Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
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, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,015 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 450,663 | $ 777,578 |
Marketable investment securities | 102,362 | 3,833 |
Trade accounts receivable, net of allowance for doubtful accounts of $17,560 and $17,440, respectively | 674,104 | 740,856 |
Inventory | 318,859 | 422,323 |
Other current assets | 134,683 | 112,745 |
Total current assets | 1,680,671 | 2,057,335 |
Noncurrent Assets: | ||
Restricted cash, cash equivalents and marketable investment securities | 72,322 | 82,360 |
Property and equipment, net | 1,673,317 | 1,890,368 |
FCC authorizations | 635,996 | 635,794 |
Other investment securities | 112,381 | 33,248 |
Other noncurrent assets, net | 232,497 | 243,112 |
Total noncurrent assets | 2,726,513 | 2,884,882 |
Total assets | 4,407,184 | 4,942,217 |
Current Liabilities: | ||
Trade accounts payable | 342,289 | 504,562 |
Deferred revenue and other | 698,254 | 751,397 |
Accrued programming | 1,593,804 | 1,542,036 |
Accrued interest | 213,717 | 265,224 |
Other accrued expenses (Note 8) | 757,276 | 459,239 |
Current portion of long-term debt and capital lease obligations | 1,238,076 | 938,832 |
Total current liabilities | 4,843,416 | 4,461,290 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion | 12,053,201 | 13,274,536 |
Deferred tax liabilities | 769,356 | 776,903 |
Long-term deferred revenue and other long-term liabilities | 211,122 | 221,638 |
Total long-term obligations, net of current portion | 13,033,679 | 14,273,077 |
Total liabilities | 17,877,095 | 18,734,367 |
Commitments and Contingencies (Note 8) | ||
Stockholder's Equity (Deficit): | ||
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding | ||
Additional paid-in capital | 1,111,337 | 1,097,607 |
Accumulated other comprehensive income (loss) | 1,038 | (117) |
Accumulated earnings (deficit) | (14,587,090) | (14,891,573) |
Total DISH DBS stockholder's equity (deficit) | (13,474,715) | (13,794,083) |
Noncontrolling interests | 4,804 | 1,933 |
Total stockholder's equity (deficit) | (13,469,911) | (13,792,150) |
Total liabilities and stockholder's equity (deficit) | $ 4,407,184 | $ 4,942,217 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Allowance for doubtful accounts on trade accounts receivable | $ 17,560 | $ 17,440 |
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Subscriber-related revenue | $ 3,459,439 | $ 3,617,798 | $ 10,508,801 | $ 10,988,263 |
Equipment sales and other revenue | 32,120 | 35,976 | 97,529 | 125,439 |
Total revenue | 3,491,559 | 3,653,774 | 10,606,330 | 11,113,702 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | ||||
Subscriber-related expenses | 2,182,555 | 2,156,508 | 6,543,542 | 6,495,549 |
Satellite and transmission expenses | 174,787 | 183,086 | 544,508 | 523,233 |
Cost of sales - equipment and other | 21,563 | 22,778 | 71,672 | 92,709 |
Subscriber acquisition costs: | ||||
Cost of sales - subscriber promotion subsidies | 15,660 | 32,742 | 58,144 | 119,676 |
Other subscriber acquisition costs | 153,465 | 173,738 | 419,023 | 521,675 |
Subscriber acquisition advertising | 146,565 | 181,258 | 390,319 | 429,813 |
Total subscriber acquisition costs | 315,690 | 387,738 | 867,486 | 1,071,164 |
General and administrative expenses | 182,679 | 184,164 | 487,287 | 552,340 |
Litigation expense (Note 8 ) | 295,695 | |||
Depreciation and amortization (Note 6) | 189,726 | 202,046 | 563,068 | 627,168 |
Total costs and expenses | 3,067,000 | 3,136,320 | 9,373,258 | 9,362,163 |
Operating income (loss) | 424,559 | 517,454 | 1,233,072 | 1,751,539 |
Other Income (Expense): | ||||
Interest income | 2,193 | 922 | 7,889 | 5,305 |
Interest expense, net of amounts capitalized | (212,655) | (222,290) | (655,889) | (605,455) |
Other, net | 40,259 | 1,331 | 43,684 | 33,006 |
Total other income (expense) | (170,203) | (220,037) | (604,316) | (567,144) |
Income (loss) before income taxes | 254,356 | 297,417 | 628,756 | 1,184,395 |
Income tax (provision) benefit, net | (94,426) | (108,460) | (321,325) | (444,236) |
Net income (loss) | 159,930 | 188,957 | 307,431 | 740,159 |
Less: Net income (loss) attributable to noncontrolling interests, net of tax | 1,506 | 816 | 2,948 | 2,151 |
Net income (loss) attributable to DISH DBS | 158,424 | 188,141 | 304,483 | 738,008 |
Comprehensive Income (Loss): | ||||
Net income (loss) | 159,930 | 188,957 | 307,431 | 740,159 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 232 | 1,078 | ||
Unrealized holding gains (losses) on available-for-sale securities | 118 | (83) | 53 | (19,689) |
Deferred income tax (expense) benefit, net | (43) | 24 | 7,690 | |
Total other comprehensive income (loss), net of tax | 307 | (83) | 1,155 | (11,999) |
Comprehensive income (loss) | 160,237 | 188,874 | 308,586 | 728,160 |
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of tax | 1,506 | 816 | 2,948 | 2,151 |
Comprehensive income (loss) attributable to DISH DBS | $ 158,731 | $ 188,058 | $ 305,638 | $ 726,009 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ 307,431 | $ 740,159 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 563,068 | 627,168 |
Realized and unrealized losses (gains) on investments | (41,509) | (32,322) |
Non-cash, stock-based compensation | 20,619 | 10,530 |
Deferred tax expense (benefit) | (9,025) | (127,262) |
Other, net | 4,714 | 70,602 |
Changes in current assets and current liabilities, net | 205,960 | 75,670 |
Net cash flows from operating activities | 1,051,258 | 1,364,545 |
Cash Flows From Investing Activities: | ||
(Purchases) Sales and maturities of marketable investment securities, net | (50,620) | 127,348 |
Purchases of property and equipment | (319,445) | (405,040) |
Purchases of strategic investments | (90,381) | |
Other, net | 19,578 | 10,863 |
Net cash flows from investing activities | (440,868) | (266,829) |
Cash Flows From Financing Activities: | ||
Proceeds from issuance of senior notes | 2,000,000 | |
Dividend to DISH Orbital Corporation | (1,500,000) | |
Redemption and repurchases of senior notes | (900,000) | (1,500,000) |
Payments made to parent of transferred businesses | (7,098) | (46,655) |
Repayment of long-term debt and capital lease obligations | (29,858) | (30,873) |
Debt issuance costs | (7,676) | |
Other, net | (349) | (500) |
Net cash flows from financing activities | (937,305) | (1,085,704) |
Net increase (decrease) in cash and cash equivalents | (326,915) | 12,012 |
Cash and cash equivalents, beginning of period | 777,578 | 420,752 |
Cash and cash equivalents, end of period | $ 450,663 | $ 432,764 |
Organization and Business Activ
Organization and Business Activities | 9 Months Ended |
Sep. 30, 2017 | |
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. Our subsidiaries operate one primary business segment. Pay-TV 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, 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”). Our Sling domestic service has a single-stream service branded Sling Orange and a multi-stream service branded Sling Blue, which includes, among other things, the ability to stream on up to three devices simultaneously. All Sling branded pay-TV subscribers are included in our Pay-TV subscriber count. As of September 30, 2017, we had 13.203 million Pay-TV subscribers in the United States, after we removed approximately 145,000 subscribers, representing all of our subscribers in Puerto Rico and the U.S. Virgin Islands, due to the impact of Hurricane Maria. As a result of the completion of the Share Exchange with EchoStar, described below, we also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. See Note 2 and Note 11 for further information. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
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, 2016. 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. On February 28, 2017, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange Agreement”) that was previously entered into on January 31, 2017 (the “Share Exchange”). Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses, consisting primarily of the businesses that design, develop and distribute digital set-top boxes, provide satellite uplinking services and develop and support streaming video technology, as well as certain investments in joint ventures, spectrum licenses, real estate properties and EchoStar’s ten percent non-voting interest in Sling TV Holding L.L.C. (the “Transferred Businesses”), and in exchange, we transferred to EchoStar the 6,290,499 shares of preferred tracking stock issued by EchoStar (the “EchoStar Tracking Stock”) and 81.128 shares of preferred tracking stock issued by Hughes Satellite Systems Corporation, a subsidiary of EchoStar (the “HSSC Tracking Stock,” and together with the EchoStar Tracking Stock, collectively, the “Tracking Stock”), that tracked the residential retail satellite broadband business of Hughes Network Systems, LLC (“HNS”). In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. See Note 11 for further information. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. We initially recorded the Transferred Businesses at EchoStar’s historical cost basis. The difference between the historical cost basis of the Transferred Businesses and the net carrying value of the Tracking Stock is recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. The results of the Transferred Businesses were prepared from separate records maintained by EchoStar for the periods prior to March 1, 2017, and may not necessarily be indicative of the conditions that would have existed, or the results of operations, if the Transferred Businesses had been operated on a combined basis with our subsidiaries. The primary impacts to our financial statement presentation are as follows: · Our investments in the EchoStar Tracking Stock and HSSC Tracking Stock are no longer included in our Condensed Consolidated Balance Sheets. · The assets and liabilities of the Transferred Businesses are recorded in our Condensed Consolidated Balance Sheets, and the results of operations of the Transferred Businesses, including sales of set-top boxes to third parties, are recorded in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). · Sling TV Holding L.L.C., in which EchoStar held a 10% non-voting interest prior to the Share Exchange, is accounted for as though it was an indirect wholly-owned subsidiary of us. · Intercompany transactions between the Transferred Businesses and us, including, among others, the sale of set-top boxes and broadcast services from EchoStar to us, have been eliminated to the extent possible, including the margin EchoStar received on those sales. Our subsequent annual and quarterly financial statements will include the results of the Transferred Businesses as described above for all periods presented in those financial statements, including periods prior to the completion of the Share Exchange. The table below includes unaudited supplemental pro forma information for revenue and net income (loss) attributable to DISH DBS on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as if the results of the Transferred Businesses were included for the three and nine months ended September 30, 2016 and for the year ended December 31, 2016, respectively: DISH DBS (as previously reported) Adjustments Relating to the Transferred Businesses DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2016: Total revenue $ 3,632,115 $ 21,659 $ 3,653,774 Net income (loss) attributable to DISH DBS $ 177,114 $ 11,027 $ 188,141 For the Nine Months Ended September 30, 2016: Total revenue $ 11,023,684 $ 90,018 $ 11,113,702 Net income (loss) attributable to DISH DBS $ 702,742 $ 35,266 $ 738,008 For the Year Ended December 31, 2016: Total revenue $ 14,637,043 $ 118,896 $ 14,755,939 Net income (loss) attributable to DISH DBS $ 916,528 $ 48,086 $ 964,614 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, independent third-party 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. Marketable Investment Securities We currently classify all marketable investment securities as available-for-sale, except for investments which we account for as trading securities, discussed below. We adjust the carrying amount of our available-for-sale securities to fair value and report the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Declines in the fair value of a marketable investment security which are determined to be “other-than-temporary” are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. Our trading securities are also carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Property and Equipment Property and equipment are stated at amortized cost less impairment losses, if any. The costs of satellites under construction, including interest and certain amounts prepaid under our satellite service agreements, are capitalized during the construction phase, assuming the eventual successful launch and in-orbit operation of the satellite. If a satellite were to fail during launch or while in-orbit, the resultant loss would be charged to expense in the period such loss was incurred. The amount of any such loss would be reduced to the extent of insurance proceeds estimated to be received, if any. Depreciation is recorded on a straight-line basis over useful lives ranging from one to 40 years. Repair and maintenance costs are charged to expense when incurred. Renewals and improvements that add value or extend the asset’s useful life are capitalized. Costs related to the procurement and development of software for internal-use are capitalized and amortized using the straight-line method over the estimated useful life of the software. Cost of Sales – Equipment and Other Costs include the cost of non-subsidized sales of DBS accessories and the cost of sales of digital receivers and related components to third-party pay-TV providers, both of which include freight and royalties. Costs are generally recognized as products are delivered to customers and the related revenue is recognized. 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, 2017 and December 31, 2016, 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”) was equal to or approximated 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 based on, among other things, available trade information, and/or 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. Revenue Recognition We recognize revenue when an arrangement exists, prices are determinable, collectability is reasonably assured and the goods or services have been delivered. Revenue from our Pay-TV services is recognized when programming is broadcast to subscribers. Payments received from Pay-TV subscribers in advance of the broadcast or service period are recorded as “Deferred revenue and other” in our Condensed Consolidated Balance Sheets until earned. Revenue from equipment sales generally is recognized upon shipment to customers. For certain of our promotions, subscribers are charged an upfront fee. A portion of these fees may be deferred and recognized over the estimated subscriber life for new subscribers or the estimated remaining life for existing subscribers ranging from four to five years. Revenue from advertising sales is recognized when the related services are performed. Subscriber fees for DISH branded pay-TV equipment rental fees and other hardware related fees, including fees for DVRs, additional outlet fees, advertising services and fees earned from our in-home service operations are recognized as revenue as earned. Generally, revenue from equipment sales, equipment upgrades and sales of streaming-capable devices for our Sling branded pay-TV services are recognized upon shipment to customers. Certain of our existing and new subscriber promotions include programming discounts. Programming revenues are recorded as earned at the discounted monthly rate charged to the subscriber. We offer our customers the opportunity to download movies for a specific viewing period or permanently purchase a movie from our website. We recognize revenue when the movie is successfully downloaded by the customer, which, based on our current technology, occurs at the time the customer plays the movie for the first time. Research and Development Research and development costs are expensed as incurred. Research and development costs totaled $8 million and $10 million for the three months ended September 30, 2017 and 2016, respectively. Research and development costs totaled $24 million and $34 million for the nine months ended September 30, 2017 and 2016, respectively. 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”), and has modified the standard thereafter. 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. 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, and we plan on using the modified retrospective method. We are currently finalizing our accounting policies under ASU 2014-09. While we have not determined the ultimate impact of the standard on our Condensed Consolidated Financial Statements and related disclosures, we believe the most significant impact to us is that the standard will require that incremental costs to obtain a customer, which represent a significant portion of our non-advertising subscriber acquisition costs, be deferred and recognized over a period of time, whereas our current policy is to expense these costs as incurred. Note that where the expected amortization period is less than a year, we plan to use the practical expedient which permits expensing of these costs. From a revenue perspective, for substantially all of our residential video customers under a contract, we have concluded that the contract term under ASC 2014-09 is one month. Accordingly, while there will be changes in the way certain upfront fees and other items are recognized, we do not believe at this time there will be a material change to our revenue recognition model for our residential video customers. We are currently in the process of identifying and implementing changes to our systems, processes, and internal controls to meet the requirements of the standard. The ultimate impact of adopting ASU 2014-09 for both revenue recognition and costs to obtain and fulfill contracts will depend on the promotions and offers in place during the period leading up to and after the adoption of ASU 2014-09. 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. The ultimate impact of adopting ASU 2016-01 will depend on the materiality of equity investments we hold and fluctuations in the fair value of those investments. 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 2016-15 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 expect that the adoption of ASU 2016-15 will have an immaterial impact on our Condensed Consolidated Financial Statements and related disclosures. Statement of Cash Flows: Restricted Cash. On November 17, 2016, the FASB issued ASU 2016-18 Restricted Cash (“ASU 2016-18”) , which addresses the diversity where changes in restricted cash are classified on the cash flow statement. ASU 2016-18 requires that changes in restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We expect that the adoption of ASU 2016-18 will have an immaterial impact on our Condensed Consolidated Financial Statements and related disclosures. |
Supplemental Data - Statements
Supplemental Data - Statements of Cash Flows | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 2016 (In thousands) Cash paid for interest $ 696,379 $ 590,238 Cash received for interest 7,889 1,705 Cash paid for income taxes 23,289 22,658 Cash paid for income taxes to DISH Network 323,588 484,217 Satellites and other assets financed under capital lease obligations 889 7,850 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, 2017 | |
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, December 31, 2017 2016 (In thousands) Marketable investment securities: Current marketable investment securities: Trading $ 47,856 $ — Other 54,506 3,833 Total current marketable investment securities 102,362 3,833 Restricted marketable investment securities (1) 71,919 81,679 Total marketable investment securities 174,281 85,512 Restricted cash and cash equivalents (1) 403 681 Other investment securities: Other investment securities - equity method 112,381 25,098 Other investment securities - cost method — 8,150 Total other investment securities 112,381 33,248 Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ 287,065 $ 119,441 (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, except as specified below. See Note 2 for further information. Current Marketable Investment Securities - Trading We had an investment in non-marketable preferred shares of a non-public company, which was accounted for as a cost method investment and included in “Other investment securities” on our Condensed Consolidated Balance Sheets. During the three months ended September 30, 2017, our non-marketable preferred shares converted into common shares in conjunction with the issuer’s initial public offering, and accordingly we classified the new securities to “Marketable investment securities” on our Condensed Consolidated Balance Sheets. We have elected to account for these common shares as trading securities with changes in fair value reported each period as unrealized gains or losses in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). As of September 30, 2017, the fair value of our investment was approximately $48 million, and we recognized a pre-tax unrealized gain of approximately $40 million for the change in the fair value of the investment during the three months ended September 30, 2017, which was recorded in “Other, net” within “Other Income (Expense).” Current Marketable Investment Securities - Other Our current marketable investment securities portfolio includes investments in equity securities and/or 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, 2017 and December 31, 2016, 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. Certain of our equity method investments are detailed below. NagraStar L.L.C. As a result of the completion of the Share Exchange on February 28, 2017, we own a 50% interest in NagraStar L.L.C. (“NagraStar”), a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. Invidi Technologies Corporation . In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi Technologies Corporation (“Invidi”), an entity that provides proprietary software for the addressable advertising market. The transaction closed in January 2017. 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. Unrealized Gains (Losses) on Marketable Investment Securities As of September 30, 2017 and December 31, 2016, we had accumulated net unrealized losses of less than $1 million. These amounts, net of related tax effect, were losses of less than $1 million. 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, 2017 As of December 31, 2016 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 $ 75,638 $ — $ (39) $ (39) $ 81,982 $ 13 $ (132) $ (119) Commercial paper 7,340 — (1) (1) — — — — Corporate securities 42,811 13 (37) (24) 3,530 3 — 3 Other 636 — — — — — — — Total $ 126,425 $ 13 $ (77) $ (64) $ 85,512 $ 16 $ (132) $ (116) As of September 30, 2017, restricted and non-restricted marketable investment securities included debt securities of $119 million with contractual maturities within one year and $7 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, 2017 December 31, 2016 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ 380,049 $ 27,117 $ 352,932 $ — $ 702,331 $ 4,126 $ 698,205 $ — Debt securities (including restricted): U.S. Treasury and agency securities $ 75,638 $ 75,638 $ — $ — $ 81,982 $ 81,982 $ — $ — Commercial paper 7,340 — 7,340 — — — — — Corporate securities 42,811 — 42,811 — 3,530 — 3,530 — Other 636 — 636 — — — — — Equity Securities 47,856 47,856 — — — — — — Total $ 174,281 $ 123,494 $ 50,787 $ — $ 85,512 $ 81,982 $ 3,530 $ — During the nine months ended September 30, 2017, we had no transfers in or out of Level 1 and Level 2 fair value measurements. Gains and Losses on Sales and Changes in Carrying Amounts of Investments “Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, Other, net: 2017 2016 2017 2016 (In thousands) Marketable investment securities - gains (losses) on sales/exchanges $ — $ — $ 1,803 $ 32,322 Marketable investment securities - unrealized gains (losses) on trading securities 39,706 — 39,706 — Other 553 1,331 2,175 684 Total $ 40,259 $ 1,331 $ 43,684 $ 33,006 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory | |
Inventory | 5. Inventory consisted of the following: As of September 30, December 31, 2017 2016 (In thousands) Finished goods $ 233,437 $ 282,569 Work-in-process and service repairs 76,779 129,486 Raw materials 8,643 10,268 Total inventory $ 318,859 $ 422,323 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment | |
Property and Equipment | 6. Property and equipment consisted of the following: Depreciable As of Life September 30, December 31, (In Years) 2017 2016 (In thousands) Equipment leased to customers 2-5 $ 2,339,446 $ 2,630,269 EchoStar XV 15 277,658 277,658 Satellites acquired under capital lease agreements 10-15 499,819 499,819 Furniture, fixtures, equipment and other 1-10 1,654,844 1,541,838 Buildings and improvements 1-40 289,953 287,612 Land - 14,057 14,057 Construction in progress - 71,402 87,887 Total property and equipment 5,147,179 5,339,140 Accumulated depreciation (3,473,862) (3,448,772) Property and equipment, net $ 1,673,317 $ 1,890,368 Depreciation and amortization expense consisted of the following: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) Equipment leased to customers $ 139,702 $ 154,802 $ 411,247 $ 485,819 Satellites 15,261 15,261 45,784 45,784 Buildings, furniture, fixtures, equipment and other 34,763 31,983 106,037 95,565 Total depreciation and amortization $ 189,726 $ 202,046 $ 563,068 $ 627,168 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 12 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 eight 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, 2017, our pay-TV satellite fleet consisted of the following: Degree Estimated Useful Life Launch Orbital (Years) / Lease Satellites Date Location Termination 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 2018 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 July 2003 61.5 September 2017 (4) EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (5) November 2012 61.5 January 2023 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 11 for further information on our Related Party Transactions with DISH Network. (2) See Note 11 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) The lease for EchoStar XII expired as of September 30, 2017. (5) We have the option to renew this lease for an additional five-year period. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and December 31, 2016: As of September 30, 2017 December 31, 2016 Carrying Fair Value Carrying Fair Value (In thousands) 4 5/8% Senior Notes due 2017 (1) $ — $ — $ 900,000 $ 913,887 4 1/4% Senior Notes due 2018 (2) 1,200,000 1,212,540 1,200,000 1,228,464 7 7/8% Senior Notes due 2019 1,400,000 1,531,992 1,400,000 1,559,698 5 1/8% Senior Notes due 2020 1,100,000 1,155,638 1,100,000 1,141,866 6 3/4% Senior Notes due 2021 2,000,000 2,201,800 2,000,000 2,178,880 5 7/8% Senior Notes due 2022 2,000,000 2,131,660 2,000,000 2,114,780 5 % Senior Notes due 2023 1,500,000 1,540,290 1,500,000 1,500,315 5 7/8% Senior Notes due 2024 2,000,000 2,095,260 2,000,000 2,064,000 7 3/4% Senior Notes due 2026 2,000,000 2,295,840 2,000,000 2,270,900 Other notes payable 11,509 11,509 12,606 12,606 Subtotal 13,211,509 $ 14,176,529 14,112,606 $ 14,985,396 Unamortized deferred financing costs and debt discounts, net (33,199) (40,123) Capital lease obligations (3) 112,967 140,885 Total long-term debt and capital lease obligations (including current portion) $ 13,291,277 $ 14,213,368 (1) On July 17, 2017, we redeemed the principal balance of our 4 5/8% Senior Notes due 2017. (2) Our 4 1/4% Senior Notes due 2018 mature on April 1, 2018 and are classified as “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2017. (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). |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments Since 2008, DISH Network has directly invested over $11 billion to acquire certain wireless spectrum licenses and related assets and made over $10 billion in non-controlling investments in certain entities, for a total of over $21 billion, as described further below. DISH Network Spectrum DISH Network has directly invested over $11 billion to acquire certain wireless spectrum licenses and related assets. These wireless spectrum licenses are subject to certain interim and final build-out requirements. 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. In addition, as DISH Network considers its options for the commercialization of its wireless spectrum, it will incur significant additional expenses and will have to make significant investments related to, among other things, research and development, wireless testing and wireless network infrastructure. In March 2017, DISH Network notified the FCC that it plans to deploy a next-generation 5G-capable network, focused on supporting narrowband Internet of Things (“IoT”). The first phase of the network deployment will be completed by March 2020, with subsequent phases to be completed thereafter. 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. 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 11 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 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, comply with regulations applicable to the Northstar Licenses and the SNR Licenses, and make any potential payments related to the re-auction of AWS-3 licenses retained by the FCC. Depending upon the nature and scope of such commercialization, build-out, integration efforts, regulatory compliance, and potential re-auction payments, any such loans or partnerships could vary significantly. For further information regarding the potential re-auction of AWS-3 licenses retained by the FCC, see Note 10 “ Commitments and Contingencies – DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. 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, 2017 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, 2017, the remaining obligation of the DISH Network guarantee was $143 million. As of September 30, 2017, 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. On February 28, 2017, DISH Network and EchoStar completed the Share Exchange pursuant to which certain assets that were transferred to EchoStar in the Spin-off were transferred back to us. The Share Exchange Agreement contains additional indemnification provisions between us and EchoStar for certain liabilities and legal proceedings. 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. 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 then 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. No trial date has been set. 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 then 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, which heard oral argument on April 6, 2017. On November 7, 2017, CRFD, we and EchoStar filed a joint motion to dismiss all claims in the action with prejudice, which the Court entered on November 9, 2017. This matter is now concluded. 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 (the “090 patent”); United States Patent No. 9,053,494 (the “494 patent”); United States Patent No. 7,840,437 (the “437 patent”); and United States Patent No. 8,955,029 (the “029 patent”). 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. In December 2016 and January 2017, DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of the asserted claims of each of the asserted patents. On June 12, 2017, the United States Patent and Trademark Office agreed to institute proceedings on our petitions challenging the 090 patent and the 437 patent; on July 18, 2017, it agreed to institute proceedings on our petitions challenging the 029 patent; and on July 28, 2017, it agreed to institute proceedings on our petitions challenging the 494 patent. These instituted proceedings cover all asserted claims of each of the asserted patents. On August 8, 2017, the litigation in the District Court was stayed pending resolution of the proceedings at the United States Patent and Trademark Office. Customedia is an entity that seeks to license a 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. 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 and, on October 5, 2017, the United States Court of Appeals for the Federal Circuit heard oral argument. On November 1, 2017, the United States Court of Appeals for the Federal Circuit affirmed the unpatentability of the 444 patent based on the petition filed in the United States Patent and Trademark Office by DISH Network L.L.C., and dismissed as moot the appeal of the order of non-infringement from the District Court. 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. On January 19, 2017, the United States Patent and Trademark Office declined to institute a proceeding on our petition. The litigation in the District Court, which had been stayed since June 13, 2016 pending resolution of DISH Network L.L.C.’s petition to the United States Patent and Trademark Office, was further stayed on February 23, 2017 pending a claim construction order from the United States District Court for the Southern District of New York in a separate action in which Grecia is asserting the same patent. 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. IPA Technologies Inc. On December 9, 2016, IPA Technologies Inc. (“IPA”) filed suit against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the District of Delaware. IPA alleges that our Voice Remote with Hopper 3 infringes United States Patent Number 6,742,021 (the “021 patent”), which is entitled “Navigating Network-based Electronic Information Using Spoken Input with Multimodal Error Feedback”; United States Patent Number 6,523,061 (the “061 patent”), which is entitled “System, Method, and Article of Manufacture for Agent-Based Navigation in a Speech-Based Data Navigation System”; and United States Patent Number 6,757,718 (the “718 patent”), which is entitled “Mobile Navigation of Network-Based Electronic Information Using Spoken Input.” IPA is an entity that seeks to license a 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. LightSquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) As previously disclosed in our public filings, L-Band Acquisition, LLC (“LBAC”), DISH Network’s wholly-owned subsidiary, entered into a Plan Support Agreement (the “PSA”) with certain senior secured lenders to LightSquared LP (the “LightSquared LP Lenders”) on July 23, 2013, which contemplated the purchase by LBAC of substantially all of the assets of LightSquared LP and certain of its subsidiaries (the “LBAC Bid”) that are debtors and debtors in possession in the LightSquared bankruptcy cases pending in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), which cases are jointly administered under the caption In re LightSquared Inc., et. al., Case No. 12 12080 (SCC). Pursuant to the PSA, LBAC was entitled to terminate the PSA in certain circumstances, certain of which required three business days’ written notice, including, without limitation, in the event that certain milestones specified in the PSA were not met. On January 7, 2014, LBAC delivered written notice of termination of the PSA to the LightSquared LP Lenders. As a result, the PSA terminated effective on January 10, 2014, and the LBAC Bid was withdrawn. On August 6, 2013, Harbinger Capital Partners LLC and other affiliates of Harbinger (collectively, “Harbinger”), a shareholder of LightSquared Inc., filed an adversary proceeding against DISH Network, LBAC, EchoStar, Charles W. Ergen (our Chairman and Chief Executive Officer), SP Special Opportunities, LLC (“SPSO”) (an entity controlled by Mr. Ergen), and certain other parties, in the Bankruptcy Court. Harbinger alleged, among other things, claims based on fraud, unfair competition, civil conspiracy and tortious interference with prospective economic advantage related to certain purchases of LightSquared secured debt by SPSO. Subsequently, LightSquared intervened to join in certain claims alleged against certain defendants other than DISH Network, LBAC and EchoStar. On October 29, 2013, the Bankruptcy Court dismissed all of the claims in Harbinger’s complaint in their entirety, but granted leave for LightSquared to file its own complaint in intervention. On November 15, 2013, LightSquared filed its complaint, which included various claims against DISH Network, EchoStar, Mr. Ergen and SPSO. On December 2, 2013, Harbinger filed an amended complaint, asserting various claims against SPSO. On December 12, 2013, the Bankruptcy Court dismissed several of the claims asserted by LightSquared and Harbinger. The surviving claims included, among others, LightSquared’s claims against SPSO for declaratory relief, breach of contract and statutory disallowance; LightSquared’s tortious interference claim against DISH Network, EchoStar and Mr. Ergen; and Harbinger’s claim against SPSO for statutory disallowance. These claims proceeded to a non-jury trial on January 9, 2014. In its Post-Trial Findings of Fact and Conclusions of Law entered on June 10, 2014, the Bankruptcy Court rejected all claims against DISH Network and EchoStar, and it rejected some but not all claims against the other defendants. On July 7, 2015, the United States District Court for the Southern District of New York denied Harbinger’s motion for an interlocutory appeal of certain Bankruptcy Court orders in the adversary proceeding. On March 27, 2015, the Bankruptcy Court entered an order confirming the Modified Second Amended Joint Plan pursuant to Chapter 11 of the Bankruptcy Code and, on December 7, 2015, the Plan became effective. DISH Network intends to vigorously defend any claims against it in this proceeding and cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages. LightSquared Transaction Shareholder Derivative Actions On August 9, 2013, a purported shareholder of DISH Network, Jacksonville Police and Fire Pension Fund (“Jacksonville PFPF”), filed a putative shareholder derivative action in the District Court for Clark County, Nevada alleging, among other things, breach of fiduciary duty claims against the members of DISH Network’s Board of Directors as of that date: Charles W. Ergen; Joseph P. Clayton; James DeFranco; Cantey M. Ergen; Steven R. Goodbarn; David K. Moskowitz; Tom A. Ortolf; and Carl E. Vogel (collectively, the “Director Defendants”). In its first amended complaint, Jacksonville PFPF asserted claims that Mr. Ergen breached his fiduciary duty to DISH Network in connection with certain purchases of LightSquared debt by SPSO, an entity controlled by Mr. Ergen, and that the other Director Defendants aided and abetted that alleged breach of duty. The Jacksonville PFPF claims alleged that (1) the debt purchases created an impermissible conflict of interest and (2) put at risk the LBAC Bid, which as noted above was withdrawn. Jacksonville PFPF further claimed that most members of DISH Network’s Board of Directors are beholden to Mr. Ergen to an extent that prevents them from discharging their duties in connection with DISH Network’s participation in the LightSquared bankruptcy auction process. Jacksonville PFPF is seeking an unspecified amount of damages. Jacksonville PFPF dismissed its claims against Mr. Goodbarn on October 8, 2013. Jacksonville PFPF sought a preliminary injunction that would enjoin Mr. Ergen and all of the Director Defendants other than Mr. Goodbarn from influencing DISH Network’s efforts to acquire certain assets of LightSquared in the bankruptcy proceeding. On November 27, 2013, the Court denied that request but granted narrower relief enjoining Mr. Ergen and anyone acting on his behalf from participating in negotiations related to one aspect of the LBAC Bid, which, as noted above, was withdrawn. Five alleged shareholders filed substantially similar putative derivative complaints in state and federal courts alleging the same or substantially similar claims. On September 18, 2013, DCM Multi-Manager Fund, LLC filed a duplicative putative derivative complaint in the District Court for Clark County, Nevada, which was consolidated with the Jacksonville PFPF action on October 9, 2013. Between September 25, 2013 and October 2, 2013, City of Daytona Beach Police Officers and Firefighters Retirement System, Louisiana Municipal Police Employees’ Retirement System and Iron Worker Mid-South Pension Fund filed duplicative putative derivative complaints in the United States District Court for the District of Colorado. Also on October 2, 2013, Iron Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan filed its complaint in the United States District Court for the District of Nevada. On October 11, 2013, Iron Worker Mid-South Pension Fund dismissed its claims without prejudice. On October 30, 2013, Louisiana Municipal Police Employees’ Retirement System dismissed its claims without prejudice and, on January 2, 2014, filed a new complaint in the District Court for Clark County, Nevada, which, on May 2, 2014, was consolidated with the Jacksonville PFPF action. On December 13, 2013, City of Daytona Beach Police Officers and Firefighters Retirement System voluntarily dismissed its claims without prejudice. On March 28, 2014, Iron Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan voluntarily dismissed its claims without prejudice. On July 25, 2014, Jacksonville PFPF filed a second amended complaint, which added claims against George R. Brokaw and Charles M. Lillis, as Director Defendants, and Thomas A. Cullen, R. Stanton Dodge and K. Jason Kiser, as officers of DISH Network. Jacksonville PFPF asserted five claims in its second amended complaint, each of which alleged breaches of the duty of loyalty. Three of the claims were asserted solely against Mr. Ergen; one claim was made against all of the remaining Director Defendants, other than Mr. Ergen and Mr. Clayton; and the final claim was made against Messrs. Cullen, Dodge and Kiser. DISH Network’s Board of Directors established a Special Litigation Committee to review the factual allegations and legal claims in these actions. On October 24, 2014, the Special Litigation Committee filed a report in the District Court for Clark County, Nevada regarding its investigation of the claims and allegations asserted in Jacksonville PFPF’s second amended complaint. The Special Litigation Committee filed a motion to dismiss the action based, among other things, on its business judgment that it is in the best interests of DISH Network not to pursue the claims asserted by Jacksonville PFPF. The Director Defendants and Messrs. Cullen, Dodge and Kiser have also filed various motions to dismiss the action. In an order entered on September 18, 2015, the Court granted the Special Litigation Committee’s motion to defer to the Special Litigation Committee’s October 24, 2014 report, including its finding that dismissal of the action is in the best interest of DISH Network. The Court also held that, in light of granting the motion to defer, the pending motions to dismiss filed by the individual defendants were denied without prejudice as moot. On October 12, 2015, Jacksonville PFPF filed a notice of appeal to the Supreme Court of Nevada, which heard oral argument on June 5, 2017. On September 14, 2017, the Supreme Court of Nevada affirmed the District Court’s decision to defer to the Special Litigation Committee’s October 24, 2014 report and dismiss the action. On October 2, 2017, Jacksonville PFPF filed a petition for rehearing, to which the Special Litigation Committee filed a response on October 24, 2017. DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. Michael Heskiaoff, Marc Langenohl, and Rafael Mann On July 10, 2015, Messrs. Michael Heskiaoff and Marc Langenohl, purportedly on behalf of themselves and all others similarly situated, filed suit against our subsidiary Sling Media, Inc. (now known as “Sling Media L.L.C.,” which we acquired as a result of the completion of the Share Exchange on February 28, 2017) in the United States District Court for the Southern District of New York. The complaint alleges that Sling Media Inc.’s display of advertising to its customers violates a number of state statutes dealing with consumer decep |
Financial Information for Subsi
Financial Information for Subsidiary Guarantors | 9 Months Ended |
Sep. 30, 2017 | |
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. |
Geographic Information
Geographic Information | 9 Months Ended |
Sep. 30, 2017 | |
Geographic Information | |
Geographic Information | 10. Geographic Information Revenue is attributed to geographic regions based upon the location where the goods and services are provided. All subscriber-related revenue was derived from the United States. Substantially all of our long-lived assets reside in the United States. The following table summarizes revenue by geographic region: For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenue: 2017 2016 2017 2016 (In thousands) United States $ 3,479,791 $ 3,636,566 $ 10,573,536 $ 11,036,835 Canada and Mexico 11,768 17,208 32,794 76,867 Total revenue $ 3,491,559 $ 3,653,774 $ 10,606,330 $ 11,113,702 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions | |
Related Party Transactions | 11. Related Party Transactions with DISH Network On September 30, 2016, we paid a dividend of $1.5 billion to DOC. Advertising Sales. We have provided advertising services to DISH Network’s broadband business. During each of the three months ended September 30, 2017 and 2016, we received no revenue associated with these services. During the nine months ended September 30, 2017 and 2016, we received revenue associated with these services of zero and $2 million, respectively. These amounts were recorded in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). 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, 2017 and 2016, the costs charged to DISH Network associated with these services were $11 million and $16 million, respectively. During the nine months ended September 30, 2017 and 2016, the costs charged to DISH Network associated with these services were $40 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 months ended September 30, 2017 and 2016, we incurred $16 million and $5 million, respectively, of expense related to this satellite. During the nine months ended September 30, 2017 and 2016, we incurred $50 million and $5 million, respectively, of expense related to this satellite. These amounts are 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 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. 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. In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. In addition, certain agreements that we had with EchoStar have terminated, and we entered into certain new agreements with EchoStar. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. Intercompany transactions between the Transferred Businesses and us, including, among others, the sale of set-top boxes and broadcast services from EchoStar to us, have been eliminated to the extent possible, including the margin EchoStar received on those sales. See Note 2 for further information. 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, 2017 and December 31, 2016, trade accounts receivable from EchoStar was $3 million and $1 million, respectively. These amounts are recorded in “Trade accounts receivable” on our Condensed Consolidated Balance Sheets. “Trade accounts payable” As of September 30, 2017 and December 31, 2016, trade accounts payable to EchoStar was $33 million and $259 million, respectively. These amounts are recorded in “Trade accounts payable” on our Condensed Consolidated Balance Sheets. “Equipment sales and other revenue” During each of the three months ended September 30, 2017 and 2016, we received less than $1 million for services provided to EchoStar. During each of the nine months ended September 30, 2017 and 2016, we received $2 million for services provided to 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. Real Estate Lease Agreements. 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 began leasing 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. · 90 Inverness Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 90 Inverness Circle East, Englewood, Colorado for a period ending in December 2022. EchoStar has the option to renew this lease for four three-year periods. · Cheyenne Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 530 EchoStar Drive, Cheyenne, Wyoming for a period ending in March 2019. EchoStar has the option to renew this lease for thirteen one-year periods. · Gilbert Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 801 N. DISH Dr., Gilbert, Arizona for a period ending in March 2019. EchoStar has the option to renew this lease for thirteen one-year periods. · American Fork Occupancy License Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, we acquired the lease for certain space at 796 East Utah Valley Drive, American Fork, Utah, and we sublease certain space at this location to EchoStar for a period ending in August 2017. In June 2017, EchoStar exercised its five-year renewal option for a period ending in August 2022. Collocation and Antenna Space Agreements . In connection with the completion of the Share Exchange, effective March 1, 2017, we entered into certain agreements pursuant to which we will provide certain collocation and antenna space to HNS through March 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Englewood, Colorado; and Spokane, Washington. During August 2017, we entered into certain other agreements pursuant to which we will provide certain collocation and antenna space to HNS through August 2022 at the following locations: Monee, Illinois and Spokane, Washington. HNS has the option to renew each of these agreements for four three-year periods. HNS may terminate certain of these agreements with 180 days’ prior written notice to us at the following locations: New Braunfels, Texas; Englewood, Colorado; and Spokane, Washington. The fees for the services provided under these agreements depend, among other things, on the number of racks leased and/or antennas present at the location. “Satellite and transmission expenses” For the three months ended September 30, 2017 and 2016, we incurred expenses of $86 million and $89 million, respectively, for satellite capacity leased from EchoStar and telemetry, tracking and control and other professional services provided to us by EchoStar. For the nine months ended September 30, 2017 and 2016, we incurred expenses of $261 million and $263 million, respectively, for satellite capacity leased from EchoStar and telemetry, tracking and control and other professional services provided to us by EchoStar. EchoStar is a supplier of the vast majority of our transponder capacity. 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. Satellite Capacity Leased from EchoStar . 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 VII, X, XI and XIV. On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar 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. · 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 expired as of September 30, 2017. · EchoStar XVI. In 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 in 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. In 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 had the option to renew for an additional five-year period. In May 2017, we exercised our first renewal option for an additional five-year period ending in January 2023. We also have the option to renew for an additional five-year period prior to expiration of the first renewal period in January 2023. There can be no assurance that the option 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. In 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. In 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”). In 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, in 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”). In 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. “General and administrative expenses” During the three months ended September 30, 2017 and 2016, we incurred $8 million and $5 million, respectively, of general and administrative expenses for services provided to us by EchoStar. During the nine months ended September 30, 2017 and 2016, we incurred $23 million and $13 million, respectively, of general and administrative expenses for services provided to us by 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. 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: · Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016. In December 2016, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2017. · Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado was for a period ending on December 31, 2016. In December 2016, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 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. In connection with the completion of the Share Exchange, EchoStar transferred ownership of a portion of this property to us, and, effective March 1, 2017, we and EchoStar amended this lease agreement to (i) terminate the lease of certain space at the portion of the property that was transferred to us and (ii) provide for the continued lease to us of certain space at the portion of the property that EchoStar retained. · 100 Inverness Lease Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, we lease certain space from EchoStar at 100 Inverness Circle East, Englewood, Colorado for a period ending in December 2020. This agreement may be terminated by either party upon 180 days’ prior notice. 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 other support services. Additionally, DISH Network and EchoStar agreed that DISH Network shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for DISH Network (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement) and other support services. The Professional Services Agreement will renew on January 1, 2018 for an additional one-year period until January 1, 2019 and renews automatically for successive one-year periods thereafter, unless terminated earlier by either party upon at least 60 days notice. However, either party may terminate the Professional Services Agreement in part with respect to any particular service it receives for any reason upon at least 30 days notice. In connection with the completion of the Share Exchange on February 28, 2017, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Share Exchange Agreement. Revenue for services provided by us to EchoStar under the Professional Services Agreement is recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Other Agreements - EchoStar Tax Sharing Agreement. In connection with the Spin-off, DISH Network entered into a tax sharing agreement with EchoStar which governs our respective rights, responsibilities and obligations after the Spin-off with respect to taxes for the periods ending on or before the Spin-off. Generally, all pre-Spin-off taxes, including any taxes that are incurred as a result of restructuring activities undertaken to implement the Spin-off, are borne by DISH Network, and DISH Network will indemnify EchoStar for such taxes. However, DISH Network is not liable for and will not indemnify EchoStar for any taxes that are incurred as a result of the Spin-off or certain related transactions failing to qualify as tax-free distributions pursuant to any provision of Section 355 or Section 361 of the Internal Revenue Code of 1986, as amended (the “Code”) because of: (i) a direct or indirect acquisition of any of EchoStar’s stock, stock options or assets; (ii) any action that EchoStar takes or fails to take; or (iii) any action that EchoStar takes that is inconsistent with the information and representations furnished to the Internal Revenue Service (“IRS”) in connection with the request for the private letter ruling, or to counsel in connection with any opinion being delivered by counsel with respect to the Spin-off or certain related transactions. In such case, EchoStar is solely liable for, and will indemnify DISH Network for, any resulting taxes, as well as any losses, claims and expenses. The tax sharing agreement will only terminate after the later of the full period of all applicable statutes of limitations, including extensions, or once all rights and obligations are fully effectuated or performed. Tax Matters Agreement . In connection with the completion of the Share Exchange, DISH Network and EchoStar entered into a Tax Matters Agreement, which governs certain rights, responsibilities and obligations with respect to taxes of the Transferred Businesses pursuant to the Share Exchange. Generally, EchoStar is responsible for all tax returns and tax liabilities for the Transferred Businesses for periods prior to the Share Exchange, and DISH Network is responsible for all tax returns and tax liabilities for the Transferred Businesses from and after the Share Exchange. Both DISH Network and EchoStar have made certain tax-related representations and are subject to various tax-related covenants after the consummation of the Share Exchange. Both DISH Network and EchoStar have agreed to indemnify each other if there is a breach of any such tax representation or violation of any such tax covenant and that breach or violation results in the Share Exchange not qualifying for tax free treatment for the other party. In addition, DISH Network has agreed to indemnify EchoStar if the Transferred Businesses are acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons and such acquisition results in the Share Exchange not qualifying for tax free treatment. The Tax Matters Agreement supplements the Tax Sharing Agreement described above, which continues in full force and effect. TiVo. On April 29, 2011, DISH Network and EchoStar entered into a settlement agreement with TiVo Inc. (“TiVo”). The settlement resolved all pending litigation between DISH Network and EchoStar, on the one hand, and TiVo, on the other hand, including litigation relating to alleged patent infringement involving certain DISH digital video recorders, or DVRs. Under the settlement agreement, all pending litigation was dismissed with prejudice and all injunctions that permanently restrain, enjoin or compel any action by DISH Network or EchoStar were dissolved. DISH Network and EchoStar are jointly responsible for making payments to TiVo in the aggregate amount of $500 million, including an initial payment of $300 million and the remaining $200 million in six equal annual installments between 2012 and 2017. Pursuant to the terms and conditions of the agreements entered into in connection with the Spin-off of EchoStar from DISH Network, DISH Network made the initial payment to TiVo in May 2011, except for the contribution from EchoStar totaling approximately $10 million, representing an allocation of liability relating to EchoStar’s sales of DVR-enabled receivers to an international customer. Future payments were allocated between DISH Network and EchoStar based on historical sales of certain licensed products, with DISH Network being responsible for 95% of each annual payment. Pursuant to the Share Exchange Agreement, DISH Network was responsible for EchoStar’s allocation of the final payment to TiVo, which was paid July 31, 2017. Patent Cross-License Agreements . In December 2011, DISH Network and EchoStar entered into separate patent cross-license agreements with the same third party whereby: (i) EchoStar and such third-party licensed their respective patents to each other subject to certain conditions; and (ii) DISH Network and such third-party licensed their respective patents to each other subject to certain conditions (each, a “Cross-License Agreement”). Each Cross License Agreement covers patents acquired by the respective party prior to January 1, 2017 and aggregate payments under both Cross-License Agreements total less than $10 million. Each Cross License Agreement also contains an option to extend each Cross-License Agreement to include patents acquired by the respective party prior to January 1, 2022. In December 2016, DISH Network and EchoStar independently exercised their respective options to extend each Cross-License Agreement. The aggregate additional payments to such third-party was less than $3 million. Since the aggregate payments under both Cross-License Agreements were based on the combined annual revenues of DISH Network and EchoStar, DISH Network and EchoStar agreed to allocate their respective payments to such third party based on their respective percentage of combined total revenue. Rovi License Agreement. On August 19, 2016, we entered into a ten-year patent license agreement (the “Rovi License Agreement”) with Rovi Corporation (“Rovi”) and, for certain limited purposes, EchoStar. EchoStar is a party to the Rovi License Agreement solely with respect to certain provisions relating to the prior patent license agreement between EchoStar and Rovi. There are no payments between us and EchoStar under the Rovi License Agreement. Sale of Orange, New Jersey Properties. In October 2016, we and EchoStar sold two parcels of real estate owned separately by us and EchoStar in Orange, New Jersey to a third party pursuant to a purchase and sale agreement. Pursuant to the agreement, we and EchoStar separately received our respective payments from the buyer. Invidi. In November 2010 and April 2011, EchoStar made investments in Invidi in exchange for shares of Invidi’s Series D Preferred Stock. In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi. As a result of the transaction, EchoStar sold its ownership interest in Invidi on the same terms offered to the other shareholders of Invidi. The transaction closed in January 2017. Hughes Broadband Master Services Agreement. In March 2017, DISH Network L.L.C. (“DNLLC”) and HNS entered into a Master Services Agreement (“MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders for the Hughes broadband satellite service and related equipment; and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS will make certain payments to DNLLC for each Hughes service activation generated, and installation performed, by DNLLC. Payments from HNS for services provided are recorded in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The MSA has an initial term of five years with automatic renewal for successive one year terms. After the first anniversary of the MSA, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA. For the three months ended September 30, 2017, we purchased broadband equipment from HNS of $7 million under the MSA. For the nine months ended September 30, 2017, we purchased broadband equipment from HNS of $17 million under the MSA. Employee Matters Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, DISH Network and EchoStar entered into an Employee Matters Agreement that addresses the transfer of employees from EchoStar to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee-related liabilities relating to current and past employees of the Transferred Businesses. DISH Network assumed employee-related liabilities relating to the Transferred Businesses as part of the Share Exchange, except that EchoStar will be responsible for certain existing employee-related litigation as well as certain pre-Share Exchange compensation and benefits for employees transferring to DISH Network in connection with the Share Exchange. Intellectual Property and Technology License Agreement . In connection with the completion of the Share Exchange, effective March 1, 2017, DISH Network and EchoStar entered into an Intellectual Property and Technology License Agreement (“IPTLA”), pursuant to which DISH Network and EchoStar license to each other certain intellectual property and technology. The IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the IPTLA, EchoStar granted to D |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2016. 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. On February 28, 2017, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange Agreement”) that was previously entered into on January 31, 2017 (the “Share Exchange”). Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses, consisting primarily of the businesses that design, develop and distribute digital set-top boxes, provide satellite uplinking services and develop and support streaming video technology, as well as certain investments in joint ventures, spectrum licenses, real estate properties and EchoStar’s ten percent non-voting interest in Sling TV Holding L.L.C. (the “Transferred Businesses”), and in exchange, we transferred to EchoStar the 6,290,499 shares of preferred tracking stock issued by EchoStar (the “EchoStar Tracking Stock”) and 81.128 shares of preferred tracking stock issued by Hughes Satellite Systems Corporation, a subsidiary of EchoStar (the “HSSC Tracking Stock,” and together with the EchoStar Tracking Stock, collectively, the “Tracking Stock”), that tracked the residential retail satellite broadband business of Hughes Network Systems, LLC (“HNS”). In connection with the Share Exchange, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. See Note 11 for further information. As the Share Exchange was a transaction between entities that are under common control, accounting rules require that our Condensed Consolidated Financial Statements include the results of the Transferred Businesses for all periods presented, including periods prior to the completion of the Share Exchange. We initially recorded the Transferred Businesses at EchoStar’s historical cost basis. The difference between the historical cost basis of the Transferred Businesses and the net carrying value of the Tracking Stock is recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. The results of the Transferred Businesses were prepared from separate records maintained by EchoStar for the periods prior to March 1, 2017, and may not necessarily be indicative of the conditions that would have existed, or the results of operations, if the Transferred Businesses had been operated on a combined basis with our subsidiaries. The primary impacts to our financial statement presentation are as follows: · Our investments in the EchoStar Tracking Stock and HSSC Tracking Stock are no longer included in our Condensed Consolidated Balance Sheets. · The assets and liabilities of the Transferred Businesses are recorded in our Condensed Consolidated Balance Sheets, and the results of operations of the Transferred Businesses, including sales of set-top boxes to third parties, are recorded in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). · Sling TV Holding L.L.C., in which EchoStar held a 10% non-voting interest prior to the Share Exchange, is accounted for as though it was an indirect wholly-owned subsidiary of us. · Intercompany transactions between the Transferred Businesses and us, including, among others, the sale of set-top boxes and broadcast services from EchoStar to us, have been eliminated to the extent possible, including the margin EchoStar received on those sales. Our subsequent annual and quarterly financial statements will include the results of the Transferred Businesses as described above for all periods presented in those financial statements, including periods prior to the completion of the Share Exchange. The table below includes unaudited supplemental pro forma information for revenue and net income (loss) attributable to DISH DBS on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as if the results of the Transferred Businesses were included for the three and nine months ended September 30, 2016 and for the year ended December 31, 2016, respectively: DISH DBS (as previously reported) Adjustments Relating to the Transferred Businesses DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2016: Total revenue $ 3,632,115 $ 21,659 $ 3,653,774 Net income (loss) attributable to DISH DBS $ 177,114 $ 11,027 $ 188,141 For the Nine Months Ended September 30, 2016: Total revenue $ 11,023,684 $ 90,018 $ 11,113,702 Net income (loss) attributable to DISH DBS $ 702,742 $ 35,266 $ 738,008 For the Year Ended December 31, 2016: Total revenue $ 14,637,043 $ 118,896 $ 14,755,939 Net income (loss) attributable to DISH DBS $ 916,528 $ 48,086 $ 964,614 |
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, independent third-party 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. |
Marketable Investment Securities | Marketable Investment Securities We currently classify all marketable investment securities as available-for-sale, except for investments which we account for as trading securities, discussed below. We adjust the carrying amount of our available-for-sale securities to fair value and report the related temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Declines in the fair value of a marketable investment security which are determined to be “other-than-temporary” are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. Our trading securities are also carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
Property and Equipment | Property and Equipment Property and equipment are stated at amortized cost less impairment losses, if any. The costs of satellites under construction, including interest and certain amounts prepaid under our satellite service agreements, are capitalized during the construction phase, assuming the eventual successful launch and in-orbit operation of the satellite. If a satellite were to fail during launch or while in-orbit, the resultant loss would be charged to expense in the period such loss was incurred. The amount of any such loss would be reduced to the extent of insurance proceeds estimated to be received, if any. Depreciation is recorded on a straight-line basis over useful lives ranging from one to 40 years. Repair and maintenance costs are charged to expense when incurred. Renewals and improvements that add value or extend the asset’s useful life are capitalized. Costs related to the procurement and development of software for internal-use are capitalized and amortized using the straight-line method over the estimated useful life of the software. |
Cost of Sales – Equipment and Other | Cost of Sales – Equipment and Other Costs include the cost of non-subsidized sales of DBS accessories and the cost of sales of digital receivers and related components to third-party pay-TV providers, both of which include freight and royalties. Costs are generally recognized as products are delivered to customers and the related revenue is recognized. |
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, 2017 and December 31, 2016, 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”) was equal to or approximated 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 based on, among other things, available trade information, and/or 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. |
Revenue Recognition | Revenue Recognition We recognize revenue when an arrangement exists, prices are determinable, collectability is reasonably assured and the goods or services have been delivered. Revenue from our Pay-TV services is recognized when programming is broadcast to subscribers. Payments received from Pay-TV subscribers in advance of the broadcast or service period are recorded as “Deferred revenue and other” in our Condensed Consolidated Balance Sheets until earned. Revenue from equipment sales generally is recognized upon shipment to customers. For certain of our promotions, subscribers are charged an upfront fee. A portion of these fees may be deferred and recognized over the estimated subscriber life for new subscribers or the estimated remaining life for existing subscribers ranging from four to five years. Revenue from advertising sales is recognized when the related services are performed. Subscriber fees for DISH branded pay-TV equipment rental fees and other hardware related fees, including fees for DVRs, additional outlet fees, advertising services and fees earned from our in-home service operations are recognized as revenue as earned. Generally, revenue from equipment sales, equipment upgrades and sales of streaming-capable devices for our Sling branded pay-TV services are recognized upon shipment to customers. Certain of our existing and new subscriber promotions include programming discounts. Programming revenues are recorded as earned at the discounted monthly rate charged to the subscriber. We offer our customers the opportunity to download movies for a specific viewing period or permanently purchase a movie from our website. We recognize revenue when the movie is successfully downloaded by the customer, which, based on our current technology, occurs at the time the customer plays the movie for the first time. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs totaled $8 million and $10 million for the three months ended September 30, 2017 and 2016, respectively. Research and development costs totaled $24 million and $34 million for the nine months ended September 30, 2017 and 2016, respectively. |
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”), and has modified the standard thereafter. 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. 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, and we plan on using the modified retrospective method. We are currently finalizing our accounting policies under ASU 2014-09. While we have not determined the ultimate impact of the standard on our Condensed Consolidated Financial Statements and related disclosures, we believe the most significant impact to us is that the standard will require that incremental costs to obtain a customer, which represent a significant portion of our non-advertising subscriber acquisition costs, be deferred and recognized over a period of time, whereas our current policy is to expense these costs as incurred. Note that where the expected amortization period is less than a year, we plan to use the practical expedient which permits expensing of these costs. From a revenue perspective, for substantially all of our residential video customers under a contract, we have concluded that the contract term under ASC 2014-09 is one month. Accordingly, while there will be changes in the way certain upfront fees and other items are recognized, we do not believe at this time there will be a material change to our revenue recognition model for our residential video customers. We are currently in the process of identifying and implementing changes to our systems, processes, and internal controls to meet the requirements of the standard. The ultimate impact of adopting ASU 2014-09 for both revenue recognition and costs to obtain and fulfill contracts will depend on the promotions and offers in place during the period leading up to and after the adoption of ASU 2014-09. 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. The ultimate impact of adopting ASU 2016-01 will depend on the materiality of equity investments we hold and fluctuations in the fair value of those investments. 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 2016-15 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 expect that the adoption of ASU 2016-15 will have an immaterial impact on our Condensed Consolidated Financial Statements and related disclosures. Statement of Cash Flows: Restricted Cash. On November 17, 2016, the FASB issued ASU 2016-18 Restricted Cash (“ASU 2016-18”) , which addresses the diversity where changes in restricted cash are classified on the cash flow statement. ASU 2016-18 requires that changes in restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We expect that the adoption of ASU 2016-18 will have an immaterial impact on our Condensed Consolidated Financial Statements and related disclosures. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Summary of income loss as if the results of transferred business were included in the results of the entity | DISH DBS (as previously reported) Adjustments Relating to the Transferred Businesses DISH DBS (as currently reported) (In thousands) For the Three Months Ended September 30, 2016: Total revenue $ 3,632,115 $ 21,659 $ 3,653,774 Net income (loss) attributable to DISH DBS $ 177,114 $ 11,027 $ 188,141 For the Nine Months Ended September 30, 2016: Total revenue $ 11,023,684 $ 90,018 $ 11,113,702 Net income (loss) attributable to DISH DBS $ 702,742 $ 35,266 $ 738,008 For the Year Ended December 31, 2016: Total revenue $ 14,637,043 $ 118,896 $ 14,755,939 Net income (loss) attributable to DISH DBS $ 916,528 $ 48,086 $ 964,614 |
Supplemental Data - Statement19
Supplemental Data - Statements of Cash Flows (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Data - Statements of Cash Flows | |
Schedule of supplemental cash flow and other non-cash data | For the Nine Months Ended September 30, 2017 2016 (In thousands) Cash paid for interest $ 696,379 $ 590,238 Cash received for interest 7,889 1,705 Cash paid for income taxes 23,289 22,658 Cash paid for income taxes to DISH Network 323,588 484,217 Satellites and other assets financed under capital lease obligations 889 7,850 |
Marketable Investment Securit20
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, December 31, 2017 2016 (In thousands) Marketable investment securities: Current marketable investment securities: Trading $ 47,856 $ — Other 54,506 3,833 Total current marketable investment securities 102,362 3,833 Restricted marketable investment securities (1) 71,919 81,679 Total marketable investment securities 174,281 85,512 Restricted cash and cash equivalents (1) 403 681 Other investment securities: Other investment securities - equity method 112,381 25,098 Other investment securities - cost method — 8,150 Total other investment securities 112,381 33,248 Total marketable investment securities, restricted cash and cash equivalents, and other investment securities $ 287,065 $ 119,441 (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, 2017 As of December 31, 2016 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 $ 75,638 $ — $ (39) $ (39) $ 81,982 $ 13 $ (132) $ (119) Commercial paper 7,340 — (1) (1) — — — — Corporate securities 42,811 13 (37) (24) 3,530 3 — 3 Other 636 — — — — — — — Total $ 126,425 $ 13 $ (77) $ (64) $ 85,512 $ 16 $ (132) $ (116) |
Schedule of investments measured at fair value on a recurring basis | As of September 30, 2017 December 31, 2016 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (In thousands) Cash equivalents (including restricted) $ 380,049 $ 27,117 $ 352,932 $ — $ 702,331 $ 4,126 $ 698,205 $ — Debt securities (including restricted): U.S. Treasury and agency securities $ 75,638 $ 75,638 $ — $ — $ 81,982 $ 81,982 $ — $ — Commercial paper 7,340 — 7,340 — — — — — Corporate securities 42,811 — 42,811 — 3,530 — 3,530 — Other 636 — 636 — — — — — Equity Securities 47,856 47,856 — — — — — — Total $ 174,281 $ 123,494 $ 50,787 $ — $ 85,512 $ 81,982 $ 3,530 $ — |
Gains and Losses on Sales and Changes in Carrying Amounts of Investments | For the Three Months Ended For the Nine Months Ended September 30, September 30, Other, net: 2017 2016 2017 2016 (In thousands) Marketable investment securities - gains (losses) on sales/exchanges $ — $ — $ 1,803 $ 32,322 Marketable investment securities - unrealized gains (losses) on trading securities 39,706 — 39,706 — Other 553 1,331 2,175 684 Total $ 40,259 $ 1,331 $ 43,684 $ 33,006 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory | |
Schedule of inventory | As of September 30, December 31, 2017 2016 (In thousands) Finished goods $ 233,437 $ 282,569 Work-in-process and service repairs 76,779 129,486 Raw materials 8,643 10,268 Total inventory $ 318,859 $ 422,323 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment | |
Schedule of property and equipment | Depreciable As of Life September 30, December 31, (In Years) 2017 2016 (In thousands) Equipment leased to customers 2-5 $ 2,339,446 $ 2,630,269 EchoStar XV 15 277,658 277,658 Satellites acquired under capital lease agreements 10-15 499,819 499,819 Furniture, fixtures, equipment and other 1-10 1,654,844 1,541,838 Buildings and improvements 1-40 289,953 287,612 Land - 14,057 14,057 Construction in progress - 71,402 87,887 Total property and equipment 5,147,179 5,339,140 Accumulated depreciation (3,473,862) (3,448,772) Property and equipment, net $ 1,673,317 $ 1,890,368 |
Schedule of depreciation and amortization expense | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) Equipment leased to customers $ 139,702 $ 154,802 $ 411,247 $ 485,819 Satellites 15,261 15,261 45,784 45,784 Buildings, furniture, fixtures, equipment and other 34,763 31,983 106,037 95,565 Total depreciation and amortization $ 189,726 $ 202,046 $ 563,068 $ 627,168 |
Schedule of pay-TV satellite fleet | As of September 30, 2017, our pay-TV satellite fleet consisted of the following: Degree Estimated Useful Life Launch Orbital (Years) / Lease Satellites Date Location Termination 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 2018 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 July 2003 61.5 September 2017 (4) EchoStar XIV (3) March 2010 119 February 2023 EchoStar XVI (5) November 2012 61.5 January 2023 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 11 for further information on our Related Party Transactions with DISH Network. (2) See Note 11 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) The lease for EchoStar XII expired as of September 30, 2017. (5) We have the option to renew this lease for an additional five-year period. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt | |
Schedule of carrying and fair values of the entity's debt facilities | As of September 30, 2017 December 31, 2016 Carrying Fair Value Carrying Fair Value (In thousands) 4 5/8% Senior Notes due 2017 (1) $ — $ — $ 900,000 $ 913,887 4 1/4% Senior Notes due 2018 (2) 1,200,000 1,212,540 1,200,000 1,228,464 7 7/8% Senior Notes due 2019 1,400,000 1,531,992 1,400,000 1,559,698 5 1/8% Senior Notes due 2020 1,100,000 1,155,638 1,100,000 1,141,866 6 3/4% Senior Notes due 2021 2,000,000 2,201,800 2,000,000 2,178,880 5 7/8% Senior Notes due 2022 2,000,000 2,131,660 2,000,000 2,114,780 5 % Senior Notes due 2023 1,500,000 1,540,290 1,500,000 1,500,315 5 7/8% Senior Notes due 2024 2,000,000 2,095,260 2,000,000 2,064,000 7 3/4% Senior Notes due 2026 2,000,000 2,295,840 2,000,000 2,270,900 Other notes payable 11,509 11,509 12,606 12,606 Subtotal 13,211,509 $ 14,176,529 14,112,606 $ 14,985,396 Unamortized deferred financing costs and debt discounts, net (33,199) (40,123) Capital lease obligations (3) 112,967 140,885 Total long-term debt and capital lease obligations (including current portion) $ 13,291,277 $ 14,213,368 (1) On July 17, 2017, we redeemed the principal balance of our 4 5/8% Senior Notes due 2017. (2) Our 4 1/4% Senior Notes due 2018 mature on April 1, 2018 and are classified as “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2017. (3) Disclosure regarding fair value of capital leases is not required. |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Geographic Information | |
Schedule of revenue by geographical region | For the Three Months Ended For the Nine Months Ended September 30, September 30, Revenue: 2017 2016 2017 2016 (In thousands) United States $ 3,479,791 $ 3,636,566 $ 10,573,536 $ 11,036,835 Canada and Mexico 11,768 17,208 32,794 76,867 Total revenue $ 3,491,559 $ 3,653,774 $ 10,606,330 $ 11,113,702 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Schedule of related party transaction | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) Purchases (including fees): Purchases from NagraStar $ 17,897 $ 20,064 $ 54,328 $ 65,558 As of September 30, December 31, 2017 2016 (In thousands) Amounts Payable and Commitments: Amounts payable to NagraStar $ 16,323 $ 18,597 Commitments to NagraStar $ 6,873 $ 2,716 |
Dish Mexico | |
Schedule of related party transaction | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) Sales: Digital receivers and related components $ 413 $ 7,693 $ 1,596 $ 40,423 Uplink services $ 995 $ 1,024 $ 2,993 $ 3,049 As of September 30, December 31, 2017 2016 (In thousands) Amounts Receivable: Amounts receivable from Dish Mexico $ 2,342 $ 13,516 |
Organization and Business Act26
Organization and Business Activities (Details) item in Thousands | Sep. 30, 2017item |
Organization and Business Activities | |
Number of subscribers | 13,203 |
Number of subscribers lost due to hurricane Maria | 145 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Feb. 28, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Research and Development | ||||||
Research and Development Expense | $ 8,000 | $ 10,000 | $ 24,000 | $ 34,000 | ||
Dish DBS | ||||||
Significant accounting policies | ||||||
Total revenue | 3,653,774 | 11,113,702 | $ 14,755,939 | |||
Net income (loss) attributable to Dish DBS | 188,141 | 738,008 | 964,614 | |||
Previously reported | Dish DBS | ||||||
Significant accounting policies | ||||||
Total revenue | 3,632,115 | 11,023,684 | 14,637,043 | |||
Net income (loss) attributable to Dish DBS | 177,114 | 702,742 | 916,528 | |||
Adjustment | Dish DBS | ||||||
Significant accounting policies | ||||||
Total revenue | 21,659 | 90,018 | 118,896 | |||
Net income (loss) attributable to Dish DBS | $ 11,027 | $ 35,266 | $ 48,086 | |||
EchoStar | Satellite and Tracking Stock Transaction | ||||||
Significant accounting policies | ||||||
Preferred tracking stock issued by related party | 6,290,499 | |||||
HSSC | Satellite and Tracking Stock Transaction | ||||||
Significant accounting policies | ||||||
Preferred tracking stock issued by related party | 81.128 | |||||
Minimum | ||||||
Property and Equipment | ||||||
Useful life of property and equipment | 1 year | |||||
Revenue Recognition | ||||||
Period of deferral for the portion of subscriber fees that are deferred | 4 years | |||||
Maximum | ||||||
Property and Equipment | ||||||
Useful life of property and equipment | 40 years | |||||
Revenue Recognition | ||||||
Period of deferral for the portion of subscriber fees that are deferred | 5 years | |||||
Sling TV Holding | EchoStar | ||||||
Significant accounting policies | ||||||
Ownership percentage owned by noncontrolling owners | 10.00% | |||||
Nonvoting Interest Prior To Share Exchange | 10.00% |
Supplemental Data - Statement28
Supplemental Data - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental Data - Statements of Cash Flows | ||
Cash paid for interest | $ 696,379 | $ 590,238 |
Cash received for interest | 7,889 | 1,705 |
Cash paid for income taxes | 23,289 | 22,658 |
Cash paid for income taxes to DISH Network | 323,588 | 484,217 |
Satellites and other assets financed under capital lease obligations | $ 889 | $ 7,850 |
Marketable Investment Securit29
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2017 | Feb. 28, 2017 | Dec. 31, 2016 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||||
Trading | $ 47,856 | $ 47,856 | ||
Other | 54,506 | 54,506 | $ 3,833 | |
Total current marketable investment securities | 102,362 | 102,362 | 3,833 | |
Restricted marketable investment securities(1) | 71,919 | 71,919 | 81,679 | |
Total marketable investment securities | 174,281 | 174,281 | 85,512 | |
Restricted cash and cash equivalents (1) | 403 | 403 | 681 | |
Other investment securities - equity method | 112,381 | 112,381 | 25,098 | |
Other investment securities - cost method | 8,150 | |||
Total other investment securities | 112,381 | 112,381 | 33,248 | |
Total marketable investment securities, restricted cash and cash equivalents, and other investment securities | 287,065 | 287,065 | $ 119,441 | |
Marketable investment securities - unrealized gains (losses) on trading securities | $ 39,706 | $ 39,706 | ||
Maximum maturities of commercial paper | 365 days | |||
Maximum maturities of corporate securities | 18 months | |||
NagraStar L.L.C | ||||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | ||||
Interest on equity method investment | 50.00% |
Marketable Investment Securit30
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, 2017 | Dec. 31, 2016 |
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | $ (64) | $ (116) |
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss) | 1,000 | |
Components of available-for-sale investments | ||
Debt securities | 126,425 | 85,512 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 13 | 16 |
Unrealized Losses | (77) | (132) |
Unrealized Gains Losses, Net | (64) | (116) |
Contractual maturities of restricted and non-restricted marketable investment securities | ||
Debt securities with contractual maturities within one year | 119,000 | |
Debt securities with contractual maturities extending longer than one year through and including five years | 7,000 | |
U.S. Treasury and agency securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (39) | (119) |
Components of available-for-sale investments | ||
Debt securities | 75,638 | 81,982 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 13 | |
Unrealized Losses | (39) | (132) |
Unrealized Gains Losses, Net | (39) | (119) |
Commercial paper | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (1) | |
Components of available-for-sale investments | ||
Debt securities | 7,340 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Losses | (1) | |
Unrealized Gains Losses, Net | (1) | |
Corporate securities | ||
Accumulated net unrealized gains (losses) | ||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | (24) | 3 |
Components of available-for-sale investments | ||
Debt securities | 42,811 | 3,530 |
Unrealized Gains (Losses) on Marketable Investment Securities | ||
Unrealized Gains | 13 | 3 |
Unrealized Losses | (37) | |
Unrealized Gains Losses, Net | (24) | $ 3 |
Other (including restricted) | ||
Components of available-for-sale investments | ||
Debt securities | $ 636 |
Marketable Investment Securit31
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair value of marketable securities | ||
Debt securities | $ 126,425 | $ 85,512 |
Equity Securities | 47,856 | |
Total marketable investment securities | 174,281 | 85,512 |
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 | 75,638 | 81,982 |
Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 7,340 | |
Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 42,811 | 3,530 |
Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 636 | |
Fair value measurements on recurring basis | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 380,049 | 702,331 |
Equity Securities | 47,856 | |
Total marketable investment securities | 174,281 | 85,512 |
Fair value measurements on recurring basis | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 75,638 | 81,982 |
Fair value measurements on recurring basis | Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 7,340 | |
Fair value measurements on recurring basis | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 42,811 | 3,530 |
Fair value measurements on recurring basis | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | 636 | |
Fair value measurements on recurring basis | Level 1 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 27,117 | 4,126 |
Equity Securities | 47,856 | |
Total marketable investment securities | 123,494 | 81,982 |
Fair value measurements on recurring basis | Level 1 | U.S. Treasury and agency securities | ||
Fair value of marketable securities | ||
Debt securities | 75,638 | 81,982 |
Fair value measurements on recurring basis | Level 2 | ||
Fair value of marketable securities | ||
Cash equivalents (including restricted) | 352,932 | 698,205 |
Total marketable investment securities | 50,787 | 3,530 |
Fair value measurements on recurring basis | Level 2 | Commercial paper | ||
Fair value of marketable securities | ||
Debt securities | 7,340 | |
Fair value measurements on recurring basis | Level 2 | Corporate securities | ||
Fair value of marketable securities | ||
Debt securities | 42,811 | $ 3,530 |
Fair value measurements on recurring basis | Level 2 | Other (including restricted) | ||
Fair value of marketable securities | ||
Debt securities | $ 636 |
Marketable Investment Securit32
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities - Gains And Losses On Sales And Changes In Carrying Amounts Of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | ||||
Marketable investment securities - gains (losses) on sales/exchanges | $ 1,803 | $ 32,322 | ||
Marketable investment securities - unrealized gains (losses) on trading securities | $ 39,706 | 39,706 | ||
Other | 553 | $ 1,331 | 2,175 | 684 |
Total | $ 40,259 | $ 1,331 | $ 43,684 | $ 33,006 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory | ||
Finished goods | $ 233,437 | $ 282,569 |
Work-in-process and service repairs | 76,779 | 129,486 |
Raw materials | 8,643 | 10,268 |
Total Inventory | $ 318,859 | $ 422,323 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Property and Equipment | ||
Total property and equipment | $ 5,147,179 | $ 5,339,140 |
Accumulated depreciation | (3,473,862) | (3,448,772) |
Property and equipment, net | $ 1,673,317 | 1,890,368 |
Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 1 year | |
Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 40 years | |
Equipment leased to customers | ||
Property and Equipment | ||
Total property and equipment | $ 2,339,446 | 2,630,269 |
Equipment leased to customers | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 2 years | |
Equipment leased to customers | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 5 years | |
EchoStar XV | ||
Property and Equipment | ||
Total property and equipment | $ 277,658 | 277,658 |
Depreciable life of assets | 15 years | |
Satellites acquired under capital lease agreements | ||
Property and Equipment | ||
Total property and equipment | $ 499,819 | 499,819 |
Satellites acquired under capital lease agreements | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 10 years | |
Satellites acquired under capital lease agreements | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 15 years | |
Furniture, fixtures, equipment and other | ||
Property and Equipment | ||
Total property and equipment | $ 1,654,844 | 1,541,838 |
Furniture, fixtures, equipment and other | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 1 year | |
Furniture, fixtures, equipment and other | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 10 years | |
Buildings and improvements | ||
Property and Equipment | ||
Total property and equipment | $ 289,953 | 287,612 |
Buildings and improvements | Minimum | ||
Property and Equipment | ||
Depreciable life of assets | 1 year | |
Buildings and improvements | Maximum | ||
Property and Equipment | ||
Depreciable life of assets | 40 years | |
Land | ||
Property and Equipment | ||
Total property and equipment | $ 14,057 | 14,057 |
Construction in progress | ||
Property and Equipment | ||
Total property and equipment | $ 71,402 | $ 87,887 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | |
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | $ 189,726 | $ 202,046 | $ 563,068 | $ 627,168 |
Equipment leased to customers | ||||
Depreciation and amortization expense | ||||
Depreciation and amortization expense | $ | 139,702 | 154,802 | 411,247 | 485,819 |
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 | $ | $ 34,763 | $ 31,983 | $ 106,037 | $ 95,565 |
Pay-TV Satellites | ||||
Depreciation and amortization expense | ||||
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator | 12 | |||
Owned Satellites | 1 | 1 | ||
Number of satellites utilized under operating lease | 8 | |||
Number of satellites utilized under capital lease | 2 | |||
Dish Networks | 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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property and Equipment | |||||
Depreciation and amortization | $ 189,726 | $ 202,046 | $ 563,068 | $ 627,168 | |
FCC authorizations | $ 635,996 | $ 635,996 | $ 635,794 | ||
Minimum | |||||
Property and Equipment | |||||
Depreciable life of assets | 1 year | ||||
Maximum | |||||
Property and Equipment | |||||
Depreciable life of assets | 40 years | ||||
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 |
Long-Term Debt - Long term debt
Long-Term Debt - Long term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Long-term debt | |||
Carrying Value | $ 13,211,509 | $ 14,112,606 | |
Fair Value | 14,176,529 | 14,985,396 | |
Unamortized deferred financing costs and debt discount, net | (33,199) | (40,123) | |
Capital lease obligations (3) | 112,967 | 140,885 | |
Total long-term debt and capital lease obligations (including current portion) | 13,291,277 | 14,213,368 | |
Principal balance of debt redeemed | $ 900,000 | $ 1,500,000 | |
4 5/8% Senior Notes due 2017 | |||
Long-term debt | |||
Carrying Value | 900,000 | ||
Fair Value | $ 913,887 | ||
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 | $ 1,212,540 | $ 1,228,464 | |
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 | $ 1,531,992 | $ 1,559,698 | |
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 | $ 1,155,638 | $ 1,141,866 | |
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 | $ 2,201,800 | $ 2,178,880 | |
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 | $ 2,131,660 | $ 2,114,780 | |
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 | $ 1,540,290 | $ 1,500,315 | |
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 | $ 2,095,260 | $ 2,064,000 | |
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 | $ 2,295,840 | $ 2,270,900 | |
Interest rate (as a percent) | 7.75% | 7.75% | |
Other notes payable | |||
Long-term debt | |||
Carrying Value | $ 11,509 | $ 12,606 | |
Fair Value | $ 11,509 | $ 12,606 |
Commitments and Contingencies -
Commitments and Contingencies - (Details) | Jun. 05, 2017USD ($) | Oct. 03, 2016 | Feb. 12, 2015USD ($) | Dec. 23, 2013USD ($) | Sep. 23, 2016USD ($) | Jul. 31, 2009item | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2017USD ($) |
Spectrum Investments | |||||||||||||
Payment to acquire interest in non-controlling investments in certain entities | $ 11,000,000,000 | ||||||||||||
Total investment | $ 90,381,000 | 21,000,000,000 | |||||||||||
Aggregate amount to the federal and state plaintiffs | $ 280,000,000 | ||||||||||||
Term barred from conducting any outbound telemarketing | 2 years | ||||||||||||
Term barred from accepting orders from independent third-party retailer | 2 years | ||||||||||||
Litigation expense | $ 41,000,000 | ||||||||||||
Litigation expense (Note 8 ) | $ 20,000,000 | 295,695,000 | $ 25,000,000 | ||||||||||
Dividend paid to DOC | $ 8,250,000,000 | $ 1,500,000,000 | $ 1,500,000,000 | ||||||||||
Claim amount | $ 280,000,000 | ||||||||||||
Other accrued expenses | |||||||||||||
Spectrum Investments | |||||||||||||
Litigation Reserve | 280,000,000 | 280,000,000 | 280,000,000 | ||||||||||
Loss Contingency Accrual | 61,000,000 | 61,000,000 | 61,000,000 | ||||||||||
Vermont National Telephone Company | Maximum | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate amount to the federal and state plaintiffs | $ 11,000 | ||||||||||||
Claim amount | 11,000 | ||||||||||||
Vermont National Telephone Company | Minimum | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate amount to the federal and state plaintiffs | 5,500 | ||||||||||||
Claim amount | 5,500 | ||||||||||||
Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company | |||||||||||||
Spectrum Investments | |||||||||||||
Bidding credit value | $ 3,300,000,000 | ||||||||||||
Northstar Wireless or Northstar Spectrum | American III | |||||||||||||
Spectrum Investments | |||||||||||||
Non-controlling investments | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | ||||||||||
FTC Action | |||||||||||||
Spectrum Investments | |||||||||||||
Litigation expense | 255,000,000 | ||||||||||||
Satellite transponder guarantees | |||||||||||||
Spectrum Investments | |||||||||||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 143,000,000 | $ 143,000,000 | $ 143,000,000 | ||||||||||
Technology Development Licensing | |||||||||||||
Spectrum Investments | |||||||||||||
Number of reexamination petitions pending before patent and trademark office | item | 2 | ||||||||||||
Telemarketing Litigation [Member] | |||||||||||||
Spectrum Investments | |||||||||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | 5 years | |||||||||||
Telemarketing Litigation [Member] | DISH Network L.L.C. | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate amount to the federal and state plaintiffs | $ 270,000,000 | ||||||||||||
Claim amount | $ 270,000,000 | ||||||||||||
Claim amount from state plaintiff | $ 23,500,000,000 | ||||||||||||
Telemarketing Litigation [Member] | Maximum | DISH Network L.L.C. | |||||||||||||
Spectrum Investments | |||||||||||||
Claim amount from federal plaintiff | $ 900,000,000 | ||||||||||||
Lightsquared Harbinger Capital Partners LLC | |||||||||||||
Spectrum Investments | |||||||||||||
Business days allowed to terminate existing agreements | 3 days | ||||||||||||
CALIFORNIA | Telemarketing Litigation [Member] | |||||||||||||
Spectrum Investments | |||||||||||||
Claim amount from state plaintiff | $ 100,000,000 | ||||||||||||
OHIO | Telemarketing Litigation [Member] | |||||||||||||
Spectrum Investments | |||||||||||||
Claim amount from state plaintiff | 10,000,000 | ||||||||||||
Illinois And North Carolina [Member] | Telemarketing Litigation [Member] | |||||||||||||
Spectrum Investments | |||||||||||||
Claim Amount Minimum That Would Not Raise Constitutional Concerns | $ 1,000,000,000 |
Commitments and Contingencies39
Commitments and Contingencies - Part 1 (Details) | Jun. 05, 2017USD ($) | May 22, 2017USD ($) | Oct. 03, 2016 | Jul. 25, 2014item | Sep. 23, 2016USD ($) | Jul. 31, 2009item | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) |
Loss contingencies | ||||||||||
Claim amount | $ 280,000,000 | |||||||||
General and administrative expenses | $ 182,679,000 | $ 184,164,000 | $ 487,287,000 | $ 552,340,000 | ||||||
Vermont National Telephone Company | ||||||||||
Loss contingencies | ||||||||||
Loss Contingency Recovery Amount | $ 10,000,000,000 | |||||||||
Falsely claimed bidding credit, percentage | 25.00% | |||||||||
LightSquared transaction shareholder derivative actions | ||||||||||
Loss contingencies | ||||||||||
Number of shareholders who filed lawsuits | item | 5 | |||||||||
Number of Claims Asserted | item | 5 | |||||||||
LightSquared transaction shareholder derivative actions | Mr. Ergen | ||||||||||
Loss contingencies | ||||||||||
Number of Claims Asserted | item | 3 | |||||||||
LightSquared transaction shareholder derivative actions | Director Defendants | ||||||||||
Loss contingencies | ||||||||||
Number of Claims Asserted | item | 1 | |||||||||
Northstar Wireless or Northstar Spectrum | Vermont National Telephone Company | ||||||||||
Loss contingencies | ||||||||||
Bidding Credit | $ 3,300,000,000 | |||||||||
Satellite transponder guarantees | ||||||||||
Loss contingencies | ||||||||||
Guarantees for payments | $ 143,000,000 | $ 143,000,000 | ||||||||
Technology Development Licensing | ||||||||||
Loss contingencies | ||||||||||
Number of reexamination petitions pending before patent and trademark office | item | 2 | |||||||||
Telemarketing Litigation [Member] | ||||||||||
Loss contingencies | ||||||||||
Period of injunctive relief sought from placing any outbound telemarketing calls to market or promote its goods or services | 5 years | 5 years | ||||||||
Lightsquared Harbinger Capital Partners LLC | ||||||||||
Loss contingencies | ||||||||||
Business days allowed to terminate existing agreements | 3 days | |||||||||
Maximum | Vermont National Telephone Company | ||||||||||
Loss contingencies | ||||||||||
Claim amount | 11,000 | |||||||||
Minimum | Vermont National Telephone Company | ||||||||||
Loss contingencies | ||||||||||
Claim amount | $ 5,500 | |||||||||
Telemarketing Litigation [Member] | ||||||||||
Loss contingencies | ||||||||||
Number of telemarketing calls | item | 51,119 | |||||||||
Litigation per call damages | $ 400 | |||||||||
Dish Networks | Telemarketing Litigation [Member] | ||||||||||
Loss contingencies | ||||||||||
Litigation per call damages | $ 1,200 |
Geographic Information - (Detai
Geographic Information - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue by geographic region | ||||
Revenue | $ 3,491,559 | $ 3,653,774 | $ 10,606,330 | $ 11,113,702 |
United States | ||||
Revenue by geographic region | ||||
Revenue | 3,479,791 | 3,636,566 | 10,573,536 | 11,036,835 |
Canada and Mexico | ||||
Revenue by geographic region | ||||
Revenue | $ 11,768 | $ 17,208 | $ 32,794 | $ 76,867 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Feb. 12, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||||||
Dividend paid to DOC | $ 8,250,000 | $ 1,500,000 | $ 1,500,000 | |||
Subscriber-related revenue | $ 3,459,439 | 3,617,798 | $ 10,508,801 | 10,988,263 | ||
Trade accounts receivable | 674,104 | 674,104 | $ 740,856 | |||
Trade accounts payable | 342,289 | 342,289 | 504,562 | |||
Equipment sales and other revenue | 32,120 | 35,976 | 97,529 | 125,439 | ||
Broadband, Wireless and Other Segments | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses associated with services | 11,000 | 16,000 | 40,000 | 51,000 | ||
Dish Network [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Advertising Revenue | 0 | 2,000 | ||||
EchoStar | ||||||
Related Party Transaction [Line Items] | ||||||
Trade accounts receivable | 3,000 | 3,000 | 1,000 | |||
Trade accounts payable | $ 33,000 | $ 33,000 | $ 259,000 | |||
Equipment sales and other revenue | $ 1,000 | $ 2,000 |
Related Party Transactions - Na
Related Party Transactions - Narrative Part 1 (Details) $ in Thousands | Mar. 01, 2017item | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2013item | Dec. 31, 2009 |
Related Party Transaction [Line Items] | |||||||
Subscriber-related expenses | $ | $ 2,182,555 | $ 2,156,508 | $ 6,543,542 | $ 6,495,549 | |||
100 Inverness Lease Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Required notice period for termination by the reporting entity | 180 days | ||||||
EchoStar | El Paso Lease Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Number of consecutive three year renewal options | 4 | ||||||
Agreement Renewal Option Term | 3 years | ||||||
EchoStar | Professional Services Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Agreement term | 1 year | ||||||
Automatic renewal period | 1 year | ||||||
Minimum notice period for termination of agreement | 60 days | ||||||
EchoStar | 90 Inverness Lease Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Number of consecutive three year renewal options | 4 | ||||||
Agreement Renewal Option Term | 3 years | ||||||
EchoStar | Cheyenne Lease Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Number of successive one year renewal options | 13 | ||||||
Agreement Renewal Option Term | 1 year | ||||||
EchoStar | Gilbert Lease Agreement | Dish Network | |||||||
Related Party Transaction [Line Items] | |||||||
Number of successive one year renewal options | 13 | ||||||
Agreement Renewal Option Term | 1 year | ||||||
EchoStar | Collocation And Antenna Space Agreements [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Required notice period for termination by the reporting entity | 180 days |
Related Party Transactions - 43
Related Party Transactions - Narrative Part 2 (Details) $ in Thousands | Dec. 21, 2012 | Jan. 02, 2012 | Nov. 30, 2016 | Jun. 30, 2013 | May 31, 2012 | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Mar. 31, 2014item | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2009item | Dec. 31, 2008item |
Related Party Transaction [Line Items] | ||||||||||||
Satellite and transmission expenses | $ | $ 174,787 | $ 183,086 | $ 544,508 | $ 523,233 | ||||||||
EchoStar XVIII Satellite | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Satellite and transmission expenses | $ | 16,000 | 50,000 | ||||||||||
EchoStar XVI | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Agreement Renewal Option Term | 5 years | |||||||||||
EchoStar XVIII | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Satellite and transmission expenses | $ | 5,000 | 5,000 | ||||||||||
EchoStar | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Satellite and transmission expenses | $ | $ 86,000 | $ 89,000 | $ 261,000 | $ 263,000 | ||||||||
EchoStar | EchoStar XVI | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Agreement term from commencement of service date | 4 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 |
Related Party Transactions - 44
Related Party Transactions - Narrative Part 3 (Details) - USD ($) $ in Thousands | Mar. 01, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2009 |
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | $ 182,679 | $ 184,164 | $ 487,287 | $ 552,340 | ||
EchoStar | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative expenses | $ 8,000 | $ 5,000 | $ 23,000 | $ 13,000 | ||
Dish Network | EchoStar | 90 Inverness Lease Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement Renewal Option Term | 3 years | |||||
Dish Network | EchoStar | Gilbert Lease Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement Renewal Option Term | 1 year | |||||
Dish Network | EchoStar | American Fork Occupancy License Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement Renewal Option Term | 5 years | |||||
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 |
Related Party Transactions - 45
Related Party Transactions - Narrative Part 4 (Details) $ in Thousands | Dec. 21, 2012 | Apr. 29, 2011USD ($)installment | Dec. 31, 2011USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2011USD ($) |
Related Party Transaction [Line Items] | ||||||||
Cost of sales - equipment and other | $ 21,563 | $ 22,778 | $ 71,672 | $ 92,709 | ||||
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 | |||||||
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 | |||||||
EchoStar XVI | ||||||||
Related Party Transaction [Line Items] | ||||||||
Agreement Renewal Option Term | 1 year |
Related Party Transactions - 46
Related Party Transactions - Narrative Part 5 (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 19, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Rovi License Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement term | 10 years | |||||
Payments to Related Parties | $ 0 | |||||
Hughes Broadband Sales Agency Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement term | 5 years | |||||
Automatic renewal period | 1 year | |||||
Broadband equipment purchased from related party | $ 7,000 | $ 17,000 | ||||
NagraStar | ||||||
Related Party Transaction [Line Items] | ||||||
Interest on equity method investment | 50.00% | 50.00% | ||||
Purchases from NagraStar | $ 17,897 | $ 20,064 | $ 54,328 | $ 65,558 | ||
Amounts payable to NagraStar | 16,323 | 16,323 | $ 18,597 | |||
Commitments to NagraStar | $ 6,873 | $ 6,873 | 2,716 | |||
Dish Mexico | ||||||
Related Party Transaction [Line Items] | ||||||
Interest on equity method investment | 49.00% | 49.00% | ||||
Amounts receivable | $ 2,342 | $ 2,342 | $ 13,516 | |||
Dish Mexico | Digital receivers and related components | ||||||
Related Party Transaction [Line Items] | ||||||
Sales | 413 | 7,693 | 1,596 | 40,423 | ||
Dish Mexico | Uplink services | ||||||
Related Party Transaction [Line Items] | ||||||
Sales | $ 995 | $ 1,024 | $ 2,993 | $ 3,049 |