318 patent are unpatentable. ClearPlay appealed as to the 784 patent and the 318 patent, and on August 23, 2016, the United States Court of Appeals for the Federal Circuit affirmed the findings of the United States Patent and Trademark Office. On October 31, 2016, the stay was lifted. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, 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. CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.) On January 17, 2014, CRFD Research, Inc. (“CRFD”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the “233 patent”). The 233 patent is entitled “System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System,” and relates to transferring an ongoing software session from one device to another. CRFD alleges that our Hopper and Joey ® set-top boxes infringe the 233 patent. On the same day, CRFD filed similar complaints against AT&T Inc.; Comcast Corp.; DirecTV; Time Warner Cable Inc.; Cox Communications, Inc.; Akamai Technologies, Inc.; Cablevision Systems Corp. and Limelight Networks, Inc. CRFD is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On January 26, 2015, we and EchoStar filed a petition before the United States Patent and Trademark Office challenging the validity of certain claims of the 233 patent. The United States Patent and Trademark Office has agreed to institute a proceeding on our petition, as well as on two third-party petitions challenging the validity of certain claims of the 233 patent, and it heard oral argument on January 16, 2016. On June 1, 2016, the United States Patent and Trademark Office found that all claims asserted against us and the EchoStar parties were unpatentable. On July 5, 2016, CRFD filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. The litigation in the District Court has been stayed since June 4, 2015 pending resolution of our petition to the United States Patent and Trademark Office. 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. Customedia Technologies, L.L.C. On February 10, 2016, Customedia Technologies, L.L.C. (“Customedia”) filed a complaint against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Eastern District of Texas. The complaint alleges infringement of four patents: United States Patent No. 8,719,090; United States Patent No. 9,053,494; United States Patent No. 7,840,437; and United States Patent No. 8,955,029. Each patent is entitled “System for Data Management And On-Demand Rental And Purchase Of Digital Data Products.” Customedia appears to allege infringement in connection with our addressable advertising services, our DISH Anywhere feature, and our Pay-Per-View and video-on-demand offerings. Customedia is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patents, 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. Do Not Call Litigation On March 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois, alleging violations of the Telephone Consumer Protection Act and the Telemarketing Sales Rule (“TSR”), as well as analogous state statutes and state consumer protection laws. The plaintiffs allege that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs were seeking civil penalties and damages of approximately $270 million and that the federal plaintiff was seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs were also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We also filed a motion for summary judgment, seeking dismissal of all claims. On December 12, 2014, the Court issued its opinion with respect to the parties’ summary judgment motions. The Court found that DISH Network L.L.C. is entitled to partial summary judgment with respect to one claim in the action. In addition, the Court found that the plaintiffs are entitled to partial summary judgment with respect to ten claims in the action, which includes, among other things, findings by the Court establishing DISH Network L.L.C.’s liability for a substantial amount of the alleged outbound telemarketing calls by DISH Network L.L.C. and certain of its independent third-party retailers that were the subject of the plaintiffs’ motion. The Court did not issue any injunctive relief and did not make any determination on civil penalties or damages, ruling instead that the scope of any injunctive relief and the amount of any civil penalties or damages are questions for trial. In pre-trial disclosures, the federal plaintiff indicated that it intended to seek up to $900 million in alleged civil penalties, and the state plaintiffs indicated that they intended to seek as much as $23.5 billion in alleged civil penalties and damages. The plaintiffs also modified their request for injunctive relief. Their requested injunction, if granted, would enjoin DISH Network L.L.C. from placing outbound telemarketing calls unless and until: (i) DISH Network L.L.C. hires a third-party consulting organization to perform a review of its call center operations; (ii) such third-party consulting organization submits a telemarketing compliance plan to the Court and the federal plaintiff; (iii) the Court holds a hearing on the adequacy of the plan; (iv) if the Court approves the plan, DISH Network L.L.C. implements the plan and verifies to the Court that it has implemented the plan; and (v) the Court issues an order permitting DISH Network L.L.C. to resume placing outbound telemarketing calls. The plaintiffs’ modified request for injunctive relief, if granted, would also enjoin DISH Network L.L.C. from accepting customer orders solicited by certain independent third-party retailers unless and until a similar third-party review and Court approval process was followed with respect to the telemarketing activities of its independent third-party retailer base to ensure compliance with the TSR. The first phase of the bench trial took place January 19, 2016 through February 11, 2016. In closing briefs, the federal plaintiff indicated that it still is seeking $900 million in alleged civil penalties; the California state plaintiff indicated that it is seeking $100 million in alleged civil penalties and damages for its state law claims (in addition to any amounts sought on its federal law claims); the Ohio state plaintiff indicated that it is seeking approximately $10 million in alleged civil penalties and damages for its state law claims (in addition to any amounts sought on its federal law claims); and the Illinois and North Carolina state plaintiffs did not state the specific alleged civil penalties and damages that they are seeking; but the state plaintiffs have taken the general position that any damages award less than $1.0 billion (presumably for both federal and state law claims) would not raise constitutional concerns. Under the Eighth Amendment of the U.S. Constitution, excessive fines may not be imposed. On October 3, 2016, the plaintiffs further modified their request for injunctive relief, and are now seeking, among other things, to enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from some or all existing independent third-party retailers. The second phase of the bench trial, which We may also from time to time be subject to private civil litigation alleging telemarketing violations. For example, a portion of the alleged telemarketing violations by an independent third-party retailer at issue in the case described above are also the subject of a certified class action filed against DISH Network L.L.C. in the United States District Court for the Middle District of North Carolina. Trial in that action is scheduled to commence on January 9, 2017. We intend to vigorously defend these cases. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. Dragon Intellectual Property, LLC On December 20, 2013, Dragon Intellectual Property, LLC (“Dragon IP”) filed complaints against our wholly-owned subsidiary DISH Network L.L.C., as well as Apple Inc.; AT&T, Inc.; Charter Communications, Inc.; Comcast Corp.; Cox Communications, Inc.; DirecTV; Sirius XM Radio Inc.; Time Warner Cable Inc. and Verizon Communications, Inc., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 5,930,444 (the “444 patent”), which is entitled “Simultaneous Recording and Playback Apparatus.” Dragon IP alleges that various of our DVR receivers infringe the 444 patent. Dragon IP is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On December 23, 2014, DISH Network L.L.C. filed a petition before the United States Patent and Trademark Office challenging the validity of certain claims of the 444 patent. On April 10, 2015, the Court granted DISH Network L.L.C.’s motion to stay the action in light of DISH Network L.L.C.’s petition and certain other defendants’ petitions pending before the United States Patent and Trademark Office challenging the validity of certain claims of the 444 patent. On July 17, 2015, the United States Patent and Trademark Office agreed to institute a proceeding on our petition. Pursuant to a stipulation between the parties, on April 27, 2016, the Court entered an order of non-infringement and judgment in favor of DISH Network L.L.C. On June 15, 2016, the United States Patent and Trademark Office entered an order that the patent claims being asserted against DISH Network L.L.C. with respect to the 444 patent are unpatentable. On August 8, 2016, Dragon filed notices of appeal with respect to the Court’s judgment and the United States Patent and Trademark Office’s decision. 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. Grecia On March 27, 2015, William Grecia (“Grecia”) filed a complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. 8,533,860 (the “860 patent”), which is entitled “Personalized Digital Media Access System—PDMAS Part II.” Grecia alleges that we violate the 860 patent in connection with our digital rights management. Grecia is the named inventor on the 860 patent. On June 22, 2015, the case was transferred to the United States District Court for the Northern District of California. On November 18, 2015, Grecia filed an amended complaint adding allegations that we infringe U.S. Patent No. 8,402,555 (the “555 patent”), which is entitled “Personalized Digital Media Access System (PDMAS).” Grecia is the named inventor on the 555 patent. Grecia alleges that we violate the 555 patent in connection with our digital rights management. Grecia dismissed his action with prejudice on February 3, 2016. On February 3, 2016, Grecia filed a new complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Northern District of California, alleging infringement of United States Patent No. 8,887,308 (the “308 patent”), which is entitled “Digital Cloud Access—PDMAS Part III,” on which Grecia is also the named inventor. Grecia alleges that we violate the 308 patent in connection with our DISH Anywhere feature. On July 29, 2016, DISH Network L.L.C. filed a petition before the United States Patent and Trademark Office challenging the validity of certain claims of the 308 patent. The litigation in the District Court has been stayed since June 13, 2016 pending resolution of DISH Network L.L.C.’s petition to the United States Patent and Trademark Office. 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. The Hopper Litigation On May 24, 2012, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit in the United States District Court for the Southern District of New York against American Broadcasting Companies, Inc.; CBS Corporation; Fox Entertainment Group, Inc.; Fox Television Holdings, Inc.; Fox Cable Network Services, L.L.C. and NBCUniversal, LLC. In the lawsuit, we sought a declaratory judgment that we are not infringing any defendant’s copyright, or breaching any defendant’s retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop features of our Hopper set-top box. A consumer can use the PrimeTime Anytime feature, at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature, at his or her option, to watch certain recordings that the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back at a certain point after the show’s original airing. Later on May 24, 2012, (i) Fox Broadcasting Company; Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as Slingbox placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC; Universal Network Television, LLC; Open 4 Business Productions LLC and NBCUniversal, LLC filed a lawsuit against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc.; CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights. As a result of certain parties’ competing venue-related motions brought in both the New York and California actions, and certain networks’ filing various counterclaims and amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox and NBC parties in California. California Actions. The NBC plaintiffs and Fox plaintiffs filed amended complaints in their respective California actions, adding copyright claims against EchoStar and EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar. In addition, the Fox plaintiffs’ amended complaint added claims challenging the Hopper Transfers™ feature of our second-generation Hopper set-top box. On November 7, 2012, the California court denied the Fox plaintiffs’ motion for a prelimin |
Financial Information for Subsi
Financial Information for Subsidiary Guarantors | 9 Months Ended |
Sep. 30, 2016 | |
Financial Information for Subsidiary Guarantors | |
Financial Information for Subsidiary Guarantors | 9. Our senior notes are fully, unconditionally and jointly and severally guaranteed by all of our subsidiaries other than minor subsidiaries, and the stand-alone entity DISH DBS has no independent assets or operations. Therefore, supplemental financial information on a condensed consolidating basis of the guarantor subsidiaries is not required. There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the guarantor subsidiaries, except those imposed by applicable law. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions | |
Related Party Transactions | 10. Related Party Transactions with DISH Network On June 30, 2016, we paid a dividend of $1.5 billion to DOC. On February 12, 2015, we paid a dividend of $8.250 billion to DOC for, among other things, general corporate purposes, which included certain funding obligations related to DISH Network’s non-controlling debt and equity investments in the Northstar Entities and the SNR Entities, and to fund other DISH Network cash needs. Advertising Sales. We provide advertising services to DISH Network’s broadband business. During the three months ended September 30, 2015, we received revenue associated with these services of $2 million in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the three months ended September 30, 2016, we received no revenue associated with these services. During the nine months ended September 30, 2016 and 2015, we received revenue associated with these services of $2 million and $8 million, respectively. Broadband, Wireless and Other Operations. We provide certain administrative, call center, installation, marketing and other services to DISH Network’s broadband, wireless and other operations. During the three months ended September 30, 2016 and 2015, the costs associated with these services were $16 million and $16 million, respectively. During the nine months ended September 30, 2016 and 2015, the costs associated with these services were $50 million and $51 million, respectively. EchoStar XVIII Satellite. The EchoStar XVIII satellite was launched on June 18, 2016 and became operational as an in-orbit spare at the 61.5 degree orbital location during the third quarter 2016, at which time we began leasing it from an indirect wholly-owned subsidiary of DISH Network. During the three and nine months ended September 30, 2016, we incurred $5 million of expense related to this satellite. This amount is recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Related Party Transactions with EchoStar Following the Spin-off, DISH Network and EchoStar have operated as separate publicly-traded companies, and, except for the Satellite and Tracking Stock Transaction and Sling TV Holding described below, neither entity has any ownership interest in the other. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman and Chief Executive Officer, and by certain trusts established by Mr. Ergen for the benefit of his family. EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a supplier of the vast majority of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. “Trade accounts receivable” As of September 30, 2016 and December 31, 2015, trade accounts receivable from EchoStar was $1 million and $23 million, respectively. These amounts are recorded in “Trade accounts receivable” on our Condensed Consolidated Balance Sheets. “Trade accounts payable” As of September 30, 2016 and December 31, 2015, trade accounts payable to EchoStar was $318 million and $263 million, respectively. These amounts are recorded in “Trade accounts payable” on our Condensed Consolidated Balance Sheets. “Equipment sales and other revenue” During the three months ended September 30, 2016 and 2015, we received less than $1 million and $13 million, respectively, for equipment sales and other revenue from EchoStar. During the nine months ended September 30, 2016 and 2015, we received $1 million and $39 million, respectively, for equipment sales and other revenue from EchoStar. These amounts are recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these revenues are discussed below. Remanufactured Receiver and Services Agreement. We entered into a remanufactured receiver and services agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2016, we and EchoStar extended this agreement until December 31, 2017. EchoStar may terminate the remanufactured receiver and services agreement for any reason upon at least 60 days notice to us. We may also terminate this agreement if certain entities acquire us. Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which EchoStar leases certain capacity on certain satellites owned by us. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased on the applicable satellite and the length of the lease. The term of each lease is set forth below: · EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. This lease terminated in November 2015 and EchoStar relocated this satellite from the 45 degree orbital location back to the 61.5 degree orbital location where it currently serves as an in-orbit spare. Real Estate Lease Agreements. Since the Spin-off, DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: · El Paso Lease Agreement. During 2012, DISH Network leased certain space at 1285 Joe Battle Blvd., El Paso, Texas to EchoStar for an initial period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. During the second quarter 2015, EchoStar exercised its first renewal option for a period ending on August 1, 2018. “Subscriber-related expenses” During the three months ended September 30, 2016 and 2015, we incurred $3 million and $3 million, respectively, for subscriber-related expenses from EchoStar. During the nine months ended September 30, 2016 and 2015, we incurred $8 million and $9 million, respectively, for subscriber-related expenses from EchoStar. These amounts are recorded in “Subscriber-related expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below. SlingService Services Agreement . Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive certain services related to placeshifting, which is used for, among other things, the DISH Anywhere mobile application. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement had an initial term of five years with automatic renewal for successive one year terms. This agreement will renew on February 23, 2017 for an additional one-year period until February 23, 2018. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. DISH Remote Access Services Agreement . Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement had an initial term of five years with automatic renewal for successive one year terms. This agreement will renew on February 23, 2017 for an additional one-year period until February 23, 2018. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. “Satellite and transmission expenses” During the three months ended September 30, 2016 and 2015, we incurred $174 million and $183 million, respectively, for satellite and transmission expenses from EchoStar. During the nine months ended September 30, 2016 and 2015, we incurred $506 million and $541 million, respectively, for satellite and transmission expenses from EchoStar. These amounts are recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below. Broadcast Agreement. Effective January 1, 2012, we and EchoStar entered into a broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us, including teleport services such as transmission and downlinking, channel origination services, and channel management services, for the period from January 1, 2012 to December 31, 2016. In November 2016, we and EchoStar amended the 2012 Broadcast Agreement to extend the term thereof for one additional year until December 31, 2017. The fees for services provided under the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. We have the ability to terminate channel origination services and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar. If we terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services. Satellite Capacity Leased from EchoStar . Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain capacity on certain satellites owned or leased by EchoStar. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased on the applicable satellite and the length of the lease. See “Pay-TV Satellites” in Note 6 for further information. The term of each lease is set forth below: · EchoStar I, VII, X, XI and XIV. On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar I, VII, X, XI and XIV satellites. The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that any options to renew such agreements will be exercised. The satellite capacity agreement for EchoStar I expired on November 30, 2015. · EchoStar VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. This lease terminated in November 2015. · EchoStar IX . We lease certain satellite capacity from EchoStar on EchoStar IX. Subject to availability, we generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-month basis. · EchoStar XII. The lease for EchoStar XII generally terminates upon the earlier of: (i) the end-of-life or replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal options. We generally have the option to renew the lease on a year-to-year basis through the end of the satellite’s life. There can be no assurance that any options to renew this agreement will be exercised. · EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Effective December 21, 2012, we and EchoStar amended the transponder service agreement to, among other things, change the initial term to generally expire upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite fails; (iii) the date the transponder(s) on which service is being provided under the agreement fails; or (iv) four years following the actual service commencement date. During July 2016, we and EchoStar amended the transponder service agreement to, among other things, extend the initial term by one additional year and to reduce the term of the first renewal option by one year. Prior to expiration of the initial term, we have the option to renew for an additional five-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions, to renew for an additional five-year period. If either we or EchoStar exercise our respective five-year renewal options, then we have the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that any options to renew this agreement will be exercised. Nimiq 5 Agreement . During 2009, EchoStar entered into a fifteen-year satellite service agreement with Telesat Canada (“Telesat”) to receive service on all 32 DBS transponders on the Nimiq 5 satellite at the 72.7 degree orbital location (the “Telesat Transponder Agreement”). During 2009, EchoStar also entered into a satellite service agreement (the “DISH Nimiq 5 Agreement”) with us, pursuant to which we currently receive service from EchoStar on all 32 of the DBS transponders covered by the Telesat Transponder Agreement. DISH Network has also guaranteed certain obligations of EchoStar under the Telesat Transponder Agreement. See discussion under “Guarantees” in Note 8. Under the terms of the DISH Nimiq 5 Agreement, we make certain monthly payments to EchoStar that commenced in September 2009 when the Nimiq 5 satellite was placed into service and continue through the service term. Unless earlier terminated under the terms and conditions of the DISH Nimiq 5 Agreement, the service term will expire ten years following the date the Nimiq 5 satellite was placed into service. Upon expiration of the initial term, we have the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end-of-life of the Nimiq 5 satellite. Upon in‑orbit failure or end-of-life of the Nimiq 5 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite. QuetzSat-1 Lease Agreement. During 2008, EchoStar entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provides, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite. During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we receive service from EchoStar on 24 DBS transponders. QuetzSat-1 was launched on September 29, 2011 and was placed into service during the fourth quarter 2011 at the 67.1 degree orbital location while we and EchoStar explored alternative uses for the QuetzSat-1 satellite. In the interim, EchoStar provided us with alternate capacity at the 77 degree orbital location. During the first quarter 2013, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. Unless earlier terminated under the terms and conditions of the QuetzSat-1 Transponder Agreement, the initial service term will expire in November 2021. Upon expiration of the initial term, we have the option to renew the QuetzSat-1 Transponder Agreement on a year-to-year basis through the end-of-life of the QuetzSat-1 satellite. Upon an in-orbit failure or end-of-life of the QuetzSat-1 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that any options to renew the QuetzSat-1 Transponder Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite. 103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. Unless earlier terminated under the terms and conditions of the DISH 103 Spectrum Development Agreement, the term generally will continue for the duration of the 103 Spectrum Rights. In connection with the 103 Spectrum Development Agreement, during May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). During June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date. Upon in-orbit failure or end-of-life of the SES-3 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that we will exercise our option to receive service on a replacement satellite. TT&C Agreement. Effective January 1, 2012, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we receive TT&C services from EchoStar for certain satellites for a period ending on December 31, 2016 (the “2012 TT&C Agreement”). In November 2016, we and EchoStar amended the 2012 TT&C Agreement to extend the term thereof for one additional year until December 31, 2017. The fees for services provided under the 2012 TT&C Agreement are calculated at either: (i) a fixed fee; or (ii) cost plus a fixed margin, which will vary depending on the nature of the services provided. We are able to terminate the 2012 TT&C Agreement for any reason upon 60 days notice. DISHOnline.com Services Agreement. Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we receive certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. We have the option to renew this agreement for successive one year terms and the agreement may be terminated for any reason upon at least 120 days notice to EchoStar. In November 2015, we exercised our right to renew this agreement for a one-year period ending on December 31, 2016. Sling TV Holding. On May 2, 2014, DISH Network contributed its equity interest in Sling TV Holding to us. Effective July 1, 2012, DISH Network and EchoStar formed Sling TV Holding, which was owned two-thirds by DISH Network and one-third by EchoStar and was consolidated into DISH Network’s financial statements beginning July 1, 2012. Sling TV Holding was formed to develop and commercialize certain advanced technologies. At that time, DISH Network, EchoStar and Sling TV Holding entered into the following agreements with respect to Sling TV Holding: (i) a contribution agreement pursuant to which DISH Network and EchoStar contributed certain assets in exchange for its respective ownership interests in Sling TV Holding; (ii) a limited liability company operating agreement (the “Operating Agreement”), which provides for the governance of Sling TV Holding; and (iii) a commercial agreement (the “Commercial Agreement”) pursuant to which, among other things, Sling TV Holding has: (a) certain rights and corresponding obligations with respect to its business; and (b) the right, but not the obligation, to receive certain services from DISH Network and EchoStar, respectively. Since this was a formation of an entity under common control and a step-up in basis was not allowed, each party’s contributions were recorded at historical book value for accounting purposes. Effective August 1, 2014, EchoStar and Sling TV Holding entered into the Exchange Agreement pursuant to which, among other things, Sling TV Holding distributed certain assets to EchoStar and EchoStar reduced its interest in Sling TV Holding to a ten percent non-voting interest. We now have a ninety percent equity interest and a 100% voting interest in Sling TV Holding. In addition, we, EchoStar and Sling TV Holding amended and restated the Operating Agreement, primarily to reflect the changes implemented by the Exchange Agreement. Finally, we, EchoStar and Sling TV Holding amended and restated the Commercial Agreement, pursuant to which, among other things, Sling TV Holding: (1) continues to have certain rights and corresponding obligations with respect to its business; (2) continues to have the right, but not the obligation, to receive certain services from us and EchoStar; and (3) has a license from EchoStar to use certain of the assets distributed to EchoStar as part of the Exchange Agreement. Sling TV Holding operates, through its subsidiary Sling TV L.L.C., the Sling TV services. Since the Exchange Agreement is among entities under common control, we recorded the difference between the historical cost basis of the assets transferred to EchoStar and our historical cost basis in EchoStar’s one-third noncontrolling interest in Sling TV Holding as a $6 million, net of deferred taxes, capital distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. In addition, we recorded the initial fair value of EchoStar’s ten percent non-voting interest as a $14 million, net of deferred taxes, deemed distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. EchoStar’s ten percent non-voting interest is redeemable contingent on a certain performance goal being achieved by Sling TV Holding. In addition, subject to certain conditions, the interest is redeemable at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interests” in the mezzanine section of our Condensed Consolidated Balance Sheets. EchoStar’s redeemable noncontrolling interest in Sling TV Holding was initially accounted for at fair value. The performance goal has been determined to be probable of achievement. Accordingly, the value of EchoStar’s redeemable noncontrolling interest in Sling TV Holding is adjusted each reporting period for any change in redemption value above the initial fair value (adjusted for the operating results of Sling TV Holding attributable to EchoStar subsequent to August 1, 2014), with the offset recorded in “Additional paid-in capital,” net of deferred taxes, on our Condensed Consolidated Balance Sheets. Subsequent to the Exchange Agreement, the operating results of Sling TV Holding attributable to EchoStar are recorded as “Redeemable noncontrolling interests” on our Condensed Consolidated Balance Sheets, with the offset recorded in “Net income (loss) attributable to noncontrolling interests, net of tax” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). “General and administrative expenses” During the three months ended September 30, 2016 and 2015, we incurred $25 million and $27 million, respectively, for general and administrative expenses from EchoStar. During the nine months ended September 30, 2016 and 2015, we incurred $72 million and $70 million, respectively, for general and administrative expenses from EchoStar. These amounts are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below. Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services. Real Estate Lease Agreements. We have entered into lease agreements pursuant to which we lease certain real estate from EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic area, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: · Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East in Englewood, Colorado was terminated effective August 10, 2016. · Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016. · Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016. · EchoStar Data Networks Sublease Agreement . The sublease for certain space at 211 Perimeter Center in Atlanta, Georgia expired on October 31, 2016. · Gilbert Lease Agreement. Effective August 1, 2014, we began leasing certain space from EchoStar at 801 N. DISH Dr. in Gilbert, Arizona. This lease is for a period ending on July 31, 2017. · Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. Application Development Agreement. During the fourth quarter 2012, we and EchoStar entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which EchoStar provides us with certain services relating to the development of web-based applications for set-top boxes for a period ending on February 1, 2017. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or EchoStar at any time upon at least 90 days notice. The fees for services provided under the Application Development Agreement are calculated at EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. XiP Encryption Agreement. During the third quarter 2012, we entered into an encryption agreement with EchoStar for our whole-home HD DVR line of set-top boxes (the “XiP Encryption Agreement”) pursuant to which EchoStar provides certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. In November 2016, we and EchoStar extended the term of the XiP Encryption Agreement for one additional year until December 31, 2017. We and EchoStar each have the right to terminate the XiP Encryption Agreement for any reason upon at least 30 days notice and 180 days notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. Sling Trademark License Agreement. On December 31, 2014, Sling TV L.L.C. entered into an agreement with Sling Media, Inc., a subsidiary of EchoStar, pursuant to which we have the right for a fixed fee to use certain trademarks, domain names and other intellectual property related to the “Sling” trademark for a period ending on December 31, 2016. Professional Services Agreement . Prior to 2010, in connection with the Spin-off, DISH Network entered into various agreements with EchoStar including the Transition Services Agreement, Satellite Procurement Agreement and Services Agreement, which all expired on January 1, 2010 and were replaced by a Professional Services Agreement. During 2009, DISH Network and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to receive the following services from DISH Network, among others, certain of which were previously provided under the Transition Services Agreement: information technology, travel and event coordination, internal audit, legal, accounting and tax, benefits administration, program acquisition services and |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required for complete financial statements prepared under GAAP. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Principles of Consolidation | Principles of Consolidation We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. See below for further information. Non-consolidated investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, the cost method is used. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests Sling TV. On May 2, 2014, DISH Network contributed its equity interest in Sling TV Holding L.L.C. (“Sling TV Holding,” formerly known as DISH Digital Holding L.L.C.) to us. As a result, all operating activities of Sling TV Holding are included in our financial results beginning May 2, 2014. Effective August 1, 2014, EchoStar Corporation (“EchoStar”) and Sling TV Holding entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, among other things, Sling TV Holding distributed certain assets to EchoStar and EchoStar reduced its interest in Sling TV Holding to a ten percent non-voting interest. EchoStar’s ten percent non-voting interest is redeemable contingent on a certain performance goal being achieved by Sling TV Holding. In addition, subject to certain conditions, the interest is redeemable at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interests” in the mezzanine section of our Condensed Consolidated Balance Sheets. EchoStar’s redeemable noncontrolling interest in Sling TV Holding was initially accounted for at fair value. The performance goal has been determined to be probable of achievement. Accordingly, the value of EchoStar’s redeemable noncontrolling interest in Sling TV Holding is adjusted each reporting period for any change in redemption value above the initial fair value (adjusted for the operating results of Sling TV Holding attributable to EchoStar subsequent to August 1, 2014), with the offset recorded in “Additional paid-in capital,” net of deferred taxes, on our Condensed Consolidated Balance Sheets. The operating results of Sling TV Holding attributable to EchoStar are recorded as “Redeemable noncontrolling interests” in our Condensed Consolidated Balance Sheets effective August 1, 2014, with the offset recorded in “Net income (loss) attributable to noncontrolling interests, net of tax” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 10 for further information on Sling TV Holding and the Exchange Agreement. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses and subscriber lives. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. |
Fair Value Measurements | Fair Value Measurements We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. We apply the following hierarchy in determining fair value: · Level 1, defined as observable inputs being quoted prices in active markets for identical assets; · Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; and quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs for which little or no market data exists, consistent with reasonably available assumptions made by other participants therefore requiring assumptions based on the best information available. As of September 30, 2016 and December 31, 2015, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. |
New Accounting Pronouncements | New Accounting Pronouncements Revenue from Contracts with Customers. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”). This converged standard on revenue recognition was issued jointly with the International Accounting Standards Board to create common revenue recognition guidance for GAAP and International Financial Reporting Standards. ASU 2014-09 provides a framework for revenue recognition that replaces most existing GAAP revenue recognition guidance when it becomes effective. ASU 2014-09 allows for either a full retrospective or modified retrospective adoption. We are evaluating the effect that ASU 2014-09 will have on our condensed consolidated financial statements and related disclosures. We have not yet selected an adoption method nor have we determined the effect of the standard on our ongoing financial reporting. The new standard could impact revenue and cost recognition for a significant number of our contracts, as well as our business processes and information technology systems. As a result, our evaluation of the effect of the new standard will likely extend over several future periods. On July 9, 2015, the FASB approved a one year deferral on the effective date for implementation of this standard, which changed the effective date for us to January 1, 2018. Recognition and Measurement of Financial Assets and Financial Liabilities . On January 5, 2016, the FASB issued ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) , which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are evaluating the impact the adoption of ASU 2016-01 will have on our condensed consolidated financial statements. Leases. On February 25, 2016, the FASB issued ASU 2016-02 Leases (“ASU 2016-02”), which relates to the accounting of leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are evaluating the impact the adoption of ASU 2016-02 will have on our condensed consolidated financial statements. Financial Instruments – Credit Losses. On June 16, 2016, the FASB issued ASU 2016-13 Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the way entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net earnings. This standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures. Statement of Cash Flows - Update . On August 26, 2016, the FASB issued an update to ASC 230 Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). This update consists of eight provisions that provide guidance on the classification of certain cash receipts and cash payments. If practicable, this update should be applied using a retrospective transition method to each period presented. For the provisions that are impracticable to apply retrospectively, those provisions may be applied prospectively as of the earliest date practicable. This update will become effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact the adoption of ASU 2016-15 will have on our condensed consolidated financial statements. Compensation – Stock Compensation. On March 30, 2016, the FASB issued ASU 2016-09 Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) , which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. During the third quarter 2016, we adopted ASU 2016-09, which had an immaterial impact on our condensed consolidated financial statements. |
Supplemental Data - Statement17
Supplemental Data - Statements of Cash Flows (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Data - Statements of Cash Flows | |
Schedule of supplemental cash flow and other non-cash data | For the Nine Months Ended September 30, 2016 2015 (In thousands) Cash paid for interest $ $ Cash received for interest Cash paid for income taxes Cash paid for income taxes to DISH Network Satellites and other assets financed under capital lease obligations — |
Marketable Investment Securit18
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | |
Schedule of marketable investment securities, restricted cash and cash equivalents, and other investment securities | As of September 30, 2016 December 31, 2015 (In thousands) Marketable investment securities: Current marketable investment securities $ $ Restricted marketable investment securities (1) Total marketable investment securities Restricted cash and cash equivalents (1) Other investment securities: Investment in EchoStar preferred tracking stock - cost method Investment in HSSC preferred tracking stock - cost method Other investment securities - cost method Total other investment securities Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ $ (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets. |
Schedule of components of available-for-sale investments | As of September 30, 2016 As of December 31, 2015 Marketable Marketable Investment Unrealized Investment Unrealized Securities Gains Losses Net Securities Gains Losses Net (In thousands) Debt securities (including restricted): U. S. Treasury and agency securities $ $ $ $ $ $ $ $ Corporate securities — Other — — — — — Equity securities — — — — — Total $ $ $ $ $ $ $ $ |
Schedule of investments measured at fair value on a recurring basis | As of September 30, 2016 December 31, 2015 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ $ $ $ — $ $ $ $ — Debt securities (including restricted): U. S. Treasury and agency securities $ $ $ — — $ $ $ $ — Corporate securities — — — — Other — — — — — — Equity securities — — — — — — Total $ $ $ $ — $ $ $ $ — |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory | |
Schedule of inventory | Inventory consisted of the following: As of September 30, 2016 December 31, 2015 (In thousands) Finished goods $ $ Work-in-process and service repairs Raw materials Total inventory (1) $ $ (1) The change in inventory as of September 30, 2016 primarily related to an increase in Hopper ® and Joey ® set top boxes and associated accessories. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Schedule of depreciation and amortization expense | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (In thousands) Equipment leased to customers $ $ $ $ Satellites Buildings, furniture, fixtures, equipment and other Total depreciation and amortization $ $ $ $ |
Schedule of pay-TV satellite fleet | Estimated Useful Life (Years)/ Degree Lease Launch Orbital Termination Satellites Date Location Date Owned: EchoStar XV July 2010 61.5 15 Leased from DISH Network (1): EchoStar XVIII June 2016 61.5 Month to month Leased from EchoStar (2): EchoStar VII (3) February 2002 119 June 2017 EchoStar IX August 2003 121 Month to month EchoStar X (3) February 2006 110 February 2021 EchoStar XI (3) July 2008 110 September 2021 EchoStar XII (3) July 2003 61.5 September 2017 EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (4) November 2012 61.5 January 2018 Nimiq 5 September 2009 72.7 September 2019 QuetzSat-1 September 2011 77 November 2021 Leased from Other Third Party: Anik F3 April 2007 118.7 April 2022 Ciel II December 2008 129 January 2019 (1) See Note 10 for further information on our Related Party Transactions with DISH Network. (2) See Note 10 for further information on our Related Party Transactions with EchoStar. (3) We generally have the option to renew each lease on a year-to-year basis through the end of the useful life of the respective satellite. (4) We have the option to renew this lease for an additional five-year period. If we exercise our five-year renewal option, we have the option to renew this lease for an additional five years. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Long-Term Debt | |
Schedule of carrying and fair values of the entity's debt facilities | As of September 30, 2016 December 31, 2015 Carrying Fair Value Carrying Fair Value (In thousands) 7 1/8% Senior Notes due 2016 (1) $ — $ — $ $ 4 5/8% Senior Notes due 2017 (2) 4 1/4% Senior Notes due 2018 7 7/8% Senior Notes due 2019 5 1/8% Senior Notes due 2020 6 3/4% Senior Notes due 2021 5 7/8% Senior Notes due 2022 5 % Senior Notes due 2023 5 7/8% Senior Notes due 2024 7 3/4% Senior Notes due 2026 — — Other notes payable Subtotal $ $ Unamortized deferred financing costs and debt discounts, net Capital lease obligations (3) Total long-term debt and capital lease obligations (including current portion) $ $ (1) On February 1, 2016, we redeemed the principal balance of our 7 1/8% Senior Notes due 2016. (2) Our 4 5/8% Senior Notes due 2017 mature on July 15, 2017 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2016. (3) Disclosure regarding fair value of capital leases is not required. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions | |
Schedule of transactions with NagraStar | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (In thousands) Purchases (including fees): Purchases from NagraStar $ $ $ $ As of September 30, 2016 December 31, 2015 (In thousands) Amounts Payable and Commitments: Amounts payable to NagraStar $ $ Commitments to NagraStar $ $ |
Organization and Business Act23
Organization and Business Activities (Details) item in Thousands | Sep. 30, 2016item |
Organization and Business Activities | |
Number of subscribers | 13,643 |
Supplemental Data - Statement24
Supplemental Data - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Supplemental Data - Statements of Cash Flows | ||
Cash paid for interest | $ 590,238 | $ 667,555 |
Cash received for interest | 1,701 | 5,028 |
Cash paid for income taxes | 22,658 | 1,979 |
Cash paid for income taxes to DISH Network | 484,217 | $ 394,145 |
Satellites and other assets financed under capital lease obligations | $ 1,328 |
Marketable Investment Securit25
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||
Current marketable investment securities | $ 12,656 | $ 141,335 |
Restricted marketable investment securities(1) | 80,244 | 82,280 |
Total marketable investment securities | 92,900 | 223,615 |
Restricted cash and cash equivalents (1) | 2,116 | 94 |
Other investment securities - cost method | 324,371 | 327,250 |
Total marketable investment securities, restricted cash and cash equivalents | $ 419,387 | 550,959 |
Maximum maturities of commercial paper | 365 days | |
Maximum maturities of corporate securities | 18 months | |
EchoStar | ||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||
Other investment securities - cost method | $ 228,795 | 228,795 |
HSSC | ||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||
Other investment securities - cost method | 87,409 | 87,409 |
Other investment securities Member | ||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||
Other investment securities - cost method | $ 8,167 | $ 11,046 |
Marketable Investment Securit26
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Investment in Tracking Stock (Details) - Satellite and Tracking Stock Transaction $ in Millions | Feb. 20, 2014USD ($)shares | Feb. 20, 2014USD ($)item |
Other investment securities: | ||
Percentage of economic interest in the Hughes Retail Group | 80.00% | |
EchoStar and HSSC | ||
Other investment securities: | ||
Number of owned satellites transferred and leased back | item | 5 | |
Liabilities Transferred | $ 59 | $ 59 |
Cash in exchange for shares of series of preferred tracking stock issued | 11 | $ 11 |
Capital transaction | 356 | |
Capital transaction recorded in additional paid-in capital | 51 | |
Capital distribution to EchoStar, net of deferred taxes | $ 51 | |
Tracking stock prohibited transfer period | 1 year | |
EchoStar | ||
Other investment securities: | ||
Preferred tracking stock issued by related party | shares | 6,290,499 | |
Historical cost of tracking stock | $ 229 | |
HSSC | ||
Other investment securities: | ||
Preferred tracking stock issued by related party | shares | 81.128 | |
Historical cost of tracking stock | $ 87 |
Marketable Investment Securit27
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Unrealized Gains (Losses) On Marketable Investment Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | $ 40 | $ 19,728 |
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss) | 1,000 | 12,000 |
Components of available-for-sale investments | ||
Debt securities | 12,656 | 141,335 |
Total marketable investment securities | 92,900 | 223,615 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 54 | 20,039 |
Unrealized Losses | (14) | (311) |
Unrealized Gains Losses, Net | 40 | 19,728 |
Contractual maturities of restricted and non-restricted marketable investment securities | ||
Debt securities with contractual maturities within one year | 59,000 | |
Debt securities with contractual maturities extending longer than one year through and including five years | 34,000 | |
U.S. Treasury and agency securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | 41 | (133) |
Components of available-for-sale investments | ||
Debt securities | 80,721 | 82,124 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 54 | 2 |
Unrealized Losses | (13) | (135) |
Unrealized Gains Losses, Net | 41 | (133) |
Corporate securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (1) | (171) |
Components of available-for-sale investments | ||
Debt securities | 12,179 | 90,838 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 3 | |
Unrealized Losses | (1) | (174) |
Unrealized Gains Losses, Net | $ (1) | (171) |
Other (including restricted) | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (2) | |
Components of available-for-sale investments | ||
Debt securities | 17,382 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Losses | (2) | |
Unrealized Gains Losses, Net | (2) | |
Equity Securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | 20,034 | |
Components of available-for-sale investments | ||
Equity securities | 33,271 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 20,034 | |
Unrealized Gains Losses, Net | $ 20,034 |
Marketable Investment Securit28
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair value of marketable securities | ||
Debt securities | $ 12,656 | $ 141,335 |
Total marketable investment securities | 92,900 | 223,615 |
Transfer of investments from Level 1 to Level 2 | 0 | |
Transfer of investments from Level 2 to Level 1 | 0 | |
U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 80,721 | 82,124 |
Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 12,179 | 90,838 |
Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 17,382 | |
Equity Securities | ||
Fair value of marketable securities | ||
Equity securities | 33,271 | |
Fair value measurements on recurring basis | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 364,415 | 307,406 |
Total marketable investment securities | 92,900 | 223,615 |
Fair value measurements on recurring basis | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 80,721 | 82,124 |
Fair value measurements on recurring basis | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 12,179 | 90,838 |
Fair value measurements on recurring basis | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 17,382 | |
Fair value measurements on recurring basis | Equity Securities | ||
Fair value of marketable securities | ||
Equity securities | 33,271 | |
Fair value measurements on recurring basis | Level 1 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 1,187 | 25,814 |
Total marketable investment securities | 80,721 | 110,599 |
Fair value measurements on recurring basis | Level 1 | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 80,721 | 77,328 |
Fair value measurements on recurring basis | Level 1 | Equity Securities | ||
Fair value of marketable securities | ||
Equity securities | 33,271 | |
Fair value measurements on recurring basis | Level 2 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 363,228 | 281,592 |
Total marketable investment securities | 12,179 | 113,016 |
Fair value measurements on recurring basis | Level 2 | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 4,796 | |
Fair value measurements on recurring basis | Level 2 | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | $ 12,179 | 90,838 |
Fair value measurements on recurring basis | Level 2 | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | $ 17,382 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory | ||
Finished goods | $ 363,155 | $ 304,812 |
Work-in-process and service repairs | 103,856 | 74,768 |
Raw materials | 12,356 | 10,673 |
Total Inventory | $ 479,367 | $ 390,253 |
Property and Equipment (Details
Property and Equipment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | |
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | $ 210,532 | $ 229,922 | $ 651,749 | $ 691,065 |
Equipment leased to customers | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | 178,300 | 199,734 | 556,303 | 597,800 |
Satellites | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | 15,261 | 15,261 | 45,784 | 45,784 |
Buildings, furniture, fixtures, equipment and other | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | $ 16,971 | $ 14,927 | $ 49,662 | $ 47,481 |
Pay-TV Satellites | ||||
Depreciation and amortization expense | ||||
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator | 13 | |||
Owned Satellites | 1 | 1 | ||
Number of satellites utilized under operating lease | 9 | |||
Number of satellites utilized under capital lease | 2 | |||
Dish Network | Pay-TV Satellites | ||||
Depreciation and amortization expense | ||||
Number of satellites utilized under operating lease | 1 |
Property and Equipment - Pay TV
Property and Equipment - Pay TV Satellites (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Property and Equipment | |||||
Depreciation and amortization | $ 210,532 | $ 229,922 | $ 651,749 | $ 691,065 | |
FCC authorizations | $ 635,794 | $ 635,794 | $ 635,794 | ||
EchoStar XV | |||||
Property and Equipment | |||||
Depreciable life of assets | 15 years | ||||
EchoStar XVI | |||||
Property and Equipment | |||||
Option to renew the lease for an additional period | 5 years | ||||
Another option to renew the lease if renewal option exercised | 5 years |
Long-Term Debt - Long term debt
Long-Term Debt - Long term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Jun. 13, 2016 | Dec. 31, 2015 | |
Long-term debt | ||||
Carrying Value | $ 14,112,650 | $ 13,613,686 | ||
Fair Value | 14,702,502 | 13,249,506 | ||
Unamortized deferred financing costs and debt discount, net | (42,456) | (41,563) | ||
Capital lease obligations (3) | 144,546 | 166,492 | ||
Total long-term debt and capital lease obligations (including current portion) | 14,214,740 | 13,738,615 | ||
Principal balance of debt redeemed | $ 1,500,000 | $ 650,001 | ||
7 1/8% Senior Notes due 2016 | ||||
Long-term debt | ||||
Carrying Value | 1,500,000 | |||
Fair Value | $ 1,506,750 | |||
Interest rate (as a percent) | 7.125% | 7.125% | ||
4 5/8% Senior Notes due 2017 | ||||
Long-term debt | ||||
Carrying Value | $ 900,000 | $ 900,000 | ||
Fair Value | $ 920,619 | $ 922,770 | ||
Interest rate (as a percent) | 4.625% | 4.625% | ||
4 1/4% Senior Notes due 2018 | ||||
Long-term debt | ||||
Carrying Value | $ 1,200,000 | $ 1,200,000 | ||
Fair Value | $ 1,235,316 | $ 1,207,560 | ||
Interest rate (as a percent) | 4.25% | 4.25% | ||
7 7/8% Senior Notes due 2019 | ||||
Long-term debt | ||||
Carrying Value | $ 1,400,000 | $ 1,400,000 | ||
Fair Value | $ 1,574,720 | $ 1,525,440 | ||
Interest rate (as a percent) | 7.875% | 7.875% | ||
5 1/8% Senior Notes due 2020 | ||||
Long-term debt | ||||
Carrying Value | $ 1,100,000 | $ 1,100,000 | ||
Fair Value | $ 1,145,507 | $ 1,100,000 | ||
Interest rate (as a percent) | 5.125% | 5.125% | ||
6 3/4% Senior Notes due 2021 | ||||
Long-term debt | ||||
Carrying Value | $ 2,000,000 | $ 2,000,000 | ||
Fair Value | $ 2,162,960 | $ 2,021,020 | ||
Interest rate (as a percent) | 6.75% | 6.75% | ||
5 7/8% Senior Notes due 2022 | ||||
Long-term debt | ||||
Carrying Value | $ 2,000,000 | $ 2,000,000 | ||
Fair Value | $ 2,060,820 | $ 1,889,780 | ||
Interest rate (as a percent) | 5.875% | 5.875% | ||
5% Senior Notes due 2023 | ||||
Long-term debt | ||||
Carrying Value | $ 1,500,000 | $ 1,500,000 | ||
Fair Value | $ 1,468,470 | $ 1,297,500 | ||
Interest rate (as a percent) | 5.00% | 5.00% | ||
5 7/8% Senior Notes due 2024 | ||||
Long-term debt | ||||
Carrying Value | $ 2,000,000 | $ 2,000,000 | ||
Fair Value | $ 1,985,980 | $ 1,765,000 | ||
Interest rate (as a percent) | 5.875% | 5.875% | ||
7 3/4% Senior Notes due 2026 | ||||
Long-term debt | ||||
Carrying Value | $ 2,000,000 | $ 2,000,000 | ||
Fair Value | $ 2,135,460 | |||
Interest rate (as a percent) | 7.75% | 7.75% | ||
Other notes payable | ||||
Long-term debt | ||||
Carrying Value | $ 12,650 | $ 13,686 | ||
Fair Value | $ 12,650 | $ 13,686 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Long-term debt | |||||
Principal balance of debt redeemed | $ 1,500,000 | $ 650,001 | |||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | 101.00% | |||
Premiums, interest expense and deferred financing costs, as applicable | $ 222,247 | $ 210,181 | $ 605,335 | $ 651,519 | |
7 1/8% Senior Notes due 2016 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 7.125% | 7.125% | 7.125% | ||
4 5/8% Senior Notes due 2017 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | ||
4 1/4% Senior Notes due 2018 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 4.25% | 4.25% | 4.25% | ||
7 7/8% Senior Notes due 2019 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 7.875% | 7.875% | 7.875% | ||
5 1/8% Senior Notes due 2020 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 5.125% | 5.125% | 5.125% | ||
6 3/4% Senior Notes due 2021 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | ||
5 7/8% Senior Notes due 2022 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | ||
5% Senior Notes due 2023 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | ||
5 7/8% Senior Notes due 2024 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 5.875% | 5.875% | 5.875% | ||
7 3/4% Senior Notes due 2026 | |||||
Long-term debt | |||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | ||
Redemption price as a percentage of principal amount | 100.00% | ||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | 35.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Aug. 30, 2016USD ($) | Feb. 12, 2015USD ($) | Dec. 23, 2013USD ($) | May 31, 2012 | Jul. 31, 2009item | Jun. 30, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Spectrum Investments | |||||||||
Dividend paid to DOC | $ 8,250,000,000 | $ 1,500,000,000 | $ 1,500,000,000 | $ 8,250,000,000 | |||||
Auction 1000 [Member] | |||||||||
Spectrum Investments | |||||||||
First phase auction threshold amount | 88,400,000,000 | ||||||||
Percent of geographic coverage area | 90 | ||||||||
Minimum upfront deposit from bidder in forward auction bid | 5,400,000,000 | ||||||||
First phase auction proceeds | $ 23,100,000,000 | ||||||||
Second phase auction proceeds | 21,500,000,000 | ||||||||
Second phase auction threshold | 56,500,000,000 | ||||||||
Dish Network | |||||||||
Spectrum Investments | |||||||||
Payment to acquire certain wireless licenses | $ 5,000,000,000 | ||||||||
Northstar Wireless or Northstar Spectrum | American III | |||||||||
Spectrum Investments | |||||||||
Non-controlling investments | 10,000,000,000 | ||||||||
Satellite transponder guarantees | |||||||||
Spectrum Investments | |||||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 206,000,000 | ||||||||
Hopper litigation | Maximum | |||||||||
Spectrum Investments | |||||||||
Number of days to store HD primetime programs recordings | 8 days | ||||||||
Technology Development Licensing | |||||||||
Spectrum Investments | |||||||||
Number of reexamination petitions pending before patent and trademark office | item | 2 | ||||||||
Do Not Call Litigation | |||||||||
Spectrum Investments | |||||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | ||||||||
Do Not Call Litigation | DISH Network L.L.C. | |||||||||
Spectrum Investments | |||||||||
Claim amount | $ 270,000,000 | ||||||||
Lightsquared Harbinger Capital Partners LLC | |||||||||
Spectrum Investments | |||||||||
Business days allowed to terminate existing agreements | 3 days |
Commitments and Contingencies -
Commitments and Contingencies - Narrative part 2 (Details) | Jul. 25, 2014item | Dec. 23, 2013USD ($) | Sep. 23, 2016USD ($) | Sep. 30, 2016USD ($)item |
DISH Network L.L.C. | Do Not Call Litigation | ||||
Loss contingencies | ||||
Claim amount | $ 270,000,000 | |||
Claim amount from state plaintiff | $ 23,500,000,000 | |||
DISH Network L.L.C. | Do Not Call Litigation | Maximum | ||||
Loss contingencies | ||||
Claim amount from federal plaintiff | $ 900,000,000 | |||
LightSquared transaction shareholder derivative actions | ||||
Loss contingencies | ||||
Number of shareholders who filed lawsuits | item | 5 | |||
Number of claims asserted by Jacksonville PFPF | item | 5 | |||
LightSquared transaction shareholder derivative actions | Mr. Ergen | ||||
Loss contingencies | ||||
Number of claims asserted by Jacksonville PFPF | item | 3 | |||
LightSquared transaction shareholder derivative actions | Director Defendants | ||||
Loss contingencies | ||||
Number of claims asserted by Jacksonville PFPF | item | 1 | |||
Vermont National Telephone Company [Member] | ||||
Loss contingencies | ||||
Falsely claimed bidding credit, percentage | 25.00% | |||
Recovery amount | $ 10,000,000,000 | |||
Vermont National Telephone Company [Member] | Minimum | ||||
Loss contingencies | ||||
Claim amount | 5,500 | |||
Vermont National Telephone Company [Member] | Maximum | ||||
Loss contingencies | ||||
Claim amount | 11,000 | |||
CALIFORNIA | Do Not Call Litigation | ||||
Loss contingencies | ||||
Claim amount from state plaintiff | $ 100,000,000 | |||
OHIO | Do Not Call Litigation | ||||
Loss contingencies | ||||
Claim amount from state plaintiff | 10,000,000 | |||
Illinois And North Carolina [Member] | Do Not Call Litigation | ||||
Loss contingencies | ||||
Claim Amount Minimum That Would Not Raise Constitutional Concerns | $ 1,000,000,000 | |||
Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company [Member] | ||||
Loss contingencies | ||||
Bidding Credit | $ 3,300,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Feb. 12, 2015 | Feb. 12, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Related Party Transaction [Line Items] | ||||||||
Dividend paid to DOC | $ 8,250,000 | $ 1,500,000 | $ 1,500,000 | $ 8,250,000 | ||||
Advertising sales | $ 3,617,798 | $ 3,595,812 | 10,988,263 | 10,880,388 | ||||
Satellite and transmission expenses | 188,517 | 192,741 | 538,432 | 569,977 | ||||
Trade accounts receivable | 777,673 | 777,673 | $ 822,505 | |||||
Trade accounts payable | 572,244 | 572,244 | 433,349 | |||||
Equipment sales and other revenue | 14,317 | 28,736 | 35,421 | 89,656 | ||||
Broadband, Wireless and Other Segments | ||||||||
Related Party Transaction [Line Items] | ||||||||
Expenses associated with services | 16,000 | 16,000 | 50,000 | 51,000 | ||||
Dish Network | ||||||||
Related Party Transaction [Line Items] | ||||||||
Dividend paid to DOC | $ 8,250,000 | |||||||
Advertising sales | 0 | 2,000 | 2,000 | 8,000 | ||||
EchoStar | ||||||||
Related Party Transaction [Line Items] | ||||||||
Satellite and transmission expenses | 174,000 | 183,000 | 506,000 | 541,000 | ||||
Trade accounts receivable | 1,000 | 1,000 | 23,000 | |||||
Trade accounts payable | 318,000 | 318,000 | $ 263,000 | |||||
Equipment sales and other revenue | 1,000 | $ 13,000 | 1,000 | $ 39,000 | ||||
EchoStar XVIII Satellite | ||||||||
Related Party Transaction [Line Items] | ||||||||
Satellite and transmission expenses | $ 5,000 | $ 5,000 |
Related Party Transactions - Na
Related Party Transactions - Narrative Part 1 (Details) $ in Thousands | Feb. 23, 2010 | May 31, 2013 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2013item |
Related Party Transaction [Line Items] | |||||||
Subscriber-related expenses | $ 2,150,558 | $ 2,113,962 | $ 6,473,663 | $ 6,386,938 | |||
EchoStar | |||||||
Related Party Transaction [Line Items] | |||||||
Subscriber-related expenses | $ 3,000 | $ 3,000 | $ 8,000 | $ 9,000 | |||
EchoStar | El Paso Lease Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Number of consecutive three year renewal options | item | 4 | ||||||
Agreement Renewal Option Term | 3 years | ||||||
EchoStar | Remanufactured Receiver Agreement | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Minimum required notice period for termination of agreement by related party | 60 days | ||||||
EchoStar | EchoStar XV | |||||||
Related Party Transaction [Line Items] | |||||||
Notice period for termination of agreement | 30 days | ||||||
EchoStar | DISH Remote Access Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement term | 5 years | ||||||
Automatic renewal period | 1 year | ||||||
Additional term of renewal option | 1 year | ||||||
Required notice period for termination by the reporting entity | 120 days | ||||||
EchoStar | Sling Service Services Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement term | 5 years | ||||||
Automatic renewal period | 1 year | ||||||
Additional term of renewal option | 1 year | ||||||
Required notice period for termination by the reporting entity | 120 days |
Related Party Transactions - 38
Related Party Transactions - Narrative Part 2 (Details) $ in Thousands | Dec. 21, 2012 | Jan. 02, 2012 | Nov. 30, 2016 | Jun. 30, 2013 | May 31, 2013 | May 31, 2012 | May 31, 2010 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2014item | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2009item | Dec. 31, 2008item |
Related Party Transaction [Line Items] | ||||||||||||||
Satellite and transmission expenses | $ | $ 188,517 | $ 192,741 | $ 538,432 | $ 569,977 | ||||||||||
EchoStar XVI | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement Renewal Option Term | 5 years | |||||||||||||
2012 Broadcast Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Extension of initial term | 1 year | |||||||||||||
EchoStar | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Satellite and transmission expenses | $ | $ 174,000 | $ 183,000 | $ 506,000 | $ 541,000 | ||||||||||
EchoStar | Certain Sports Related Programming Broadcast Agreement | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term | 10 years | |||||||||||||
EchoStar | EchoStar VIII | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notice period for termination of agreement | 30 days | |||||||||||||
EchoStar | EchoStar XVI | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term from commencement of service date | 4 years | |||||||||||||
Agreement Renewal Option Term | 5 years | |||||||||||||
Additional term of renewal option | 5 years | |||||||||||||
EchoStar | Telesat Transponder Agreement | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term with third party | 15 years | |||||||||||||
Number of DBS transponders available to receive services | 32 | |||||||||||||
EchoStar | DISH Nimiq 5 Agreement | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term | 10 years | |||||||||||||
Number of DBS transponders currently used | 32 | |||||||||||||
EchoStar | QuetzSat-1 Lease Agreement | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term with third party | 10 years | |||||||||||||
Number of DBS transponders available to receive services | 32 | |||||||||||||
Number of DBS transponders currently used | 24 | |||||||||||||
Number of transponders subleased | 5 | |||||||||||||
EchoStar | 103 degree orbital location member | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Agreement term | 10 years | |||||||||||||
Agreement term from commencement of service date | 10 years | |||||||||||||
EchoStar | TT&C Agreement | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Required notice period for termination by the reporting entity | 60 days | |||||||||||||
Agreement term | 1 year | |||||||||||||
EchoStar | 2012 Broadcast Agreement [Member] | Minimum | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Required notice period for termination by the reporting entity | 60 days |
Related Party Transactions - 39
Related Party Transactions - Narrative Part 3 (Details) - USD ($) $ in Thousands | Nov. 12, 2015 | Aug. 02, 2014 | Jul. 02, 2012 | Jan. 02, 2010 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2014 | Dec. 31, 2012 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2009 | Aug. 01, 2014 |
Related Party Transaction [Line Items] | ||||||||||||
General and administrative expenses | $ 188,959 | $ 180,070 | $ 562,831 | $ 539,546 | ||||||||
XiP Encryption Agreement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Minimum notice period for termination of agreement | 30 days | |||||||||||
DISH Digital Holding LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Ownership percentage | 90.00% | |||||||||||
Voting interest (as a percent) | 100.00% | |||||||||||
Additional paid in capital recorded due to difference between the historical cost basis of the assets transferred | $ 6,000 | |||||||||||
Deemed Distribution Redeemable Noncontrolling Interest Fair Value Net Of Deferred Tax | $ 14,000 | |||||||||||
EchoStar | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
General and administrative expenses | $ 25,000 | $ 27,000 | $ 72,000 | $ 70,000 | ||||||||
Ownership percentage | 33.00% | |||||||||||
Non-voting interest redeemable period from fifth anniversary of the exchange agreement | 60 days | |||||||||||
EchoStar | Product Support Agreement | Minimum | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Required notice period for termination by the reporting entity | 60 days | |||||||||||
EchoStar | DISH Online.com Services Agreement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Term of renewal option exercised | 1 year | |||||||||||
Agreement term | 2 years | |||||||||||
Agreement Renewal Option Term | 1 year | |||||||||||
EchoStar | DISH Online.com Services Agreement | Minimum | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Required notice period for termination by the reporting entity | 120 days | |||||||||||
EchoStar | Application Development Agreement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Minimum notice period for termination of agreement | 90 days | |||||||||||
Automatic renewal period | 1 year | |||||||||||
EchoStar | XiP Encryption Agreement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Required notice period for termination of agreement | 180 days | |||||||||||
Additional term of renewal option | 1 year | |||||||||||
EchoStar | DISH Digital Holding LLC | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Ownership percentage | 10.00% | |||||||||||
Dish Network [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Ownership percentage | 67.00% | |||||||||||
Dish Network | EchoStar | Professional Services Agreement | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Minimum notice period for termination of agreement | 60 days | |||||||||||
Minimum notice period for termination of a specific service | 30 days | |||||||||||
Agreement term | 1 year | |||||||||||
Automatic renewal period | 1 year |
Related Party Transactions - 40
Related Party Transactions - Narrative Part 4 (Details) $ in Thousands | Jan. 02, 2012 | Apr. 29, 2011USD ($)installment | Dec. 31, 2011USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2011USD ($) |
Related Party Transaction [Line Items] | ||||||||
Cost of sales - equipment, services and other | $ 11,352 | $ 18,787 | $ 36,455 | $ 73,086 | ||||
Dish Network | TiVo v. Dish Network and EchoStar Corporation | ||||||||
Related Party Transaction [Line Items] | ||||||||
Settlement amount | $ 500,000 | |||||||
Initial settlement amount paid | 300,000 | |||||||
Aggregate of six annual installment amounts between 2012 and 2017 | $ 200,000 | |||||||
Estimated percentage of annual future payments payable by the company | 95.00% | |||||||
Litigation settlement number of annual installments | installment | 6 | |||||||
Contribution from related party | $ 10,000 | |||||||
Receiver Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Additional term of renewal option | 1 year | |||||||
gTLD Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount paid by related party transaction | 1,000 | 1,000 | ||||||
EchoStar | Receiver Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Minimum notice period for termination of agreement | 60 days | |||||||
Purchased set-top boxes and other equipment from EchoStar | $ 154,000 | $ 154,000 | $ 584,000 | $ 570,000 | ||||
EchoStar | Patent Cross-License Agreements | Dish Network | Maximum | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments to third party by related party | $ 10,000 | |||||||
Payments to third party by related party under extension option | $ 3,000 |
Related Party Transactions - 41
Related Party Transactions - Narrative Part 5 (Details) - USD ($) $ in Thousands | Feb. 20, 2014 | Feb. 20, 2014 | Aug. 19, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 |
Satellite and Tracking Stock Transaction | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percentage of economic interest in the Hughes Retail Group | 80.00% | |||||||
Rovi License Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Agreement term | 10 years | |||||||
EchoStar | Satellite and Tracking Stock Transaction | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related Party Transactions Historical Cost of Tracking Stock | $ 229,000 | |||||||
NagraStar | ||||||||
Related Party Transaction [Line Items] | ||||||||
Purchases from NagraStar | $ 17,526 | $ 21,707 | $ 55,410 | $ 68,729 | ||||
Amounts payable to NagraStar | 17,364 | 19,362 | 17,364 | 19,362 | ||||
Commitments to NagraStar | $ 682 | $ 1,532 | $ 682 | $ 1,532 | ||||
EchoStar and HSSC | Satellite and Tracking Stock Transaction | ||||||||
Related Party Transaction [Line Items] | ||||||||
Liabilities Transferred | 59,000 | $ 59,000 | ||||||
Cash in exchange for shares of series of preferred tracking stock issued | 11,000 | 11,000 | ||||||
Capital transaction | 356,000 | |||||||
Cash in Exchange of Shares Issued | 11,000 | $ 11,000 | ||||||
Capital Distribution to Related Party in Connection Purchase of Strategic Investments | 51,000 | |||||||
Tracking stock prohibited transfer period | 1 year | |||||||
HSSC | Satellite and Tracking Stock Transaction | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related Party Transactions Historical Cost of Tracking Stock | $ 87,000 | |||||||
PMC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Contribution from related party | $ 5,000 | |||||||
DISH Investors | EchoStar and HSSC | ||||||||
Related Party Transaction [Line Items] | ||||||||
Tracking stock prohibited transfer period | 1 year |