Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2014 | |
Document and Entity Information | |
Entity Registrant Name | DISH DBS CORP |
Entity Central Index Key | 1042642 |
Document Type | S-4 |
Document Period End Date | 30-Sep-14 |
Amendment Flag | FALSE |
Entity Filer Category | Non-accelerated Filer |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $4,294,475 | $3,424,387 |
Marketable investment securities (Note 4) | 4,117,326 | 2,269,670 |
Trade accounts receivable - other, net of allowance for doubtful accounts of $15,981 and $13,834, respectively | 859,986 | 823,374 |
Trade accounts receivable - EchoStar, net of allowance for doubtful accounts of zero | 52,602 | 19,924 |
Inventory | 512,646 | 464,393 |
Deferred tax assets (Note 8) | 65,457 | 91,722 |
Other current assets | 143,564 | 117,157 |
Total current assets | 10,046,056 | 7,210,627 |
Noncurrent Assets: | ||
Restricted cash and marketable investment securities (Note 4) | 82,780 | 121,661 |
Property and equipment, net (Note 6) | 2,979,323 | 3,007,384 |
FCC authorizations | 635,794 | 635,794 |
Other noncurrent assets, net | 258,754 | 198,992 |
Total noncurrent assets | 3,956,651 | 3,963,831 |
Total assets | 14,002,707 | 11,174,458 |
Current Liabilities: | ||
Trade accounts payable - other | 257,950 | 221,839 |
Trade accounts payable - EchoStar | 338,788 | 262,843 |
Deferred revenue and other | 824,478 | 832,518 |
Accrued programming | 1,238,610 | 1,092,346 |
Accrued interest | 232,732 | 224,383 |
Litigation accrual (Note 11) | 70,999 | |
Other accrued expenses | 457,775 | 440,990 |
Current portion of long-term debt and capital lease obligations (Note 7) | 1,032,607 | 534,787 |
Total current liabilities | 4,382,940 | 3,680,705 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion (Note 7) | 12,596,608 | 11,328,944 |
Deferred tax liabilities (Note 8) | 1,247,375 | 1,184,349 |
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities | 159,684 | 242,360 |
Total long-term obligations, net of current portion | 14,003,667 | 12,755,653 |
Total liabilities | 18,386,607 | 16,436,358 |
Commitments and Contingencies (Note 11) | ||
Stockholder's Equity (Deficit): | ||
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding | ||
Additional paid-in capital | 1,300,101 | 1,254,814 |
Accumulated other comprehensive income (loss) | 11,189 | 6,080 |
Accumulated earnings (deficit) | -5,697,772 | -6,522,794 |
Total DISH DBS stockholder's equity (deficit) | -4,386,482 | -5,261,900 |
Noncontrolling interest | 2,582 | |
Total stockholder's equity (deficit) | -4,383,900 | -5,261,900 |
Total liabilities and stockholder's equity (deficit) | $14,002,707 | $11,174,458 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | |||
Current Assets: | |||
Allowance for doubtful accounts on trade accounts receivable - other | $20,010 | $15,981 | $13,834 |
Allowance for doubtful accounts on trade accounts receivable - EchoStar | $0 | $0 | $0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 |
Common stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,015 | 1,015 | 1,015 |
Common stock, shares outstanding | 1,015 | 1,015 | 1,015 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenue: | |||
Subscriber-related revenue | $13,559,511 | $13,038,611 | $12,959,025 |
Equipment sales and other revenue | 92,618 | 95,923 | 64,547 |
Equipment sales, services and other revenue - EchoStar | 43,483 | 17,066 | 36,474 |
Total revenue | 13,695,612 | 13,151,600 | 13,060,046 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | |||
Subscriber-related expenses | 7,677,111 | 7,246,104 | 6,841,760 |
Satellite and transmission expenses: | |||
EchoStar | 487,011 | 419,888 | 441,613 |
Other | 40,472 | 40,392 | 39,341 |
Cost of sales - equipment, services and other | 85,627 | 96,240 | 79,563 |
Subscriber acquisition costs: | |||
Cost of sales - subscriber promotion subsidies - EchoStar | 252,178 | 264,208 | 249,440 |
Other subscriber acquisition costs | 1,432,558 | 1,396,477 | 1,254,036 |
Total subscriber acquisition costs | 1,684,736 | 1,660,685 | 1,503,476 |
General and administrative expenses - EchoStar | 69,224 | 49,878 | 45,188 |
General and administrative expenses | 617,898 | 616,339 | 570,699 |
Litigation expense (Note 11) | 730,457 | -316,949 | |
Depreciation and amortization (Note 6) | 905,987 | 898,682 | 904,955 |
Total costs and expenses | 11,568,066 | 11,758,665 | 10,109,646 |
Operating income (loss) | 2,127,546 | 1,392,935 | 2,950,400 |
Other Income (Expense): | |||
Interest income | 38,214 | 22,431 | 13,209 |
Interest expense, net of amounts capitalized | -878,550 | -647,298 | -552,036 |
Other, net | -2,833 | 2,124 | 10,957 |
Total other income (expense) | -843,169 | -622,743 | -527,870 |
Income (loss) before income taxes | 1,284,377 | 770,192 | 2,422,530 |
Income tax (provision) benefit, net (Note 8) | -459,655 | -285,926 | -896,847 |
Net income (loss) | 824,722 | 484,266 | 1,525,683 |
Less: Net income (loss) attributable to noncontrolling interest | -300 | ||
Net income (loss) attributable to DISH DBS | 825,022 | 484,266 | 1,525,683 |
Comprehensive Income (Loss): | |||
Net income (loss) | 824,722 | 484,266 | 1,525,683 |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) on available-for-sale securities | 8,781 | 8,047 | -5,215 |
Deferred income tax (expense) benefit, net | -3,672 | -517 | |
Total other comprehensive income (loss), net of tax | 5,109 | 7,530 | -5,215 |
Comprehensive income (loss) | 829,831 | 491,796 | 1,520,468 |
Less: Comprehensive income (loss) attributable to noncontrolling interest | -300 | ||
Comprehensive income (loss) attributable to DISH DBS | $830,131 | $491,796 | $1,520,468 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) (USD $) | Total | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Earnings (Deficit) | Noncontrolling Interest |
In Thousands, unless otherwise specified | |||||
Balance at Dec. 31, 2010 | ($2,942,560) | $1,170,560 | $3,765 | ($4,116,885) | |
Increase (Decrease) in Stockholder's Equity | |||||
Dividends to DISH Orbital Corporation (Note 15) | -3,500,000 | -3,500,000 | |||
Non-cash, stock-based compensation | 31,163 | 31,163 | |||
Income tax (expense) benefit related to stock awards and other | 5,958 | 5,958 | |||
Change in unrealized holding gains (losses) on available-for-sale securities, net | -5,215 | -5,215 | |||
Net income (loss) attributable to DISH DBS | 1,525,683 | 1,525,683 | |||
Balance at Dec. 31, 2011 | -4,884,971 | 1,207,681 | -1,450 | -6,091,202 | |
Increase (Decrease) in Stockholder's Equity | |||||
Dividends to DISH Orbital Corporation (Note 15) | -915,858 | -915,858 | |||
Non-cash, stock-based compensation | 38,573 | 38,573 | |||
Income tax (expense) benefit related to stock awards and other | 8,560 | 8,560 | |||
Change in unrealized holding gains (losses) on available-for-sale securities, net | 8,047 | 8,047 | |||
Deferred income tax (expense) benefit attributable to unrealized gains (losses) on available-for-sale securities | -517 | -517 | |||
Net income (loss) attributable to DISH DBS | 484,266 | 484,266 | |||
Balance at Dec. 31, 2012 | -5,261,900 | 1,254,814 | 6,080 | -6,522,794 | |
Increase (Decrease) in Stockholder's Equity | |||||
Non-cash, stock-based compensation | 29,647 | 29,647 | |||
Income tax (expense) benefit related to stock awards and other | 18,788 | 18,788 | |||
Change in unrealized holding gains (losses) on available-for-sale securities, net | 8,781 | 8,781 | |||
Deferred income tax (expense) benefit attributable to unrealized gains (losses) on available-for-sale securities | -3,672 | -3,672 | |||
Capital distribution to EchoStar | -3,148 | -3,148 | |||
Noncontrolling interest recognized with acquisition of a controlling interest in subsidiary | 2,882 | 2,882 | |||
Net income (loss) attributable to noncontrolling interest | 300 | -300 | |||
Net income (loss) attributable to DISH DBS | 825,022 | 825,022 | |||
Balance at Dec. 31, 2013 | ($4,383,900) | $1,300,101 | $11,189 | ($5,697,772) | $2,582 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash Flows From Operating Activities: | |||
Net income (loss) | $824,722 | $484,266 | $1,525,683 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||
Depreciation and amortization | 905,987 | 898,682 | 904,955 |
Realized and unrealized losses (gains) on investments | -1,751 | -10,758 | |
Non-cash, stock-based compensation | 29,647 | 38,573 | 31,163 |
Deferred tax expense (benefit) (Note 8) | 71,405 | 169,308 | 582,519 |
Other, net | -82,032 | -20,897 | 17,342 |
Changes in current assets and current liabilities: | |||
Trade accounts receivable - other | -36,867 | -55,048 | 18,173 |
Allowance for doubtful accounts | 2,147 | 1,918 | -17,735 |
Trade accounts receivable - EchoStar | -32,678 | -3,628 | -2,141 |
Inventory | -18,437 | 84,151 | -56,063 |
Other current assets | -26,407 | 635 | -5,723 |
Trade accounts payable - other | 32,620 | 93,392 | -31,614 |
Trade accounts payable - EchoStar | 75,945 | 39,926 | -15,712 |
Deferred revenue and other | -8,040 | 23,239 | 5,822 |
Litigation expense accrual (Note 11 and Note 15) | 5,419 | -316,949 | |
Litigation settlement payments (Note 11 and Note 15) | -70,999 | -350,000 | |
Accrued programming and other accrued expenses | 163,308 | 196,219 | -10,600 |
Net cash flows from operating activities | 1,830,321 | 1,954,404 | 2,268,362 |
Cash Flows From Investing Activities: | |||
(Purchases) Sales and maturities of marketable investment securities, net | -1,838,875 | -1,580,123 | 919,433 |
Purchases of property and equipment | -925,203 | -778,742 | -765,490 |
Change in restricted cash and marketable investment securities | 38,881 | -2,017 | 12,751 |
Other, net | -12,235 | -23,895 | 9,954 |
Net cash flows from investing activities | -2,737,432 | -2,384,777 | 176,648 |
Cash Flows From Financing Activities: | |||
Proceeds from issuance of long-term debt | 2,300,000 | 4,400,000 | 2,000,000 |
Proceeds from issuance of restricted debt | 2,600,000 | ||
Redemption of restricted debt | -2,600,000 | ||
Funding of restricted debt escrow | -2,596,750 | ||
Release of restricted debt escrow | 2,596,771 | ||
Debt issuance costs | -11,146 | -13,246 | -27,261 |
Repayment of long-term debt and capital lease obligations | -35,586 | -34,890 | -32,716 |
Dividend to DISH Orbital Corporation | -907,230 | -3,500,000 | |
Other, net | 23,910 | 11,054 | 6,773 |
Net cash flows from financing activities | 1,777,199 | 3,455,688 | -2,553,204 |
Net increase (decrease) in cash and cash equivalents | 870,088 | 3,025,315 | -108,194 |
Cash and cash equivalents, beginning of period | 3,424,387 | 399,072 | 507,266 |
Cash and cash equivalents, end of period | 4,294,475 | 3,424,387 | 399,072 |
7 % Senior Notes due 2013 | |||
Cash Flows From Financing Activities: | |||
Repurchases and redemption of Senior Notes | -500,000 | ||
6 3/8% Senior Notes Due 2011 | |||
Cash Flows From Financing Activities: | |||
Repurchases and redemption of Senior Notes | ($1,000,000) |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Dec. 31, 2011 |
6 3/8% Senior Notes Due 2011 | |
Long-term debt | |
Senior Notes, interest rate (as a percent) | 6.38% |
Organization_and_Business_Acti
Organization and Business Activities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Organization and Business Activities | ||
Organization and Business Activities | 1. Organization and Business Activities | 1. Organization and Business Activities |
Principal Business | Principal Business | |
DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. We operate the DISH® branded pay-TV service (“DISH”), which had 14.041 million subscribers in the United States as of September 30, 2014. The DISH branded pay-TV service consists of, among other things, Federal Communications Commission (“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations. | DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our,” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. We operate the DISH® branded direct broadcast satellite (“DBS”) pay-TV service in the United States. The DISH branded pay-TV service consists of Federal Communications Commission (“FCC”) licenses authorizing us to use DBS and Fixed Satellite Service (“FSS”) spectrum, our satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Summary of Significant Accounting Policies | ||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | ||
Basis of Presentation | Principles of Consolidation and 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, 2013. Certain prior period amounts have been reclassified to conform to the current period presentation. | 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 interest. Non-majority owned 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. Certain prior period amounts have been reclassified to conform to the current period presentation. | |||
Principles of Consolidation | Use of Estimates | |||
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 interest or redeemable non-controlling interest. See below for further discussion. Non-majority owned 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. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Weak economic conditions have increased 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 the Consolidated Financial Statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. | |||
Redeemable Noncontrolling Interests. DISH Digital Holding L.L.C. (“DISH Digital”) has been consolidated into our financial statements since May 2, 2014. Effective August 1, 2014, EchoStar Corporation (“EchoStar”) and DISH Digital entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, among other things, DISH Digital distributed certain assets to EchoStar and EchoStar reduced its interest in DISH Digital to a ten percent non-voting interest. EchoStar’s ten percent non-voting interest is redeemable, subject to certain conditions, at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interest” in the mezzanine section of our Condensed Consolidated Balance Sheets. Since any redemption of EchoStar’s ten percent non-voting interest would occur at fair value, the “Redeemable noncontrolling interest” was initially accounted for at fair value, which established a minimum threshold value for this interest. Redemption of the interest is contingent on a certain performance goal being achieved by DISH Digital, which is not yet probable of being achieved. At such time that we determine the performance goal to be probable, the value of the “Redeemable noncontrolling interest” will be adjusted for any change in redemption value above the minimum threshold, with the offset recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. In addition, the operating results of DISH Digital attributable to EchoStar are recorded as “Redeemable noncontrolling interest” in our Condensed Consolidated Balance Sheets effective August 1, 2014. See Note 10 for further discussion on DISH Digital and the Exchange Agreement. | Cash and Cash Equivalents | |||
Use of Estimates | We consider all liquid investments purchased with a remaining maturity of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents as of December 31, 2013 and 2012 may consist of money market funds, government bonds, corporate notes and commercial paper. The cost of these investments approximates their fair value. | |||
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Sustained economic weakness has increased 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 | |||
Fair Value Measurements | We currently classify all marketable investment securities as available-for-sale. We adjust the carrying value 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. Declines in the fair value of a marketable investment security which are determined to be “other-than-temporary” are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. | |||
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: | We evaluate our marketable investment securities portfolio on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary. This quarterly evaluation consists of reviewing, among other things: | |||
· Level 1, defined as observable inputs being quoted prices in active markets for identical assets, including U.S. treasury notes; | · the fair value of our marketable investment securities compared to the carrying amount, | |||
· the historical volatility of the price of each security, and | ||||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and | · any market and company specific factors related to each security. | |||
· 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. | Declines in the fair value of debt and equity investments below cost basis are generally accounted for as follows: | |||
As of September 30, 2014 and December 31, 2013, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | Length of Time Investment | Treatment of the Decline in Value | ||
Has Been In a Continuous | (absent specific factors to the contrary) | |||
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | Loss Position | |||
Less than six months | Generally, considered temporary. | |||
New Accounting Pronouncements | Six to nine months | Evaluated on a case by case basis to determine whether any company or market-specific factors exist indicating that such decline is other-than-temporary. | ||
Greater than nine months | Generally, considered other-than-temporary. The decline in value is recorded as a charge to earnings. | |||
Revenue from Contracts with Customers. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. This converged standard on revenue recognition was issued jointly with the International Accounting Standards Board (“IASB”) to improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards (“IFRS”). ASU 2014-09 provides a framework for revenue recognition that replaces most existing GAAP revenue recognition guidance when it becomes effective. ASU 2014-09 will become effective for us on January 1, 2017. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. | ||||
Additionally, in situations where the fair value of a debt security is below its carrying amount, we consider the decline to be other-than-temporary and record a charge to earnings if any of the following factors apply: | ||||
· we have the intent to sell the security, | ||||
· it is more likely than not that we will be required to sell the security before maturity or recovery, or | ||||
· we do not expect to recover the security’s entire amortized cost basis, even if there is no intent to sell the security. | ||||
In general, we use the first in, first out method to determine the cost basis on sales of marketable investment securities. | ||||
Trade Accounts Receivable | ||||
Management estimates the amount of required allowances for the potential non-collectability of accounts receivable based upon past collection experience and consideration of other relevant factors. However, past experience may not be indicative of future collections and therefore additional charges could be incurred in the future to reflect differences between estimated and actual collections. | ||||
Inventory | ||||
Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The cost of manufactured inventory includes the cost of materials, labor, freight-in, royalties and manufacturing overhead. | ||||
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. | ||||
Impairment of Long-Lived Assets | ||||
We review our long-lived assets and identifiable finite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For assets which are held and used in operations, the asset would be impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash flows. Once an impairment is determined, the actual impairment recognized is the difference between the carrying value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash flow, estimated future operating results, trends and other available information in assessing whether the carrying value of assets are recoverable. | ||||
DBS Satellites. We currently evaluate our DBS satellite fleet for impairment as one asset group whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. We do not believe any triggering event has occurred which would indicate impairment as of December 31, 2013. | ||||
Indefinite Lived Intangible Assets | ||||
We do not amortize indefinite lived intangible assets, but test these assets for impairment annually during the fourth quarter or more often if indicators of impairment arise. Intangible assets that have finite lives are amortized over their estimated useful lives and tested for impairment as described above for long-lived assets. Our intangible assets with indefinite lives primarily consist of FCC licenses. Generally, we have determined that our FCC licenses have indefinite useful lives due to the following: | ||||
· FCC licenses are a non-depleting asset; | ||||
· existing FCC licenses are integral to our business segments and will contribute to cash flows indefinitely; | ||||
· replacement satellite applications are generally authorized by the FCC subject to certain conditions, without substantial cost under a stable regulatory, legislative and legal environment; | ||||
· maintenance expenditures to obtain future cash flows are not significant; | ||||
· FCC licenses are not technologically dependent; and | ||||
· we intend to use these assets indefinitely. | ||||
DBS FCC Licenses. We combine all of our indefinite lived DBS FCC licenses that we currently utilize or plan to utilize in the future into a single unit of accounting. The analysis encompasses future cash flows from satellites transmitting from such licensed orbital locations, including revenue attributable to programming offerings from such satellites, the direct operating and subscriber acquisition costs related to such programming, and future capital costs for replacement satellites. Projected revenue and cost amounts include projected subscribers. In conducting our annual impairment test in 2013, we determined that the estimated fair value of the DBS FCC licenses, calculated using a discounted cash flow analysis, exceeded their carrying amounts. | ||||
Long-Term Deferred Revenue, Distribution and Carriage Payments | ||||
Certain programmers provide us up-front payments. Such amounts are deferred and recognized as reductions to “Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (generally up to ten years). The current and long-term portions of these deferred credits are recorded in our Consolidated Balance Sheets in “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and other long-term liabilities,” respectively. | ||||
Sales Taxes | ||||
We account for sales taxes imposed on our goods and services on a net basis in our Consolidated Statements of Operations and Comprehensive Income (Loss). Since we primarily act as an agent for the governmental authorities, the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity. | ||||
Income Taxes | ||||
We establish a provision for income taxes currently payable or receivable and for income tax amounts deferred to future periods. Deferred tax assets and liabilities are recorded for the estimated future tax effects of differences that exist between the book and tax basis of assets and liabilities. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. | ||||
Accounting for Uncertainty in Income Taxes | ||||
From time to time, we engage in transactions where the tax consequences may be subject to uncertainty. We record a liability when, in management’s judgment, a tax filing position does not meet the more likely than not threshold. For tax positions that meet the more likely than not threshold, we may record a liability depending on management’s assessment of how the tax position will ultimately be settled. We adjust our estimates periodically for ongoing examinations by and settlements with various taxing authorities, as well as changes in tax laws, regulations and precedent. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of “Interest expense, net of amounts capitalized” and “Other, net,” respectively, on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
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, including U.S. treasury notes; | ||||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; 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 December 31, 2013 and 2012, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | ||||
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | ||||
Deferred Debt Issuance Costs | ||||
Costs of issuing debt are generally deferred and amortized to interest expense ratably over the terms of the respective notes. See Note 7. | ||||
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 service is recognized when programming is broadcast to subscribers. Payments received from our Pay-TV subscribers in advance of the broadcast or service period are recorded as “Deferred revenue and other” in our Consolidated Balance Sheets until earned. | ||||
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 18 months to five years. Revenue from advertising sales is recognized when the related services are performed. | ||||
Subscriber fees for pay-TV equipment rental and other hardware related fees, including fees for DVRs, equipment upgrade fees and additional outlet fees from subscribers with receivers with multiple tuners, advertising services and fees earned from our in-home service operations are recognized as revenue as earned. Generally, revenue from equipment sales and equipment upgrades is 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 web-site. 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. | ||||
Subscriber-Related Expenses | ||||
The cost of television programming distribution rights is generally incurred on a per subscriber basis and various upfront carriage payments are recognized when the related programming is distributed to subscribers. Long-term flat rate programming contracts are charged to expense using the straight-line method over the term of the agreement. The cost of television programming rights to distribute live sporting events for a season or tournament is charged to expense using the straight-line method over the course of the season or tournament. “Subscriber-related expenses” in the Consolidated Statements of Operations and Comprehensive Income (Loss) principally include programming expenses, costs for pay-TV services incurred in connection with our in-home service and call center operations, billing costs, refurbishment and repair costs related to receiver systems, subscriber retention and other variable subscriber expenses. These costs are recognized as the services are performed or as incurred. | ||||
Subscriber Acquisition Costs | ||||
Subscriber acquisition costs in our Consolidated Statements of Operations and Comprehensive Income (Loss) consist of costs incurred to acquire new Pay-TV subscribers through third parties and our direct sales distribution channel. Subscriber acquisition costs include the following line items from our Consolidated Statements of Operations and Comprehensive Income (Loss): | ||||
· “Cost of sales — subscriber promotion subsidies - EchoStar” includes the cost of our receiver systems sold to retailers and other distributors of our equipment and receiver systems sold directly by us to subscribers. | ||||
· “Other subscriber acquisition costs” includes net costs related to promotional incentives and costs related to installation and other promotional subsidies and advertising and marketing expenses related to the acquisition of new Pay-TV subscribers. | ||||
We characterize amounts paid to our independent retailers as consideration for equipment installation services and for equipment buydowns (incentives and rebates) as a reduction of revenue. We expense payments for equipment installation services as “Other subscriber acquisition costs.” Our payments for equipment buydowns represent a partial or complete return of the retailer’s purchase price and are, therefore, netted against the proceeds received from the retailer. We report the net cost from our various sales promotions through our independent retailer network as a component of “Other subscriber acquisition costs.” Net proceeds from the sale of subscriber related equipment pursuant to our subscriber acquisition promotions are not recognized as revenue. | ||||
Advertising Costs | ||||
Our advertising costs associated with acquiring new Pay-TV subscribers are expensed as incurred. During the years ended December 31, 2013, 2012 and 2011, we recorded advertising costs of $448 million, $429 million and $329 million, respectively, within “Other subscriber acquisition costs” and “General and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Deferred Cost of Sales | ||||
On May 22, 2013, we launched a promotion whereby qualifying new Pay-TV subscribers may choose either an Apple® iPad® 2 or programming credits when they, among other things, commit to a two-year contract. The costs of the iPad 2 are recorded as short-term or long-term deferred cost of sales expense within “Other current assets” and “Other noncurrent assets, net,” respectively, on our Consolidated Balance Sheets and are amortized on a straight-line basis over the related contract term to “Cost of sales — equipment, services and other” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Equipment Lease Programs | ||||
Pay-TV subscribers have the choice of leasing or purchasing the satellite receiver and other equipment necessary to receive our pay-TV service. Most of our new Pay-TV subscribers choose to lease equipment and thus we retain title to such equipment. Equipment leased to new and existing Pay-TV subscribers is capitalized and depreciated over their estimated useful lives. |
Statements_of_Cash_Flow_Data
Statements of Cash Flow Data | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Statements of Cash Flow Data | 3. Supplemental Data — Statements of Cash Flows | 3. Statements of Cash Flow Data | |||||||||||||||||
The following table presents our supplemental cash flow and other non-cash data. | The following presents our supplemental cash flow statement disclosure. | ||||||||||||||||||
For the Nine Months | For the Years Ended December 31, | ||||||||||||||||||
Ended September 30, | 2013 | 2012 | 2011 | ||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||
(In thousands) | Cash paid for interest | $ | 875,006 | $ | 537,512 | $ | 545,406 | ||||||||||||
Supplemental Disclosure of Cash Flow Information: | Cash received for interest | 36,242 | 22,431 | 11,468 | |||||||||||||||
Cash paid for interest | $ | 652,150 | $ | 662,264 | Cash paid for income taxes | 1,351 | 20,624 | 14,661 | |||||||||||
Cash received for interest | 26,242 | 26,771 | Cash paid for income taxes to DISH Network | 433,120 | 272,599 | 384,462 | |||||||||||||
Cash paid for income taxes | 4,355 | 751 | Satellites and other assets financed under capital lease obligations | 1,070 | 5,857 | 10,548 | |||||||||||||
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | Receipt of marketable investment securities with no cash consideration | — | 13,237 | — | |||||||||||||
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | Net satellite broadband assets distributed to DISH Network | — | 8,628 | — | |||||||||||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 432,080 | — | |||||||||||||||||
Investment in EchoStar and HSSC preferred tracking stock - cost method | 316,204 | — | 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 Consolidated Balance Sheets is a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s 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 year presented on our Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities. | ||||||||||||||||
Transfer of liabilities and other | 44,540 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $31,274 | 51,466 | — | |||||||||||||||||
DISH Digital Exchange Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 8,978 | — | |||||||||||||||||
Transfer of investments and intangibles, net | 25,097 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $3,542 | 5,845 | — | |||||||||||||||||
Deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest, net of deferred taxes of $8,491 | 14,009 | — | |||||||||||||||||
Marketable_Investment_Securiti
Marketable Investment Securities and Restricted Cash and Cash Equivalents | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities and Restricted Cash and Cash Equivalents | 4. Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 4. Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||
Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following: | Our marketable investment securities and restricted cash and cash equivalents consisted of the following: | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Marketable investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable investment securities: | Current marketable investment securities - VRDNs | $ | 105,854 | $ | 124,007 | |||||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - VRDNs | $ | 20,538 | $ | 105,854 | Current marketable investment securities - other | 4,011,472 | 2,145,663 | |||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - other | 3,728,301 | 4,011,472 | Total current marketable investment securities | 4,117,326 | 2,269,670 | |||||||||||||||||||||||||||||||||||||||||||||||
Total current marketable investment securities | 3,748,839 | 4,117,326 | Restricted marketable investment securities (1) | 63,902 | 49,044 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted marketable investment securities (1) | 74,194 | 63,902 | Total marketable investment securities | 4,181,228 | 2,318,714 | |||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities | 3,823,033 | 4,181,228 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 18,878 | 72,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 6,490 | 18,878 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,200,106 | $ | 2,391,331 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in EchoStar preferred tracking stock - cost method (2) | 228,795 | — | (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Consolidated Balance Sheets. | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in HSSC preferred tracking stock - cost method (2) | 87,409 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities - cost method (2) | 13,546 | 5,396 | Marketable Investment Securities | |||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,159,273 | $ | 4,205,502 | ||||||||||||||||||||||||||||||||||||||||||||||||
Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale. See Note 2 for further discussion. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Condensed Consolidated Balance Sheets. | Current Marketable Investment Securities — VRDNs | |||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Other investment securities are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised mainly of investments in municipalities, which are backed by financial institutions or other highly rated obligors that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities — Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Our current marketable investment securities portfolio includes investments in various debt and equity instruments including corporate and government bonds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities - VRDNs | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised mainly of investments in municipalities, which are backed by financial institutions or other highly rated obligors that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit or surety bonds and for litigation. During the first quarter 2013, we released $42 million of restricted cash related to litigation. See Note 11 for further information. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities — Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gains (Losses) on Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Our current marketable investment securities portfolio includes investments in various debt and equity instruments including corporate and government bonds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, we had accumulated net unrealized gains of $15 million and $7 million, respectively. These amounts, net of related tax effect, were $11 million and $6 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit. | 2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other Investment Securities | Investment | Unrealized | Investment | Unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | |||||||||||||||||||||||||||||||||||||||||||||
We have strategic investments in certain debt and equity securities that are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting. | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | VRDNs | $ | 105,854 | $ | — | $ | — | $ | — | $ | 124,007 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||
Other (including restricted) | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 2,181,064 | 7,335 | (1,144 | ) | 6,191 | ||||||||||||||||||||||||||||||||||||||||||
Investment in Tracking Stock | Equity securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | 26,523 | 13,286 | — | 13,286 | 13,643 | 406 | — | 406 | ||||||||||||||||||||||||||||||||||||||||||||
To improve our position in the growing consumer satellite broadband market, among other reasons, on February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV (collectively the “Transferred Satellites”), including related in-orbit incentive obligations and cash interest payments of approximately $59 million), and approximately $11 million in cash in exchange for an aggregate of 6,290,499 shares of a series of preferred tracking stock issued by EchoStar and an aggregate of 81.128 shares of a series of preferred tracking stock issued by HSSC (collectively, the “Tracking Stock”); and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites (collectively, the “Satellite and Tracking Stock Transaction”). The Tracking Stock generally tracks the residential retail satellite broadband business of Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of HSSC, including without limitation the operations, assets and liabilities attributed to the Hughes residential retail satellite broadband business (collectively, the “Hughes Retail Group”). The shares of the Tracking Stock issued to us represent an aggregate 80% economic interest in the Hughes Retail Group. | Total | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | $ | 2,318,714 | $ | 7,741 | $ | (1,144 | ) | $ | 6,597 | |||||||||||||||||||||||||||||||||
Since the Satellite and Tracking Stock Transaction is among entities under common control, we recorded the Tracking Stock at EchoStar and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. Although our investment in the Tracking Stock represents an aggregate 80% economic interest in the Hughes Retail Group, we have no operational control or significant influence over the Hughes Retail Group business, and currently there is no public market for the Tracking Stock. As such, the Tracking Stock is accounted for under the cost method of accounting. | (1) In connection with certain commercial arrangements that we entered into during the third quarter 2012, among other things, we received shares of common stock from a single issuer for no cash consideration. | |||||||||||||||||||||||||||||||||||||||||||||||||||
On February 20, 2014, DISH Operating L.L.C. (“DOLLC”) and DISH Network L.L.C. (“DNLLC”), each indirect wholly-owned subsidiaries of us, entered into an Investor Rights Agreement with EchoStar and HSSC with respect to the Tracking Stock (the “Investor Rights Agreement”). The Investor Rights Agreement provides, among other things, certain information and consultation rights for us; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate with respect to our interest should we no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. | As of December 31, 2013, restricted and non-restricted marketable investment securities included debt securities of $3.819 billion with contractual maturities within one year, $314 million with contractual maturities extending longer than one year through and including five years, $1 million with contractual maturities extending longer than five years through and including ten years and $21 million with contractual maturities longer than ten years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gains (Losses) on Marketable Investment Securities | Marketable Investment Securities in a Loss Position | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, we had accumulated net unrealized gains of $35 million and $15 million, respectively. These amounts, net of related tax effect, were $25 million and $11 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. | The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of December 31, 2013 and 2012, the unrealized losses on our investments in debt securities primarily represented investments in corporate bonds. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations. | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of December 31, 2013 | As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment | Unrealized | Investment | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | Value | Loss | Value | Loss | |||||||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | — | $ | — | $ | 105,854 | $ | — | $ | — | $ | — | Less than 12 months | $ | 2,002,239 | $ | (2,820 | ) | $ | 724,739 | $ | (865 | ) | |||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | 6,767 | (1,263 | ) | 5,504 | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 12 months or more | 38,043 | (535 | ) | 29,045 | (279 | ) | |||||||||||||||||||||||||||||||||||
Equity securities: | Total | $ | 2,040,282 | $ | (3,355 | ) | $ | 753,784 | $ | (1,144 | ) | |||||||||||||||||||||||||||||||||||||||||
Other | 42,658 | 29,421 | — | 29,421 | 26,523 | 13,286 | — | 13,286 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 36,188 | $ | (1,263 | ) | $ | 34,925 | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | Fair Value Measurements | |||||||||||||||||||||||||||||||||
As of September 30, 2014, restricted and non-restricted marketable investment securities included debt securities of $2.487 billion with contractual maturities within one year, $1.270 billion with contractual maturities extending longer than one year through and including five years and $23 million with contractual maturities longer than ten years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. | Our investments measured at fair value on a recurring basis were as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities in a Loss Position | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||
The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of September 30, 2014, the unrealized losses on our investments in debt securities primarily represented investments in corporate bonds. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations. | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | Cash equivalents (including restricted) | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | $ | 3,014,946 | $ | 59,386 | $ | 2,955,560 | $ | — | |||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Value | Loss | Value | Loss | VRDNs | $ | 105,854 | $ | — | $ | 105,854 | $ | — | $ | 124,007 | $ | — | $ | 124,007 | $ | — | ||||||||||||||||||||||||||||||||
(In thousands) | Other (including restricted) | 4,048,851 | — | 4,048,851 | — | 2,181,064 | — | 2,181,064 | — | |||||||||||||||||||||||||||||||||||||||||||
Debt Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | $ | 1,858,459 | $ | (1,243 | ) | $ | 2,002,239 | $ | (2,820 | ) | Equity securities | 26,523 | 26,523 | — | — | 13,643 | 13,643 | — | — | |||||||||||||||||||||||||||||||||
12 months or more | 168,734 | (20 | ) | 38,043 | (535 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,027,193 | $ | (1,263 | ) | $ | 2,040,282 | $ | (3,355 | ) | Total | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | $ | 2,318,714 | $ | 13,643 | $ | 2,305,071 | $ | — | |||||||||||||||||||||||||
Fair Value Measurements | During the year ended December 31, 2013, we had no transfers in or out of Level 1 and Level 2 fair value measurements. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Our investments measured at fair value on a recurring basis were as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | ||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents (including restricted) | $ | 4,183,698 | $ | 67,535 | $ | 4,116,163 | $ | — | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | ||||||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | 20,538 | $ | — | $ | 105,854 | $ | — | $ | 105,854 | $ | — | ||||||||||||||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | — | 3,759,837 | — | 4,048,851 | — | 4,048,851 | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity securities | 42,658 | 42,658 | — | — | 26,523 | 26,523 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 42,658 | $ | 3,780,375 | $ | — | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | ||||||||||||||||||||||||||||||||||||
During the nine months ended September 30, 2014, we had no transfers in or out of Level 1 and Level 2 fair value measurements. |
Inventory
Inventory | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||
Inventory | ||||||||||||||||
Inventory | 5. Inventory | 5. Inventory | ||||||||||||||
Inventory consisted of the following: | Inventory consisted of the following: | |||||||||||||||
As of | As of December 31, | |||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||
(In thousands) | Finished goods | $ | 299,975 | $ | 259,274 | |||||||||||
Finished goods | $ | 280,369 | $ | 299,975 | Raw materials | 102,563 | 122,758 | |||||||||
Raw materials | 159,210 | 102,563 | Work-in-process | 110,108 | 82,361 | |||||||||||
Work-in-process | 88,237 | 110,108 | Total (1) | $ | 512,646 | $ | 464,393 | |||||||||
Total | $ | 527,816 | $ | 512,646 | ||||||||||||
(1) The increase in inventory as of December 31, 2013 primarily related to an increase in Hopper® and Joey® set-top boxes and broadband equipment. |
Property_and_Equipment
Property and Equipment | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
Property and Equipment | 6. Property and Equipment and FCC Authorizations | 6. Property and Equipment | |||||||||||||||||||||||
Property and Equipment | Property and equipment consisted of the following: | ||||||||||||||||||||||||
Property and equipment consisted of the following: | Depreciable | ||||||||||||||||||||||||
Life | As of December 31, | ||||||||||||||||||||||||
Depreciable | As of | (In Years) | 2013 | 2012 | |||||||||||||||||||||
Life | September 30, | December 31, | (In thousands) | ||||||||||||||||||||||
(In Years) | 2014 | 2013 | Equipment leased to customers | 5-Feb | $ | 3,496,994 | $ | 3,424,911 | |||||||||||||||||
(In thousands) | EchoStar I | 12 | 201,607 | 201,607 | |||||||||||||||||||||
Equipment leased to customers | 5-Feb | $ | 3,526,090 | $ | 3,496,994 | EchoStar VII | 15 | 177,000 | 177,000 | ||||||||||||||||
EchoStar I (1) | 12 | — | 201,607 | EchoStar X | 15 | 177,192 | 177,192 | ||||||||||||||||||
EchoStar VII (1) | 15 | — | 177,000 | EchoStar XI | 15 | 200,198 | 200,198 | ||||||||||||||||||
EchoStar X (1) | 15 | — | 177,192 | EchoStar XIV | 15 | 316,541 | 316,541 | ||||||||||||||||||
EchoStar XI (1) | 15 | — | 200,198 | EchoStar XV | 15 | 277,658 | 277,658 | ||||||||||||||||||
EchoStar XIV (1) | 15 | — | 316,541 | Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | ||||||||||||||||||
EchoStar XV | 15 | 277,658 | 277,658 | Furniture, fixtures, equipment and other | 10-Jan | 600,439 | 580,588 | ||||||||||||||||||
Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | Buildings and improvements | Jan-40 | 80,439 | 74,398 | ||||||||||||||||||
Furniture, fixtures, equipment and other | 10-Jan | 661,321 | 600,439 | Land | - | 5,504 | 5,207 | ||||||||||||||||||
Buildings and improvements | Jan-40 | 83,258 | 80,439 | Construction in progress | - | 39,043 | 20,469 | ||||||||||||||||||
Land | — | 5,504 | 5,504 | Total property and equipment | 6,072,434 | 5,955,588 | |||||||||||||||||||
Construction in progress | — | 19,006 | 39,043 | Accumulated depreciation | (3,093,111 | ) | (2,948,204 | ) | |||||||||||||||||
Total property and equipment | 5,072,656 | 6,072,434 | Property and equipment, net | $ | 2,979,323 | $ | 3,007,384 | ||||||||||||||||||
Accumulated depreciation (1) | (2,591,343 | ) | (3,093,111 | ) | |||||||||||||||||||||
Property and equipment, net | $ | 2,481,313 | $ | 2,979,323 | Construction in progress consisted of the following: | ||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||
(1) Property and equipment and accumulated depreciation decreased $1.073 billion and $633 million, respectively, as a result of the Satellite and Tracking Stock Transaction. See Note 4 and Note 10 for further discussion. | 2013 | 2012 | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Depreciation and amortization expense consisted of the following: | Computer hardware projects | $ | 20,216 | $ | 2,115 | ||||||||||||||||||||
Software projects | 15,017 | 6,088 | |||||||||||||||||||||||
For the Three Months | For the Nine Months | Other | 3,810 | 12,266 | |||||||||||||||||||||
Ended September 30, | Ended September 30, | Construction in progress | $ | 39,043 | $ | 20,469 | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | Depreciation and amortization expense consisted of the following: | ||||||||||||||||||||||||
Equipment leased to customers | $ | 208,208 | $ | 188,524 | $ | 607,584 | $ | 538,457 | |||||||||||||||||
Satellites | 15,261 | 27,171 | 53,723 | 81,512 | For the Years Ended December 31, | ||||||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 22,671 | 14,054 | 58,181 | 43,441 | 2013 | 2012 | 2011 | ||||||||||||||||||
Total depreciation and amortization | $ | 246,140 | $ | 229,749 | $ | 719,488 | $ | 663,410 | (In thousands) | ||||||||||||||||
Equipment leased to customers | $ | 739,266 | $ | 649,394 | $ | 725,904 | |||||||||||||||||||
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. | Satellites | 108,682 | 123,431 | 128,352 | |||||||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 58,039 | 58,081 | 50,699 | ||||||||||||||||||||||
Pay-TV Satellites. We currently utilize 14 owned and leased satellites in geostationary orbit approximately 22,300 miles above the equator, one of which we own and depreciate over the useful life of the satellite. We currently utilize capacity on 11 satellites that we lease from EchoStar, 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 of the satellite or the term of the satellite agreement. | 148 degree orbital location (1) | — | 67,776 | — | |||||||||||||||||||||
Total depreciation and amortization | $ | 905,987 | $ | 898,682 | $ | 904,955 | |||||||||||||||||||
As of September 30, 2014, our pay-TV satellite fleet consisted of the following: | |||||||||||||||||||||||||
(1) See “FCC Authorizations” below. | |||||||||||||||||||||||||
Degree | Estimated | ||||||||||||||||||||||||
Launch | Orbital | Useful Life | Cost of sales and operating expense categories included in our accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers. | ||||||||||||||||||||||
Satellites | Date | Location | (Years) | ||||||||||||||||||||||
Owned: | We did not record any capitalized interest during the years ended December 31, 2013, 2012 or 2011. | ||||||||||||||||||||||||
EchoStar XV (1) | July 2010 | 45 | 15 | ||||||||||||||||||||||
Satellites | |||||||||||||||||||||||||
Leased from EchoStar (1): | |||||||||||||||||||||||||
EchoStar I (2)(3) | December 1995 | 77 | NA | DBS Satellites. As of December 31, 2013, we utilized 14 satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we owned and depreciated over the useful life of each satellite. As of December 31, 2013, we utilized capacity on six satellites from EchoStar, which were accounted for as operating leases. As of December 31, 2013, we also leased two satellites from third parties, which were accounted for as capital leases and were depreciated over the shorter of the economic life or the term of the satellite agreement. | |||||||||||||||||||||
EchoStar VII (2)(3) | February 2002 | 119 | NA | ||||||||||||||||||||||
EchoStar VIII | August 2002 | 77 | NA | Degree | Estimated | ||||||||||||||||||||
EchoStar IX | August 2003 | 121 | NA | Launch | Orbital | Useful Life | |||||||||||||||||||
EchoStar X (2)(3) | February 2006 | 110 | NA | Satellites | Date | Location | (Years) | ||||||||||||||||||
EchoStar XI (2)(3) | July 2008 | 110 | NA | Owned: | |||||||||||||||||||||
EchoStar XII (2) | July 2003 | 61.5 | NA | EchoStar I (1)(5) | December 1995 | 77 | 12 | ||||||||||||||||||
EchoStar XIV (2)(3) | March 2010 | 119 | NA | EchoStar VII (2)(5) | February 2002 | 119 | 15 | ||||||||||||||||||
EchoStar XVI | November 2012 | 61.5 | NA | EchoStar X (2)(5) | February 2006 | 110 | 15 | ||||||||||||||||||
Nimiq 5 | September 2009 | 72.7 | NA | EchoStar XI (2)(5) | July 2008 | 110 | 15 | ||||||||||||||||||
QuetzSat-1 | September 2011 | 77 | NA | EchoStar XIV (5) | March 2010 | 119 | 15 | ||||||||||||||||||
EchoStar XV | July 2010 | 45 | 15 | ||||||||||||||||||||||
Leased from Other Third Party: | |||||||||||||||||||||||||
Anik F3 | April 2007 | 118.7 | NA | Leased from EchoStar: | |||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | EchoStar VIII (1)(3)(4) | August 2002 | 77 | NA | ||||||||||||||||||
EchoStar IX (1)(3) | August 2003 | 121 | NA | ||||||||||||||||||||||
Under Construction: | EchoStar XII (1)(4) | July 2003 | 61.5 | NA | |||||||||||||||||||||
EchoStar XVIII | 2015 | 110 | 15 | Nimiq 5 (1)(3) | September 2009 | 72.7 | NA | ||||||||||||||||||
EchoStar XVI (1) | November 2012 | 61.5 | NA | ||||||||||||||||||||||
QuetzSat-1 (1)(3) | September 2011 | 77 | NA | ||||||||||||||||||||||
(1) See Note 10 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | Leased from Other Third Party: | ||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 4 for further discussion. | Anik F3 | April 2007 | 118.7 | NA | |||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | ||||||||||||||||||||||
FCC Authorizations | |||||||||||||||||||||||||
Under Construction: | |||||||||||||||||||||||||
MVDDS Licenses. We have multichannel video distribution and data service (“MVDDS”) licenses in 82 out of 214 geographical license areas, including Los Angeles, New York City, Chicago and several other major metropolitan areas. By August 2014, we were required to meet certain FCC build-out requirements related to our MVDDS licenses, and we are subject to certain FCC service rules applicable to these licenses. We have filed an application with the FCC seeking an extension of the build-out requirements related to our MVDDS licenses and requested an additional four-year license term. That application remains pending, and we cannot predict the timing or outcome of our application. Part or all of our MVDDS licenses may be terminated if our application for an extension is not granted. If the FCC decides to terminate part or all of these licenses, we may be required to write-off up to the $24 million carrying value. | EchoStar XVIII | 2015 | 110 | 15 | |||||||||||||||||||||
(1) See Note 15 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) During the fourth quarter 2012, the estimated useful life of these satellites was extended from 12 years to 15 years on a prospective basis based on management’s assessment of, among other things, these satellites’ useful lives, technological obsolescence risk, estimated remaining fuel life and estimated useful lives of our other DBS satellites. This increase in the estimated useful life of these satellites had an immaterial effect on our results of operations. | |||||||||||||||||||||||||
(3) We lease a portion of the capacity on these satellites. | |||||||||||||||||||||||||
(4) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | |||||||||||||||||||||||||
(5) On February 20, 2014, we entered into agreements with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 16 for further discussion of our Subsequent Events. | |||||||||||||||||||||||||
Recent Developments | |||||||||||||||||||||||||
Recent developments with respect to certain of our satellites are discussed below. In addition, see Note 16 for further discussion of our Subsequent Events. | |||||||||||||||||||||||||
Satellites Under Construction | |||||||||||||||||||||||||
EchoStar XVIII. On September 7, 2012, DISH Network entered into a contract with Space Systems/Loral, Inc. (“SS/L”) for the construction of EchoStar XVIII, a DBS satellite with spot beam technology designed for, among other things, HD programming. During October 2013, DISH Network entered into an agreement with ArianeSpace S.A. for launch services for this satellite, which is expected to be launched during 2015. | |||||||||||||||||||||||||
Satellite Anomalies | |||||||||||||||||||||||||
Operation of our DISH branded pay-TV service requires that we have adequate satellite transmission capacity for the programming we offer. Moreover, current competitive conditions require that we continue to expand our offering of new programming. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited. | |||||||||||||||||||||||||
In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations. | |||||||||||||||||||||||||
Prior to 2013, certain of our satellites have experienced anomalies, some of which have had a significant adverse impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies will not impact the remaining useful life and/or commercial operation of any of the satellites in our fleet. See Note 2 “Impairment of Long-Lived Assets” for further discussion of evaluation of impairment. There can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. We generally do not carry commercial insurance for any of the in-orbit satellites that we use, other than certain satellites leased from third parties, and therefore, we will bear the risk associated with any uninsured in-orbit satellite failures. Recent developments with respect to certain of our satellites are discussed below. | |||||||||||||||||||||||||
Leased Satellites | |||||||||||||||||||||||||
EchoStar XII. Prior to 2010, EchoStar XII experienced anomalies resulting in the loss of electrical power available from its solar arrays, which reduced the number of transponders that could be operated. In September 2012, November 2012, and January 2013, EchoStar XII experienced additional solar array anomalies, which further reduced the electrical power available. During the third quarter 2013, EchoStar informed us that EchoStar XII will likely experience further loss of available electrical power that will impact its operational capability, and EchoStar reduced the remaining estimated useful life of the satellite to 18 months. Pursuant to our satellite lease agreement with EchoStar, we are entitled to a reduction in our monthly recurring lease payments in the event of a partial loss of satellite capacity or complete failure of the satellite. Since the number of useable transponders on EchoStar XII depends on, among other things, whether EchoStar XII is operated in CONUS which provides service to the continental United States, spot beam, or hybrid CONUS/spot beam mode, we are unable to determine at this time the actual number of transponders that will be available at any given time or how many transponders can be used during the remaining estimated life of the satellite. This satellite is currently not in service and serves as an in-orbit spare. | |||||||||||||||||||||||||
FCC Authorizations. On May 31, 2012, the International Bureau of the FCC announced the termination of our license for use of the 148 degree orbital location. We had not had a satellite positioned at the 148 degree orbital location since the retirement of EchoStar V in August 2009. Our license for use of the 148 degree orbital location had a $68 million carrying value. This amount was recorded as “Depreciation and amortization” expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) in the second quarter 2012 due to the termination of this license by the FCC. |
LongTerm_Debt
Long-Term Debt | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||
Long-Term Debt | 7. Long-Term Debt | 7. Long-Term Debt | ||||||||||||||||||||||||||
Fair Value of our Long-Term Debt | 7% Senior Notes due 2013 | |||||||||||||||||||||||||||
The following table summarizes the carrying and fair values of our debt facilities as of September 30, 2014 and December 31, 2013: | During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | |||||||||||||||||||||||||||
As of | 6 5/8% Senior Notes due 2014 | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||
Carrying | Carrying | The 6 5/8% Senior Notes mature October 1, 2014. Interest accrues at an annual rate of 6 5/8% and is payable semi-annually in cash, in arrears on April 1 and October 1 of each year. | ||||||||||||||||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||||||||||||||
(In thousands) | The 6 5/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of their principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | |||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (1) | $ | 900,000 | $ | 900,000 | $ | 1,000,000 | $ | 1,040,200 | ||||||||||||||||||||
7 3/4% Senior Notes due 2015 (2) | 650,001 | 673,564 | 750,000 | 813,750 | The 6 5/8% Senior Notes are: | |||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,591,875 | 1,500,000 | 1,657,500 | ||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 918,099 | 900,000 | 946,962 | · general unsecured senior obligations of DISH DBS; | |||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,207,200 | 1,200,000 | 1,221,792 | · ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | |||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,589,000 | 1,400,000 | 1,603,000 | · ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | |||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,127,500 | 1,100,000 | 1,104,950 | ||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,146,260 | 2,000,000 | 2,122,500 | The indenture related to the 6 5/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | |||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 2,040,000 | 2,000,000 | 1,997,500 | ||||||||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,447,500 | 1,500,000 | 1,458,090 | · incur additional indebtedness or enter into sale and leaseback transactions; | |||||||||||||||||||||||
Mortgages and other notes payable (3) | 14,892 | 14,892 | 59,313 | 59,313 | · pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | |||||||||||||||||||||||
Subtotal | 13,164,893 | $ | 13,655,890 | 13,409,313 | $ | 14,025,557 | · make certain investments; | |||||||||||||||||||||
Unamortized discounts, net | (16,142 | ) | (19,198 | ) | · create liens; | |||||||||||||||||||||||
Capital lease obligations (4) | 201,867 | NA | 219,902 | NA | · enter into transactions with affiliates; | |||||||||||||||||||||||
Total long-term debt and capital lease obligations (including current portion) | $ | 13,350,618 | $ | 13,610,017 | · merge or consolidate with another company; and | |||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
(1) During the nine months ended September 30, 2014, we repurchased $100 million of our 6 5/8% Senior Notes due 2014 in open market trades. The remaining balance of $900 million was redeemed on October 1, 2014 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 6 5/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | |||||||||||||||||||||||||||
(2) During the nine months ended September 30, 2014, we repurchased $100 million of our 7 3/4% Senior Notes due 2015 in open market trades. The remaining balance of $650 million matures on May 31, 2015 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | ||||||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction, which resulted in a decrease in “Mortgages and other notes payable” of $44 million related to the in-orbit incentive obligations associated with the Transferred Satellites. See Note 4 and Note 10 for further discussion. | 7 3/4% Senior Notes due 2015 | |||||||||||||||||||||||||||
(4) Disclosure regarding fair value of capital leases is not required. | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes mature May 31, 2015. Interest accrues at an annual rate of 7 3/4% and is payable semi-annually in cash, in arrears on May 31 and November 30 of each year. | ||||||||||||||||||||||||||||
We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2). | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 7 3/4% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 3/4% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes mature February 1, 2016. Interest accrues at an annual rate of 7 1/8% and is payable semi-annually in cash, in arrears on February 1 and August 1 of each year. | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 7 1/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 1/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5% Senior Notes due 2017 | ||||||||||||||||||||||||||||
On May 28, 2013, we issued $1.25 billion aggregate principal amount of our four-year, 5% Senior Notes due May 15, 2017 at an issue price of 100%. The net proceeds from the 5% Senior Notes due 2017 were placed into escrow to finance a portion of the cash consideration for DISH Network’s proposed merger with Sprint Corporation (“Sprint”). On June 21, 2013, DISH Network abandoned its efforts to acquire Sprint and, on June 24, 2013, we redeemed all of the 5% Senior Notes due 2017 at a redemption price equal to 100% of the aggregate principal amount of the 5% Senior Notes due 2017, plus accrued and unpaid interest. | ||||||||||||||||||||||||||||
During the second quarter 2013, we recorded $7 million in interest expense and deferred financing costs related to the issuance and redemption of our 5% Senior Notes due 2017 as “Interest expense, net of amounts capitalized” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | ||||||||||||||||||||||||||||
On May 16, 2012, we issued $900 million aggregate principal amount of our five-year, 4 5/8% Senior Notes due July 15, 2017 at an issue price of 100.0%. Interest accrues at an annual rate of 4 5/8% and is payable semi-annually in cash, in arrears on January 15 and July 15 of each year. | ||||||||||||||||||||||||||||
The 4 5/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to July 15, 2015, we may also redeem up to 35.0% of each of the 4 5/8% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 4 5/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 4 5/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 4 5/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | ||||||||||||||||||||||||||||
On April 5, 2013, we issued $1.2 billion aggregate principal amount of our five-year, 4 1/4% Senior Notes due April 1, 2018 at an issue price of 100%. Interest accrues at an annual rate of 4 1/4% and is payable semi-annually in cash in arrears on April 1 and October 1 of each year. | ||||||||||||||||||||||||||||
The 4 1/4% Senior Notes due 2018 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to April 1, 2016, we may also redeem up to 35.0% of the 4 1/4% Senior Notes due 2018 at a specified premium with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 4 1/4% Senior Notes due 2018 are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 4 1/4% Senior Notes due 2018 contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 4 1/4% Senior Notes due 2018 at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes mature September 1, 2019. Interest accrues at an annual rate of 7 7/8% and is payable semi-annually in cash, in arrears on March 1 and September 1 of each year. | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The Indenture related to the 7 7/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 7/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | ||||||||||||||||||||||||||||
On April 5, 2013, we issued $1.1 billion aggregate principal amount of our seven-year, 5 1/8% Senior Notes due May 1, 2020 at an issue price of 100%. Interest accrues at an annual rate of 5 1/8% and is payable semi-annually in cash in arrears on May 1 and November 1 of each year. | ||||||||||||||||||||||||||||
The 5 1/8% Senior Notes due 2020 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to May 1, 2016, we may also redeem up to 35.0% of the 5 1/8% Senior Notes due 2020 at a specified premium with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 1/8% Senior Notes due 2020 are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 1/8% Senior Notes due 2020 contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 1/8% Senior Notes due 2020 at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | ||||||||||||||||||||||||||||
On May 5, 2011, we issued $2.0 billion aggregate principal amount of our ten-year, 6 3/4% Senior Notes due June 1, 2021 at an issue price of 99.093%. Interest accrues at an annual rate of 6 3/4% and is payable semi-annually in cash, in arrears on June 1 and December 1 of each year. | ||||||||||||||||||||||||||||
The 6 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to June 1, 2014, we may also redeem up to 35% of each of the 6 3/4% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 6 3/4% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 6 3/4% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 6 3/4% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | ||||||||||||||||||||||||||||
On May 16, 2012, we issued $1.0 billion aggregate principal amount of our ten-year, 5 7/8% Senior Notes due July 15, 2022 at an issue price of 100.0%. Interest accrues at an annual rate of 5 7/8% and is payable semi-annually in cash, in arrears on January 15 and July 15 of each year. | ||||||||||||||||||||||||||||
On July 26, 2012, we issued an additional $1.0 billion aggregate principal amount of our ten-year, 5 7/8% Senior Notes due July 15, 2022 at an issue price of 100.75% plus accrued interest from May 16, 2012. These notes were issued as additional notes under the related indenture, pursuant to which we issued on May 16, 2012 $1.0 billion in aggregate principal amount of our 5 7/8% Senior Notes due 2022 discussed above. These notes and the notes previously issued under the related indenture will be treated as a single class of debt securities under the related indenture. | ||||||||||||||||||||||||||||
The 5 7/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to July 15, 2015, we may also redeem up to 35.0% of each of the 5 7/8% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 7/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 7/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 7/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
6 1/4% Senior Notes due 2023 | ||||||||||||||||||||||||||||
On May 28, 2013, we issued $1.35 billion aggregate principal amount of our ten-year, 6 1/4% Senior Notes due May 15, 2023 at an issue price of 100%. The net proceeds from the 6 1/4% Senior Notes due 2023 were placed into escrow to finance a portion of the cash consideration for DISH Network’s proposed merger with Sprint. On June 21, 2013, DISH Network abandoned its efforts to acquire Sprint and, on June 24, 2013, we redeemed all of the 6 1/4% Senior Notes due 2023 at a redemption price equal to 101% of the aggregate principal amount of the 6 1/4% Senior Notes due 2023, plus accrued and unpaid interest. | ||||||||||||||||||||||||||||
During the second quarter 2013, we recorded $23 million in premiums, interest expense and deferred financing costs related to the issuance and redemption of our 6 1/4% Senior Notes due 2023 as “Interest expense, net of amounts capitalized” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||||||||||||||||||||||||||
5 % Senior Notes due 2023 | ||||||||||||||||||||||||||||
On December 27, 2012, we issued $1.5 billion aggregate principal amount of our 5 % Senior Notes due March 15, 2023 at an issue price of 100.0%. Interest accrues at an annual rate of 5 % and is payable semi-annually in cash, in arrears on March 15 and September 15 of each year. | ||||||||||||||||||||||||||||
The 5 % Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to March 15, 2016, we may also redeem up to 35.0% of each of the 5 % Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 % Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 % Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 % Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
Interest on Long-Term Debt | ||||||||||||||||||||||||||||
Annual | ||||||||||||||||||||||||||||
Semi-Annual | Debt Service | |||||||||||||||||||||||||||
Payment Dates | Requirements | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 | April 1 and October 1 | $ | 66,250 | |||||||||||||||||||||||||
7 3/4% Senior Notes due 2015 | May 31 and November 30 | $ | 58,125 | |||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | February 1 and August 1 | $ | 106,875 | |||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | January 15 and July 15 | $ | 41,625 | |||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | April 1 and October 1 | $ | 51,000 | |||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | March 1 and September 1 | $ | 110,250 | |||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | May 1 and November 1 | $ | 56,375 | |||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | June 1 and December 1 | $ | 135,000 | |||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | January 15 and July 15 | $ | 117,500 | |||||||||||||||||||||||||
5% Senior Notes due 2023 | March 15 and September 15 | $ | 75,000 | |||||||||||||||||||||||||
Our ability to meet our debt service requirements will depend on, among other factors, the successful execution of our business strategy, which is subject to uncertainties and contingencies beyond our control. | ||||||||||||||||||||||||||||
Fair Value of our Long-Term Debt | ||||||||||||||||||||||||||||
The following table summarizes the carrying and fair values of our debt facilities as of December 31, 2013 and 2012: | ||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||||||
Value | Value | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
7 % Senior Notes due 2013 (1) | — | — | 500,000 | 521,875 | ||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (2) | 1,000,000 | 1,040,200 | 1,000,000 | 1,078,500 | ||||||||||||||||||||||||
7 3/4% Senior Notes due 2015 | 750,000 | 813,750 | 750,000 | 844,725 | ||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,657,500 | 1,500,000 | 1,683,750 | ||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 946,962 | 900,000 | 940,500 | ||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,221,792 | — | — | ||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,603,000 | 1,400,000 | 1,669,500 | ||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,104,950 | — | — | ||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,122,500 | 2,000,000 | 2,280,000 | ||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 1,997,500 | 2,000,000 | 2,150,000 | ||||||||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,458,090 | 1,500,000 | 1,548,750 | ||||||||||||||||||||||||
Mortgages and other notes payable | 59,313 | 59,313 | 65,427 | 65,427 | ||||||||||||||||||||||||
Subtotal | 13,409,313 | $ | 14,025,557 | 11,615,427 | $ | 12,783,027 | ||||||||||||||||||||||
Capital lease obligations (3) | 219,902 | NA | 248,304 | NA | ||||||||||||||||||||||||
Total long-term debt and capital | ||||||||||||||||||||||||||||
lease obligations (including current portion) | $ | 13,629,215 | $ | 11,863,731 | ||||||||||||||||||||||||
(1) During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | ||||||||||||||||||||||||||||
(2) Our 6 5/8% Senior Notes with an aggregate principal balance of $1.0 billion mature on October 1, 2014 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Consolidated Balance Sheets as of December 31, 2013. | ||||||||||||||||||||||||||||
(3) Disclosure regarding fair value of capital leases is not required. | ||||||||||||||||||||||||||||
Other Long-Term Debt and Capital Lease Obligations | ||||||||||||||||||||||||||||
Other long-term debt and capital lease obligations consisted of the following: | ||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Satellites and other capital lease obligations | $ | 219,902 | $ | 248,304 | ||||||||||||||||||||||||
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates ranging from approximately 6% to 13% | 59,313 | 65,427 | ||||||||||||||||||||||||||
Total | 279,215 | 313,731 | ||||||||||||||||||||||||||
Less current portion | (32,607 | ) | (34,787 | ) | ||||||||||||||||||||||||
Other long-term debt and capital lease obligations, net of current portion | $ | 246,608 | $ | 278,944 | ||||||||||||||||||||||||
Capital Lease Obligations | ||||||||||||||||||||||||||||
Anik F3. Anik F3, an FSS satellite, was launched and commenced commercial operation during April 2007. This satellite is accounted for as a capital lease and depreciated over the term of the satellite service agreement. We have leased 100% of the Ku-band capacity on Anik F3 for a period of 15 years. | ||||||||||||||||||||||||||||
Ciel II. Ciel II, a Canadian DBS satellite, was launched in December 2008 and commenced commercial operation during February 2009. This satellite is accounted for as a capital lease and depreciated over the term of the satellite service agreement. We have leased 100% of the capacity on Ciel II for an initial 10 year term. | ||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, we had $500 million capitalized for the estimated fair value of satellites acquired under capital leases included in “Property and equipment, net,” with related accumulated depreciation of $236 million and $194 million, respectively. In our Consolidated Statements of Operations and Comprehensive Income (Loss), we recognized $43 million, $43 million and $43 million in depreciation expense on satellites acquired under capital lease agreements during the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||||||
Future minimum lease payments under the capital lease obligations, together with the present value of the net minimum lease payments as of December 31, 2013 are as follows (in thousands): | ||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||
2014 | $ | 77,944 | ||||||||||||||||||||||||||
2015 | 76,007 | |||||||||||||||||||||||||||
2016 | 76,007 | |||||||||||||||||||||||||||
2017 | 76,007 | |||||||||||||||||||||||||||
2018 | 75,982 | |||||||||||||||||||||||||||
Thereafter | 162,331 | |||||||||||||||||||||||||||
Total minimum lease payments | 544,278 | |||||||||||||||||||||||||||
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments | (254,832 | ) | ||||||||||||||||||||||||||
Net minimum lease payments | 289,446 | |||||||||||||||||||||||||||
Less: Amount representing interest | (69,544 | ) | ||||||||||||||||||||||||||
Present value of net minimum lease payments | 219,902 | |||||||||||||||||||||||||||
Less: Current portion | (26,829 | ) | ||||||||||||||||||||||||||
Long-term portion of capital lease obligations | $ | 193,073 | ||||||||||||||||||||||||||
The summary of future maturities of our outstanding long-term debt as of December 31, 2013 is included in the commitments table in Note 11. In addition, see Note 16 for further discussion of our Subsequent Events. |
Income_Taxes_and_Accounting_fo
Income Taxes and Accounting for Uncertainty in Income Taxes | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Income Taxes and Accounting for Uncertainty in Income Taxes | |||||||||||
Income Taxes and Accounting for Uncertainty in Income Taxes | 8. Income Taxes and Accounting for Uncertainty in Income Taxes | ||||||||||
Income Taxes | |||||||||||
Our income tax policy is to record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported on our Consolidated Balance Sheets, as well as probable operating loss, tax credit and other carryforwards. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that net deferred tax assets will not be realized. We periodically evaluate our need for a valuation allowance. Determining necessary valuation allowances requires us to make assessments about historical financial information as well as the timing of future events, including the probability of expected future taxable income and available tax planning opportunities. | |||||||||||
As of December 31, 2013, we had no net operating loss carryforwards (“NOLs”) for federal income tax purposes and $5 million of NOL benefit for state income tax purposes. The state NOLs begin to expire in the year 2017. In addition, there are $11 million of tax benefits related to credit carryforwards which are partially offset by a valuation allowance. The credit carryforwards begin to expire in the year 2022. | |||||||||||
DISH DBS and its domestic subsidiaries join with DISH Network in filing U.S. consolidated federal income tax returns and, in some states, combined or consolidated returns. The federal and state income tax provisions or benefits recorded by DISH DBS are generally those that would have been recorded if DISH DBS and its domestic subsidiaries had filed returns as a consolidated group independent of DISH Network. Cash is due and paid to DISH Network based on amounts that would be payable based on DISH DBS consolidated or combined group filings. Amounts are receivable from DISH Network on a basis similar to when they would be receivable from the IRS or other state taxing authorities. The amounts paid to DISH Network during the years ended December 31, 2013, 2012 and 2011 were $433 million, $273 million and $384 million, respectively. | |||||||||||
The components of the (provision for) benefit from income taxes were as follows: | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(In thousands) | |||||||||||
Current (provision) benefit: | |||||||||||
Federal | $ | (361,662 | ) | $ | (127,291 | ) | $ | (277,920 | ) | ||
State | (13,272 | ) | 10,673 | (36,408 | ) | ||||||
Foreign | (13,316 | ) | — | — | |||||||
(388,250 | ) | (116,618 | ) | (314,328 | ) | ||||||
Deferred (provision) benefit: | |||||||||||
Federal | (65,955 | ) | (126,561 | ) | (553,393 | ) | |||||
State | (5,450 | ) | (42,747 | ) | (35,887 | ) | |||||
Decrease (increase) in valuation allowance | — | — | 6,761 | ||||||||
(71,405 | ) | (169,308 | ) | (582,519 | ) | ||||||
Total benefit (provision) | $ | (459,655 | ) | $ | (285,926 | ) | $ | (896,847 | ) | ||
The actual tax provisions for 2013, 2012 and 2011 reconcile to the amounts computed by applying the statutory Federal tax rate to income before taxes as follows: | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
% of pre-tax (income)/loss | |||||||||||
Statutory rate | (35.0 | ) | (35.0 | ) | (35.0 | ) | |||||
State income taxes, net of Federal benefit | (1.0 | ) | (2.7 | ) | (2.0 | ) | |||||
Other | 0.2 | 0.6 | (0.3 | ) | |||||||
Decrease (increase) in valuation allowance | — | — | 0.3 | ||||||||
Total benefit (provision) for income taxes | (35.8 | ) | (37.1 | ) | (37.0 | ) | |||||
The temporary differences, which give rise to deferred tax assets and liabilities as of December 31, 2013 and 2012, were as follows: | |||||||||||
As of December 31, | |||||||||||
2013 | 2012 | ||||||||||
(In thousands) | |||||||||||
Deferred tax assets: | |||||||||||
NOL, credit and other carryforwards | $ | 10,645 | $ | 9,565 | |||||||
Accrued expenses | 48,416 | 75,996 | |||||||||
Stock-based compensation | 23,006 | 26,351 | |||||||||
Deferred revenue | 54,331 | 67,023 | |||||||||
Total deferred tax assets | 136,398 | 178,935 | |||||||||
Valuation allowance | (7,469 | ) | (7,656 | ) | |||||||
Deferred tax asset after valuation allowance | 128,929 | 171,279 | |||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and amortization | (1,272,014 | ) | (1,234,003 | ) | |||||||
Unrealized gains on investments | (2,204 | ) | (773 | ) | |||||||
Other liabilities | (36,629 | ) | (29,130 | ) | |||||||
Total deferred tax liabilities | (1,310,847 | ) | (1,263,906 | ) | |||||||
Net deferred tax asset (liability) | $ | (1,181,918 | ) | $ | (1,092,627 | ) | |||||
Current portion of net deferred tax asset | $ | 65,457 | $ | 91,722 | |||||||
Noncurrent portion of net deferred tax asset (liability) | (1,247,375 | ) | (1,184,349 | ) | |||||||
Total net deferred tax asset (liability) | $ | (1,181,918 | ) | $ | (1,092,627 | ) | |||||
Accounting for Uncertainty in Income Taxes | |||||||||||
In addition to filing federal income tax returns, we and one or more of our subsidiaries file income tax returns in all states that impose an income tax and a small number of foreign jurisdictions where we have immaterial operations. We are subject to U.S. federal, state and local income tax examinations by tax authorities for the years beginning in 2002 due to the carryover of previously incurred net operating losses. We are currently under a federal income tax examination for fiscal years 2008 through 2012. | |||||||||||
A reconciliation of the beginning and ending amount of unrecognized tax benefits included in “Long-term deferred revenue, distribution and carriage payments and other long-term liabilities” on our Consolidated Balance Sheets was as follows: | |||||||||||
For the Years Ended December 31, | |||||||||||
Unrecognized tax benefit | 2013 | 2012 | 2011 | ||||||||
(In thousands) | |||||||||||
Balance as of beginning of period | $ | 185,669 | $ | 190,935 | $ | 170,226 | |||||
Additions based on tax positions related to the current year | 9,533 | 5,949 | 9,836 | ||||||||
Reductions based on tax positions related to current years | — | — | (1,170 | ) | |||||||
Additions based on tax positions related to prior years | 66,307 | 1,581 | 16,610 | ||||||||
Reductions based on tax positions related to prior years | — | (3,461 | ) | — | |||||||
Reductions based on tax positions related to settlements with taxing authorities | (103,311 | ) | — | (1,185 | ) | ||||||
Reductions based on tax positions related to the lapse of the statute of limitations | (12,314 | ) | (9,335 | ) | (3,382 | ) | |||||
Balance as of end of period | $ | 145,884 | $ | 185,669 | $ | 190,935 | |||||
We have $146 million in unrecognized tax benefits that, if recognized, could favorably affect our effective tax rate. We do not expect any portion of this amount to be paid or settled within the next twelve months. | |||||||||||
Accrued interest and penalties on uncertain tax positions are recorded as a component of “Other, net” on our Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2013 and 2012, we recorded $8 million and $6 million in interest and penalty expense to earnings, respectively. During the year ended December 31, 2011, we recorded $1 million in interest and penalty benefit to earnings. Accrued interest and penalties were $13 million and $15 million at December 31, 2013 and 2012, respectively. The above table excludes these amounts. |
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Employee Benefit Plans | |||||||||||
Employee Benefit Plans | 9. Employee Benefit Plans | ||||||||||
Employee Stock Purchase Plan | |||||||||||
Our employees participate in the DISH Network employee stock purchase plan (the “ESPP”), in which DISH Network is authorized to issue up to 2.8 million shares of Class A common stock. At December 31, 2013, DISH Network had 1.1 million shares of Class A common stock which remain available for issuance under the ESPP. Substantially all full-time employees who have been employed by DISH Network for at least one calendar quarter are eligible to participate in the ESPP. Employee stock purchases are made through payroll deductions. Under the terms of the ESPP, employees may not deduct an amount which would permit such employee to purchase DISH Network’s capital stock under all of DISH Network’s stock purchase plans at a rate which would exceed $25,000 in fair value of capital stock in any one year. The purchase price of the stock is 85% of the closing price of DISH Network’s Class A common stock on the last business day of each calendar quarter in which such shares of DISH Network’s Class A common stock are deemed sold to an employee under the ESPP. During the years ended December 31, 2013, 2012 and 2011, employee purchases of DISH Network’s Class A common stock through the ESPP totaled approximately 0.1 million, 0.1 million and 0.1 million shares, respectively. | |||||||||||
401(k) Employee Savings Plan | |||||||||||
DISH Network sponsors a 401(k) Employee Savings Plan (the “401(k) Plan”) for eligible employees. Voluntary employee contributions to the 401(k) Plan may be matched 50% by DISH Network, subject to a maximum annual contribution of $2,500 per employee. Forfeitures of unvested participant balances which are retained by the 401(k) Plan may be used to fund matching and discretionary contributions. DISH Network’s board of directors may also authorize an annual discretionary contribution to the 401(k) Plan with authorization by our Board of Directors, subject to the maximum deductible limit provided by the Internal Revenue Code of 1986, as amended. These contributions may be made in cash or in DISH Network’s stock. | |||||||||||
The following table summarizes the expense associated with our matching contributions and discretionary contributions: | |||||||||||
For the Years Ended December 31, | |||||||||||
Expense Recognized Related to the 401(k) Plan | 2013 | 2012 | 2011 | ||||||||
(In thousands) | |||||||||||
Matching contributions, net of forfeitures | $ | 5,994 | $ | 2,750 | $ | 1,521 | |||||
Discretionary stock contributions, net of forfeitures | $ | 26,096 | $ | 23,772 | $ | 22,331 |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Stock-Based Compensation | 10. Stock-Based Compensation | |||||||||||||||||
Stock Incentive Plans | ||||||||||||||||||
DISH Network maintains stock incentive plans to attract and retain officers, directors and key employees. Our employees participate in the DISH Network stock incentive plans. Stock awards under these plans include both performance and non-performance based stock incentives. As of December 31, 2013, there were outstanding under these plans stock options to acquire 11.9 million shares of DISH Network’s Class A common stock and 1.9 million restricted stock units associated with our employees. Stock options granted on or prior to December 31, 2013 were granted with exercise prices equal to or greater than the market value of DISH Network Class A common stock at the date of grant and with a maximum term of approximately ten years. While historically DISH Network has issued stock awards subject to vesting, typically at the rate of 20% per year, some stock awards have been granted with immediate vesting and other stock awards vest only upon the achievement of certain DISH Network-specific subscriber, operational and/or financial goals. As of December 31, 2013, DISH Network had 69.7 million shares of its Class A common stock available for future grant under its stock incentive plans. | ||||||||||||||||||
During December 2011, DISH Network paid a dividend in cash of $2.00 per share on its outstanding Class A and Class B common stock to shareholders of record on November 17, 2011. In light of such dividend, during January 2012, the exercise price of 17.3 million stock options, affecting approximately 400 of our employees, was reduced by $2.00 per share (the “2011 Stock Option Adjustment”). Except as noted below, all information discussed below reflects the 2011 Stock Option Adjustment. | ||||||||||||||||||
On December 28, 2012, DISH Network paid a dividend in cash of $1.00 per share on its outstanding Class A and Class B common stock to shareholders of record on December 14, 2012. In light of such dividend, during January 2013, the exercise price of 12.9 million stock options, affecting approximately 400 of our employees, was reduced by $0.77 per share (the “2012 Stock Option Adjustment”). Except as noted below, all information discussed below reflects the 2012 Stock Option Adjustment. | ||||||||||||||||||
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, each DISH Network stock award was converted into an adjusted DISH Network stock award and a new EchoStar stock award consistent with the Spin-off exchange ratio. DISH Network is responsible for fulfilling all stock awards related to DISH Network common stock and EchoStar is responsible for fulfilling all stock awards related to EchoStar common stock, regardless of whether such stock awards are held by our or EchoStar’s employees. Notwithstanding the foregoing, our stock-based compensation expense, resulting from stock awards outstanding at the Spin-off date, is based on the stock awards held by our employees regardless of whether such stock awards were issued by DISH Network or EchoStar. Accordingly, stock-based compensation that we expense with respect to EchoStar stock awards is included in “Additional paid-in capital” on our Consolidated Balance Sheets. As of March 31, 2013, we have recognized all of our stock-based compensation expense resulting from EchoStar stock awards outstanding at the Spin-off date held by our employees except for the 2005 LTIP performance awards, which were determined not to be probable as of December 31, 2013. See discussion of the 2005 LTIP below. | ||||||||||||||||||
The following stock awards were outstanding: | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
DISH Network Awards | EchoStar Awards | |||||||||||||||||
Stock Awards Outstanding | Stock | Restricted | Stock | Restricted | ||||||||||||||
Options | Stock | Options | Stock | |||||||||||||||
Units | Units | |||||||||||||||||
Held by DISH DBS employees | 11,938,090 | 1,863,165 | 542,048 | 41,622 | ||||||||||||||
Exercise prices for DISH Network stock options outstanding and exercisable associated with our employees as of December 31, 2013 were as follows: | ||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||
Number | Weighted- | Weighted- | Number | Weighted- | Weighted- | |||||||||||||
Outstanding | Average | Average | Exercisable | Average | Average | |||||||||||||
as of | Remaining | Exercise | as of | Remaining | Exercise | |||||||||||||
December 31, | Contractual | Price | December 31, | Contractual | Price | |||||||||||||
2013 | Life | 2013 | Life | |||||||||||||||
$ — | - | $ 10.00 | 1,514,885 | 3.79 | $ | 6.33 | 1,411,885 | 3.68 | $ | 6.33 | ||||||||
$10.01 | - | $ 15.00 | 138,286 | 5.49 | $ | 12.16 | 23,085 | 5.28 | $ | 12.75 | ||||||||
$15.01 | - | $ 20.00 | 3,860,300 | 4.12 | $ | 17.37 | 426,700 | 2.75 | $ | 17.72 | ||||||||
$20.01 | - | $ 25.00 | 1,560,312 | 4.06 | $ | 21.47 | 893,412 | 2.62 | $ | 21.34 | ||||||||
$25.01 | - | $ 30.00 | 2,238,007 | 7.09 | $ | 27.8 | 1,200,907 | 6.64 | $ | 27.71 | ||||||||
$30.01 | - | $ 35.00 | 437,800 | 6.95 | $ | 32.04 | 88,300 | 5.29 | $ | 31.82 | ||||||||
$35.01 | - | $ 40.00 | 2,159,500 | 9.03 | $ | 36.64 | 7,000 | 9.01 | $ | 36.4 | ||||||||
$40.01 | - | $ 45.00 | 10,000 | 4.5 | $ | 42.52 | 10,000 | 4.5 | $ | 42.52 | ||||||||
$45.01 | - | $ 50.00 | 19,000 | 9.36 | $ | 45.68 | — | — | $ | — | ||||||||
$ — | - | $ 50.00 | 11,938,090 | 5.65 | $ | 22.49 | 4,061,289 | 4.28 | $ | 17.88 | ||||||||
Stock Award Activity | ||||||||||||||||||
DISH Network stock option activity associated with our employees was as follows: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Options | Weighted- | Options | Weighted- | Options | Weighted- | |||||||||||||
Average | Average | Average | ||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||
Price | Price | Price | ||||||||||||||||
Total options outstanding, beginning of period (1) | 13,018,490 | $ | 18.99 | 17,640,074 | $ | 20.38 | 18,447,004 | $ | 17.76 | |||||||||
Granted | 2,225,500 | $ | 36.75 | 589,500 | $ | 32.25 | 3,198,500 | $ | 28.52 | |||||||||
Exercised | (3,172,900 | ) | $ | 14.7 | (4,406,888 | ) | $ | 18.51 | (1,640,462 | ) | $ | 12.36 | ||||||
Forfeited and cancelled | (133,000 | ) | $ | 30.25 | (804,196 | ) | $ | 20.34 | (2,364,968 | ) | $ | 12.11 | ||||||
Total options outstanding, end of period | 11,938,090 | $ | 22.49 | 13,018,490 | $ | 18.99 | 17,640,074 | $ | 20.38 | |||||||||
Performance based options outstanding, end of period (2) | 6,468,500 | $ | 24.92 | 6,400,700 | $ | 18.71 | 8,022,975 | $ | 18.89 | |||||||||
Exercisable at end of period | 4,061,289 | $ | 17.88 | 4,310,489 | $ | 17.92 | 6,387,798 | $ | 21.73 | |||||||||
(1) The beginning of period weighted-average exercise price for the year ended December 31, 2013 of $18.99 does not reflect the 2012 Stock Option Adjustment, which occurred subsequent to December 31, 2012. The beginning of period weighted-average exercise price for the year ended December 31, 2012 of $20.38 does not reflect the 2011 Stock Option Adjustment, which occurred subsequent to December 31, 2011. | ||||||||||||||||||
(2) These stock options are included in the caption “Total options outstanding, end of period.” See discussion of the 2005 LTIP, 2008 LTIP, 2013 LTIP and Other Employee Performance Awards below. | ||||||||||||||||||
We realized tax benefits from stock awards exercised as follows: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Tax benefit from stock awards exercised | $ | 37,583 | $ | 22,898 | $ | 9,786 | ||||||||||||
Based on the closing market price of DISH Network Class A common stock on December 31, 2013, the aggregate intrinsic value of stock options associated with our employees was as follows: | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
Options | Options | |||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||
(In thousands) | ||||||||||||||||||
Aggregate intrinsic value | $ | 422,987 | $ | 162,600 | ||||||||||||||
DISH Network restricted stock unit activity associated with our employees was as follows: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Restricted | Weighted- | Restricted | Weighted- | Restricted | Weighted- | |||||||||||||
Stock | Average | Stock | Average | Stock | Average | |||||||||||||
Awards | Grant Date | Awards | Grant Date | Awards | Grant Date | |||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||
Total restricted stock units outstanding, beginning of period | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | 1,271,984 | $ | 22.06 | |||||||||
Granted | 990,000 | $ | 36.53 | — | $ | — | 300,000 | $ | 30.67 | |||||||||
Vested | (135,250 | ) | $ | 29.19 | (24,795 | ) | $ | 22.94 | (14,705 | ) | $ | 11.09 | ||||||
Forfeited and cancelled | (68,333 | ) | $ | 32.91 | (78,166 | ) | $ | 27.2 | (377,570 | ) | $ | 26.23 | ||||||
Total restricted stock units outstanding, end of period | 1,863,165 | $ | 29.27 | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | |||||||||
Restricted Performance Units outstanding, end of period (1) | 1,863,165 | $ | 29.27 | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | |||||||||
(1) These Restricted Performance Units are included in the caption “Total restricted stock units outstanding, end of period.” See discussion of the 2005 LTIP, 2008 LTIP, 2013 LTIP and Other Employee Performance Awards below. | ||||||||||||||||||
Long-Term Performance Based Plans | ||||||||||||||||||
2005 LTIP. During 2005, DISH Network adopted a long-term, performance-based stock incentive plan (the “2005 LTIP”). The 2005 LTIP provides stock options and restricted stock units, either alone or in combination, which vest over seven years at the rate of 10% per year during the first four years, and at the rate of 20% per year thereafter. Exercise of the stock awards is subject to the foregoing vesting schedule and a performance condition that a DISH Network-specific subscriber goal is achieved by March 31, 2015. | ||||||||||||||||||
Contingent compensation related to the 2005 LTIP will not be recorded in our financial statements unless and until DISH Network concludes achievement of the performance condition is probable. Given the competitive nature of DISH Network’s business, small variations in subscriber churn, gross new subscriber activation rates and certain other factors can significantly impact subscriber growth. Consequently, while it was determined that achievement of the goal was not probable as of December 31, 2013, that assessment could change in the future. | ||||||||||||||||||
If all of the stock awards under the 2005 LTIP were vested and the goal had been met or if DISH Network had determined that achievement of the goal was probable during the year ended December 31, 2013, we would have recorded total non-cash, stock-based compensation expense for our employees as indicated in the table below. If the goal is met and there are unvested stock awards at that time, the vested amounts would be expensed immediately on our Consolidated Statements of Operations and Comprehensive Income (Loss), with the unvested portion recognized ratably over the remaining vesting period. | ||||||||||||||||||
2005 LTIP | ||||||||||||||||||
Total | Vested | |||||||||||||||||
Portion (1) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
DISH Network awards held by DISH DBS employees | $ | 32,251 | $ | 31,124 | ||||||||||||||
EchoStar awards held by DISH DBS employees | 5,575 | 5,497 | ||||||||||||||||
Total | $ | 37,826 | $ | 36,621 | ||||||||||||||
(1) Represents the amount of this award that has met the foregoing vesting schedule and would therefore vest upon achievement of the performance condition. | ||||||||||||||||||
2008 LTIP. During 2008, DISH Network adopted a long-term, performance-based stock incentive plan (the “2008 LTIP”). The 2008 LTIP provided stock options and restricted stock units, either alone or in combination, which vested based on DISH Network-specific subscriber and financial goals. As of June 30, 2013, 100% of the eligible 2008 LTIP awards had vested. | ||||||||||||||||||
2013 LTIP. During 2013, DISH Network adopted a long-term, performance-based stock incentive plan (the “2013 LTIP”). The 2013 LTIP provides stock options and restricted stock units in combination, which vest based on DISH Network -specific subscriber and financial goals. Exercise of the stock awards is contingent on achieving these goals by September 30, 2022. Regardless of when achieved, no vesting will occur or payment will be made under the 2013 LTIP for any performance goals prior to March 31, 2014. | ||||||||||||||||||
Although no awards vest until DISH Network attains the performance goals, compensation related to the 2013 LTIP will be recorded based on DISH Network’s assessment of the probability of meeting the remaining goals. If the remaining goals are probable of being achieved, we will begin recognizing the associated non-cash, stock-based compensation expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal. | ||||||||||||||||||
During the third quarter 2013, DISH Network determined that 20% of the 2013 LTIP performance goals were probable of achievement. As a result, we recorded non cash, stock based compensation expense for the year ended December 31, 2013, as indicated in the table below titled “Non Cash, Stock Based Compensation Expense Recognized.” | ||||||||||||||||||
Other Employee Performance Awards. In addition to the above long-term, performance stock incentive plans, DISH Network has other stock awards that vest based on certain other DISH Network-specific subscriber, operational and/or financial goals. Exercise of these stock awards is contingent on achieving certain performance goals. | ||||||||||||||||||
Additional compensation related to these awards will be recorded based on DISH Network’s assessment of the probability of meeting the remaining performance goals. If the remaining goals are probable of being achieved, we will begin recognizing the associated non-cash, stock-based compensation expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal. See the table below titled “Estimated Remaining Non-Cash, Stock-Based Compensation Expense.” | ||||||||||||||||||
Although no awards vest until the performance goals are attained, DISH Network determined that certain goals were probable of achievement and, as a result, recorded non-cash, stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011, as indicated in the table below titled “Non-Cash, Stock-Based Compensation Expense Recognized.” | ||||||||||||||||||
Given the competitive nature of DISH Network’s business, small variations in subscriber churn, gross new subscriber activation rates and certain other factors can significantly impact subscriber growth. Consequently, while it was determined that achievement of certain DISH Network-specific subscriber, operational and/or financial goals was not probable as of December 31, 2013, that assessment could change in the future. | ||||||||||||||||||
The non-cash, stock-based compensation expense associated with these awards for our employees was as follows: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
Non-Cash, Stock-Based Compensation Expense Recognized | 2013 | 2012 | 2011 | |||||||||||||||
(In thousands) | ||||||||||||||||||
2008 LTIP | $ | 2,719 | $ | 9,025 | $ | 18,944 | ||||||||||||
2013 LTIP | 8,137 | — | — | |||||||||||||||
Other employee performance awards | 4,045 | 7,471 | 144 | |||||||||||||||
Total non-cash, stock-based compensation expense recognized for performance based awards | $ | 14,901 | $ | 16,496 | $ | 19,088 | ||||||||||||
Estimated Remaining Non-Cash, Stock-Based Compensation Expense | 2013 LTIP | Other | ||||||||||||||||
Employee | ||||||||||||||||||
Performance | ||||||||||||||||||
Awards | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Expense estimated to be recognized during 2014 | $ | 5,460 | $ | 432 | ||||||||||||||
Estimated contingent expense subsequent to 2014 | 52,311 | 38,817 | ||||||||||||||||
Total estimated remaining expense over the term of the plan | $ | 57,771 | $ | 39,249 | ||||||||||||||
Of the 11.9 million stock options and 1.9 million restricted stock units outstanding under the DISH Network stock incentive plans associated with our employees as of December 31, 2013, the following awards were outstanding pursuant to the performance based stock incentive plans: | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
Performance Based Stock Options | Number of | Weighted- | ||||||||||||||||
Awards | Average | |||||||||||||||||
Exercise | ||||||||||||||||||
Price | ||||||||||||||||||
2005 LTIP | 1,878,500 | $ | 20.83 | |||||||||||||||
2013 LTIP | 1,920,000 | $ | 36.53 | |||||||||||||||
Other employee performance awards | 2,670,000 | $ | 19.46 | |||||||||||||||
Total | 6,468,500 | $ | 24.92 | |||||||||||||||
Restricted Performance Units | ||||||||||||||||||
2005 LTIP | 208,165 | |||||||||||||||||
2013 LTIP | 960,000 | |||||||||||||||||
Other employee performance awards | 695,000 | |||||||||||||||||
Total | 1,863,165 | |||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
During the years ended December 31, 2013 and 2012, we incurred an initial charge related to vested options of $4 million and $13 million, respectively, of additional non-cash, stock-based compensation expense in connection with the 2012 Stock Option Adjustment and the 2011 Stock Option Adjustment discussed previously. These amounts are included in the table below. Total non-cash, stock-based compensation expense for all of our employees is shown in the following table for the years ended December 31, 2013, 2012 and 2011 and was allocated to the same expense categories as the base compensation for such employees: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Subscriber-related | $ | 1,947 | $ | 1,607 | $ | 1,914 | ||||||||||||
General and administrative | 27,700 | 36,966 | 29,249 | |||||||||||||||
Total non-cash, stock based compensation | $ | 29,647 | $ | 38,573 | $ | 31,163 | ||||||||||||
As of December 31, 2013, our total unrecognized compensation cost related to the non-performance based unvested stock awards was $12 million. This cost was based on an estimated future forfeiture rate of approximately 3.7% per year and will be recognized over a weighted-average period of approximately two years. Share-based compensation expense is recognized based on stock awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Changes in the estimated forfeiture rate can have a significant effect on share-based compensation expense since the effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. | ||||||||||||||||||
Valuation | ||||||||||||||||||
The fair value of each stock option granted for the years ended December 31, 2013, 2012 and 2011 was estimated at the date of the grant using a Black-Scholes option valuation model with the following assumptions: | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
Stock Options | 2013 | 2012 | 2011 | |||||||||||||||
Risk-free interest rate | 0.91% - 2.66% | 0.41% - 1.29% | 0.36% - 3.18% | |||||||||||||||
Volatility factor | 32.37% - 39.87% | 33.15% - 39.50% | 31.74% - 45.56% | |||||||||||||||
Expected term of options in years | 5.6 - 10.0 | 3.1 - 5.9 | 3.6 - 10.0 | |||||||||||||||
Weighted-average fair value of options granted | $14.49 - $21.09 | $ 6.72 - $13.79 | $ 8.73 - $14.77 | |||||||||||||||
On December 28, 2012 and December 1, 2011, DISH Network paid a $1.00 and a $2.00 cash dividend per share on its outstanding Class A and Class B common stock, respectively. While DISH Network currently does not intend to declare additional dividends on its common stock, it may elect to do so from time to time. Accordingly, the dividend yield percentage used in the Black-Scholes option valuation model was set at zero for all periods. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded stock options which have no vesting restrictions and are fully transferable. Consequently, our estimate of fair value may differ from other valuation models. Further, the Black-Scholes option valuation model requires the input of highly subjective assumptions. Changes in these subjective input assumptions can materially affect the fair value estimate. | ||||||||||||||||||
We will continue to evaluate the assumptions used to derive the estimated fair value of DISH Network’s stock options as new events or changes in circumstances become known. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||||||
Commitments and Contingencies | 8. Commitments and Contingencies | 11. Commitments and Contingencies | ||||||||||||||||||||||
Commitments | Commitments | |||||||||||||||||||||||
Wireless Spectrum | As of December 31, 2013, future maturities of our long-term debt, capital lease and contractual obligations are summarized as follows: | |||||||||||||||||||||||
DISH Network has made substantial investments to acquire certain wireless spectrum licenses and related assets in recent years. | Payments due by period | |||||||||||||||||||||||
Total | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | ||||||||||||||||||
700 MHz Licenses. In 2008, DISH Network paid $712 million to acquire certain 700 MHz E Block (“700 MHz”) wireless spectrum licenses, which were granted to DISH Network by the FCC in February 2009. At the time they were granted, these licenses were subject to certain interim and final build-out requirements. By June 2013, DISH Network was required to provide signal coverage and offer service to at least 35% of the geographic area in each area covered by each individual license (the “700 MHz Interim Build-Out Requirement”). By June 2019, DISH Network was required to provide signal coverage and offer service to at least 70% of the geographic area in each area covered by each individual license (the “700 MHz Final Build-Out Requirement”). As discussed below, these requirements have since been modified by the FCC. | (In thousands) | |||||||||||||||||||||||
Long-term debt obligations | $ | 13,409,313 | $ | 1,005,778 | $ | 756,159 | $ | 1,504,669 | $ | 904,903 | $ | 1,205,197 | $ | 8,032,607 | ||||||||||
On September 9, 2013, DISH Network filed a letter with the FCC in support of a voluntary industry solution to resolve certain interoperability issues affecting the lower 700 MHz spectrum band (the “Interoperability Solution”). On October 29, 2013, the FCC issued an order approving the Interoperability Solution (the “Interoperability Solution Order”), which requires DISH Network to reduce power emissions on its 700 MHz licenses. As part of the Interoperability Solution Order, the FCC, among other things, approved DISH Network’s request to modify the 700 MHz Interim Build-Out Requirement so that by March 2017 DISH Network must provide signal coverage and offer service to at least 40% of its total E Block population (the “Modified 700 MHz Interim Build-Out Requirement”). The FCC also approved DISH Network’s request to modify the 700 MHz Final Build-Out Requirement so that by March 2021 DISH Network must provide signal coverage and offer service to at least 70% of the population in each of its E Block license areas (the “Modified 700 MHz Final Build-Out Requirement”). These requirements replaced the previous build-out requirements associated with DISH Network’s 700 MHz licenses. While the modifications to DISH Network’s 700 MHz licenses provide DISH Network additional time to complete the build-out requirements, the reduction in power emissions could have an adverse impact on DISH Network’s ability to fully utilize its 700 MHz licenses. If DISH Network fails to meet the Modified 700 MHz Interim Build-Out Requirement, the Modified 700 MHz Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020, and DISH Network could face the reduction of license area(s). If DISH Network fails to meet the Modified 700 MHz Final Build-Out Requirement, DISH Network’s authorization may terminate for the geographic portion of each license in which DISH Network is not providing service. | Capital lease obligations | 219,902 | 26,829 | 27,372 | 30,058 | 32,994 | 36,175 | 66,474 | ||||||||||||||||
Interest expense on long-term debt and capital lease obligations | 4,718,745 | 838,801 | 741,005 | 655,467 | 599,028 | 528,620 | 1,355,824 | |||||||||||||||||
AWS-4 Licenses. On March 2, 2012, the FCC approved the transfer of 40 MHz of wireless spectrum licenses held by DBSD North America, Inc. (“DBSD North America”) and TerreStar Networks, Inc. (“TerreStar”) to DISH Network. On March 9, 2012, DISH Network completed the acquisition of 100% of the equity of reorganized DBSD North America (the “DBSD Transaction”) and substantially all of the assets of TerreStar (the “TerreStar Transaction”), pursuant to which DISH Network acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion. | Satellite-related obligations | 1,717,153 | 250,741 | 230,225 | 230,138 | 225,464 | 225,246 | 555,339 | ||||||||||||||||
Operating lease obligations | 179,355 | 45,868 | 36,204 | 31,793 | 15,150 | 8,438 | 41,902 | |||||||||||||||||
DISH Network’s consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar were accompanied by requests for waiver of the FCC’s Mobile Satellite Service (“MSS”) “integrated service” and spare satellite requirements and various technical provisions. On March 21, 2012, the FCC released a Notice of Proposed Rule Making proposing the elimination of the integrated service, spare satellite and various technical requirements associated with these licenses. On December 11, 2012, the FCC approved rules that eliminated these requirements and gave notice of its proposed modification of DISH Network’s authorizations to, among other things, allow DISH Network to offer single-mode terrestrial terminals to customers who do not desire satellite functionality. On February 15, 2013, the FCC issued an order, which became effective on March 7, 2013, modifying DISH Network’s licenses to expand its terrestrial operating authority with AWS-4 authority (“AWS-4”). That order imposed certain limitations on the use of a portion of this spectrum, including interference protections for other spectrum users and power and emission limits that DISH Network presently believes could render 5 MHz of its uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial services and limit its ability to fully utilize the remaining 15 MHz of its uplink spectrum (2005-2020 MHz) for terrestrial services. These limitations could, among other things, impact the ongoing development of technical standards associated with DISH Network’s wireless business, and may have a material adverse effect on DISH Network’s ability to commercialize its AWS-4 licenses. That order also mandated certain interim and final build-out requirements for the licenses. By March 2017, DISH Network must provide terrestrial signal coverage and offer terrestrial service to at least 40% of the aggregate population represented by all of the areas covered by the licenses (the “AWS-4 Interim Build-Out Requirement”). By March 2020, DISH Network was required to provide terrestrial signal coverage and offer terrestrial service to at least 70% of the population in each area covered by an individual license (the “AWS-4 Final Build-Out Requirement”). | Purchase obligations | 3,019,689 | 1,826,577 | 444,657 | 322,253 | 165,059 | 136,059 | 125,084 | ||||||||||||||||
Total | $ | 23,264,157 | $ | 3,994,594 | $ | 2,235,622 | $ | 2,774,378 | $ | 1,942,598 | $ | 2,139,735 | $ | 10,177,230 | ||||||||||
On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If DISH Network fails to meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020. If DISH Network fails to meet the Modified AWS-4 Final Build-Out Requirement, DISH Network’s terrestrial authorization for each license area in which it fails to meet the requirement may terminate. The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for DISH Network’s AWS-4 licenses to allow DISH Network to repurpose all 20 MHz of its uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4 Downlink Waiver”). If DISH Network fails to notify the FCC that it intends to use its uplink spectrum for downlink by June 20, 2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will revert back to the AWS-4 Final Build-Out Requirement. | ||||||||||||||||||||||||
In certain circumstances the dates on which we are obligated to make these payments could be delayed. These amounts will increase to the extent we procure insurance for our satellites or contract for the construction, launch or lease of additional satellites. | ||||||||||||||||||||||||
H Block Licenses. The auction of wireless spectrum known as the H Block commenced on January 22, 2014 and concluded on February 27, 2014. DISH Network was the winning bidder for all 176 H Block wireless spectrum licenses (“H Block”) in the H Block auction with an aggregate bid of $1.564 billion. On December 17, 2013, DISH Network paid approximately $328 million to the FCC as a deposit for the H Block auction. DISH Network paid the remaining balance of its winning bid of approximately $1.236 billion for the H Block licenses on March 28, 2014. On April 29, 2014, the FCC issued an order granting DISH Network’s application to acquire these H Block licenses. As a result, during May 2014, DISH Network also paid approximately $13 million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95 million to Sprint for clearance costs associated with the upper H Block spectrum in connection with the issuance of the H Block licenses. The H Block licenses are subject to certain interim and final build-out requirements. By April 2018, DISH Network must provide reliable signal coverage and offer service to at least 40% of the population in each area covered by an individual H Block license (the “H Block Interim Build-Out Requirement”). By April 2024, DISH Network must provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an individual H Block license (the “H Block Final Build-Out Requirement”). If DISH Network fails to meet the H Block Interim Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated by two years (from April 2024 to April 2022) for each H Block license area in which it fails to meet the requirement. If DISH Network fails to meet the H Block Final Build-Out Requirement, its authorization for each H Block license area in which it fails to meet the requirement may terminate. The FCC has adopted rules for the H Block spectrum band that is adjacent to DISH Network’s AWS-4 licenses. Depending on the outcome of the standard-setting process for the H Block and DISH Network’s ultimate decision regarding the AWS-4 Downlink Waiver, the rules that the FCC adopted for the H Block could further impact 15 MHz of DISH Network’s AWS-4 uplink spectrum (2005-2020 MHz), which may have a material adverse effect on DISH Network’s ability to commercialize the AWS-4 licenses. | ||||||||||||||||||||||||
On February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a wholly-owned subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV, including related in-orbit incentive obligations and interest payments of approximately $59 million) and approximately $11 million in cash in exchange for shares of a series of preferred tracking stock issued by EchoStar and shares of a series of preferred tracking stock issued by HSSC; and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on these five satellites (collectively, the “Satellite and Tracking Stock Transaction”). The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will result in operating lease obligations of $148 million due 2014, $175 million due 2015, $123 million due 2016, $102 million due 2017, $102 million due 2018 and $329 million due thereafter. These obligations are not included in the table above. The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will also result in a reduction of our long-term debt obligations associated with our in-orbit incentive payments of $5 million due 2014, $5 million due 2015, $4 million due 2016, $4 million due 2017, $4 million due 2018 and $22 million due thereafter and a reduction in our interest expense associated with our in-orbit incentive payments of $3 million due 2014, $2 million due 2015, $2 million due 2016, $2 million due 2017, $1 million due 2018 and $5 million due thereafter. See Note 16 for further discussion of our Subsequent Events. | ||||||||||||||||||||||||
AWS-3 Auction. DISH Network has filed an application with the FCC to participate as a potential bidder in the upcoming AWS-3 wireless spectrum auction. On October 30, 2014, the FCC announced that DISH Network and 69 other applicants were qualified to participate in the AWS-3 auction. The auction is scheduled to commence on November 13, 2014. The FCC has set an aggregate reserve price of: (i) approximately $580 million for licenses in the 1695-1710 MHz band, and (ii) approximately $10.066 billion for paired licenses in the 1755-1780/2155-2180 MHz bands, to conclude the auction of spectrum in each respective band. The FCC determined that bidding in this auction will be “anonymous,” which means that prior to and during the course of the auction, the FCC will not make public any information about a specific applicant’s upfront deposit or its bids. In addition, FCC rules restrict information that bidders may disclose about their participation in the auction. | ||||||||||||||||||||||||
In addition, the table above does not include $146 million of liabilities associated with unrecognized tax benefits that were accrued, as discussed in Note 8, and are included on our Consolidated Balance Sheets as of December 31, 2013. We do not expect any portion of this amount to be paid or settled within the next twelve months. | ||||||||||||||||||||||||
Commercialization of Wireless Spectrum Licenses and Related Assets. 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. DISH Network will need to make significant additional investments or partner with others to, among other things, commercialize, build-out, and integrate its licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to its licenses. Depending on the nature and scope of such commercialization, build-out, and integration efforts, and regulatory compliance, any such investment or partnership could vary significantly. In connection with the development of DISH Network’s wireless business, including without limitation the efforts described above, we have made cash distributions to DISH Network 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. On March 28, 2014, we paid a dividend of $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 wireless spectrum licenses in the H Block auction. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on its wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by its wireless spectrum licenses. | ||||||||||||||||||||||||
Wireless Spectrum | ||||||||||||||||||||||||
Guarantees | ||||||||||||||||||||||||
On March 2, 2012, the FCC approved the transfer of 40 MHz of AWS-4 wireless spectrum licenses held by DBSD North America, Inc. (“DBSD North America”) and TerreStar Networks, Inc. (“TerreStar”) to DISH Network. On March 9, 2012, DISH Network completed the acquisitions of 100% of the equity of reorganized DBSD North America (the “DBSD Transaction”) and substantially all of the assets of TerreStar (the “TerreStar Transaction”), pursuant to which DISH Network acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
DISH Network’s consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar were accompanied by requests for waiver of the FCC’s Mobile Satellite Service (“MSS”) “integrated service” and spare satellite requirements and various technical provisions. On March 21, 2012, the FCC released a Notice of Proposed Rule Making proposing the elimination of the integrated service, spare satellite and various technical requirements associated with the AWS-4 licenses. On December 11, 2012, the FCC approved rules that eliminated these requirements and gave notice of its proposed modification of DISH Network’s AWS-4 authorizations to, among other things, allow DISH Network to offer single-mode terrestrial terminals to customers who do not desire satellite functionality. On February 15, 2013, the FCC issued an order, which became effective on March 7, 2013, modifying its AWS-4 licenses to expand DISH Network’s terrestrial operating authority. That order imposed certain limitations on the use of a portion of this spectrum, including interference protections for other spectrum users and power and emission limits that DISH Network presently believes could render 5 MHz of its uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial services and limit its ability to fully utilize the remaining 15 MHz of its uplink spectrum (2005-2020 MHz) for terrestrial services. These limitations could, among other things, impact the ongoing development of technical standards associated with DISH Network’s wireless business, and may have a material adverse effect on DISH Network’s ability to commercialize these licenses. That order also mandated certain interim and final build-out requirements for the licenses. By March 2017, DISH Network must provide terrestrial signal coverage and offer terrestrial service to at least 40% of the aggregate population represented by all of the areas covered by the licenses (the “AWS-4 Interim Build-Out Requirement”). By March 2020, DISH Network was required to provide terrestrial signal coverage and offer terrestrial service to at least 70% of the population in each area covered by an individual license (the “AWS-4 Final Build-Out Requirement”). On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If DISH Network fails to meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020. If DISH Network fails to meet the Modified AWS-4 Final Build-Out Requirement, its terrestrial authorization for each license area in which it fails to meet the requirement may terminate. | ||||||||||||||||||||||||
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the guarantor under those capital leases for payments totaling approximately $10 million over approximately the next five months. | ||||||||||||||||||||||||
The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for DISH Network’s AWS-4 spectrum licenses to allow DISH Network to repurpose 20 MHz of its uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4 Downlink Waiver”). The AWS-4 Downlink Waiver and the Modified AWS-4 Final Build-Out Requirement were conditioned upon DISH Network bidding at least a net clearing price equal to the aggregate reserve price of $1.564 billion in the auction of wireless spectrum known as the “H Block.” If DISH Network failed to meet this bidding condition, or if DISH Network fails to notify the FCC whether it intends to use its uplink spectrum for downlink by June 20, 2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will revert back to the AWS-4 Final Build-Out Requirement. The H Block auction commenced January 22, 2014 and concluded on February 27, 2014. DISH Network was the winning bidder of all 176 H Block wireless spectrum licenses in the H Block auction with an aggregate bid of $1.564 billion, and, on March 14, 2014, DISH Network filed an application with the FCC to acquire these H Block spectrum licenses. The FCC has not issued any of the H Block spectrum licenses to DISH Network, as such issuance depends upon, among other things, the FCC’s review and approval of DISH Network’s application. DISH Network cannot predict the timing or the outcome of the FCC’s review of its application. On December 17, 2013, DISH Network paid approximately $328 million to the FCC as a deposit for the H Block auction. The remaining balance of DISH Network’s winning bid of approximately $1.236 billion for the H Block spectrum licenses is due March 28, 2014. In the event the FCC ultimately issues the H Block licenses to DISH Network, the FCC will also require that DISH Network pay approximately $13 million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95 million to Sprint for clearance costs associated with the upper H Block spectrum within 30 days of the issuance of the H Block licenses. The H Block spectrum licenses are subject to certain interim and final build-out requirements. Within four years after the FCC issues the H Block spectrum licenses, the licensee must provide reliable signal coverage and offer service to at least 40% of the population in each area covered by an individual H Block spectrum license (the “H Block Interim Build-Out Requirement”). Within ten years after the FCC issues the H Block spectrum licenses, the licensee must provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an individual H Block spectrum license (the “H Block Final Build-Out Requirement”). If the licensee fails to meet the H Block Interim Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated by two years (from ten years to eight years) for each H Block license area in which it fails to meet the requirement. If the licensee fails to meet the H Block Final Build-Out Requirement, its authorization for each H Block spectrum license area in which it fails to meet the requirement may terminate. The FCC has adopted rules for the H Block spectrum band that is adjacent to DISH Network’s AWS-4 spectrum licenses. Depending on the outcome of the standard-setting process for the H Block and DISH Network’s ultimate decision regarding the AWS-4 Downlink Waiver, the rules that the FCC adopted for the H Block could further impact the remaining 15 MHz of DISH Network’s uplink spectrum (2005-2020 MHz), which may have a material adverse effect on DISH Network’s ability to commercialize the AWS-4 licenses. | ||||||||||||||||||||||||
During the third quarter 2009, EchoStar entered into a new 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, 2014, the remaining obligation of DISH Network’s guarantee was $327 million. | ||||||||||||||||||||||||
In 2008, DISH Network paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to DISH Network by the FCC in February 2009. At the time they were granted, these licenses were subject to certain interim and final build-out requirements. By June 2013, DISH Network was required to provide signal coverage and offer service to at least 35% of the geographic area in each area covered by each individual license (the “700 MHz Interim Build-Out Requirement”). By June 2019, DISH Network was required to provide signal coverage and offer service to at least 70% of the geographic area in each area covered by each individual license (the “700 MHz Final Build-Out Requirement”). As discussed below, these requirements have since been modified by the FCC. | ||||||||||||||||||||||||
As of September 30, 2014, we have not recorded a liability on the balance sheet for any of these guarantees. | ||||||||||||||||||||||||
On September 9, 2013, DISH Network filed a letter with the FCC in support of a voluntary industry solution to resolve certain interoperability issues affecting the lower 700 MHz spectrum band (the “Interoperability Solution”). On October 29, 2013, the FCC issued an order approving the Interoperability Solution (the “Interoperability Solution Order”), which requires DISH Network to reduce power emissions on its 700 MHz licenses. As part of the Interoperability Solution Order, the FCC, among other things, approved DISH Network’s request to modify the 700 MHz Interim Build-Out Requirement so that by March 2017 (rather than the previous deadline of June 2013), DISH Network must provide signal coverage and offer service to at least 40% of its total E Block population (the “Modified 700 MHz Interim Build-Out Requirement”). The FCC also approved DISH Network’s request to modify the 700 MHz Final Build-Out Requirement so that by March 2021 (rather than the previous deadline of June 2019), DISH Network must provide signal coverage and offer service to at least 70% of the population in each of its E Block license areas (the “Modified 700 MHz Final Build-Out Requirement”). These requirements replaced the previous build-out requirements associated with DISH Network’s 700 MHz licenses. While the modifications to DISH Network’s 700 MHz licenses would provide DISH Network additional time to complete the build-out requirements, the reduction in power emissions could have an adverse impact on DISH Network’s ability to fully utilize DISH Network’s 700 MHz licenses. If DISH Network fails to meet the Modified 700 MHz Interim Build-Out Requirement, the Modified 700 MHz Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020, and DISH Network could face the reduction of license area(s). If DISH Network fails to meet the Modified 700 MHz Final Build-Out Requirement, DISH Network’s authorization may terminate for the geographic portion of each license in which DISH Network is not providing service. | ||||||||||||||||||||||||
Contingencies | ||||||||||||||||||||||||
DISH Network will need to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and DISH Network’s integration efforts, including compliance with regulations applicable to the acquired licenses. Depending on the nature and scope of such commercialization, build-out, and integration efforts, any such investment or partnership could vary significantly. We have made cash distributions to DISH Network to finance the acquisition of these licenses and may make additional cash distributions to, among other things, finance the acquisition of additional licenses and the commercialization and build-out requirements of acquired licenses and DISH Network’s integration efforts including compliance with regulations applicable to acquired licenses. We expect to pay a dividend of approximately $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 H Block wireless spectrum licenses in the H Block auction. 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 spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these spectrum licenses. | ||||||||||||||||||||||||
Separation Agreement | ||||||||||||||||||||||||
Guarantees | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the guarantor under those capital leases for payments totaling approximately $50 million over approximately the next 14 months. | ||||||||||||||||||||||||
Litigation | ||||||||||||||||||||||||
During the third quarter 2009, EchoStar entered into a new 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 December 31, 2013, the remaining obligation of the DISH Network guarantee was $375 million. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
As of December 31, 2013, we have not recorded a liability on the balance sheet for any of these guarantees. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Purchase Obligations | ||||||||||||||||||||||||
California Institute of Technology | ||||||||||||||||||||||||
Our 2014 purchase obligations primarily consist of binding purchase orders for receiver systems and related equipment, digital broadcast operations, engineering services and products and services related to the operation of our DISH branded pay-TV service. Our purchase obligations also include certain fixed contractual commitments to purchase programming content. Our purchase obligations can fluctuate significantly from period to period due to, among other things, management’s control of inventory levels, and can materially impact our future operating asset and liability balances, and our future working capital requirements. | ||||||||||||||||||||||||
On October 1, 2013, the California Institute of Technology (“Caltech”) filed complaints against DISH Network and its wholly-owned subsidiaries DISH Network L.L.C. and dishNET Satellite Broadband L.L.C., as well as Hughes Communications, Inc. and Hughes Network Systems, LLC, which are wholly-owned subsidiaries of EchoStar, in the United States District Court for the Central District of California. The complaint alleges infringement of United States Patent Nos. 7,116,710 (the “710 patent”); 7,421,032 (the “032 patent”); 7,916,781 (the “781 patent”) and 8,284,833 (the “833 patent”), each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech alleges that encoding data as specified by the DVB-S2 standard infringes each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claims that our Hopper set-top box, as well as the Hughes defendants’ satellite broadband products and services, infringe the asserted patents by implementing the DVB-S2 standard. | ||||||||||||||||||||||||
Programming Contracts | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
In the normal course of business, we enter into contracts to purchase programming content in which our payment obligations are generally contingent on the number of Pay-TV subscribers to whom we provide the respective content. These programming commitments are not included in the “Commitments” table above. The terms of our contracts typically range from one to ten years with annual rate increases. Our programming expenses will continue to increase to the extent we are successful in growing our Pay-TV subscriber base. In addition, our margins may face further downward pressure from price increases and the renewal of long-term pay-TV programming contracts on less favorable pricing terms. | ||||||||||||||||||||||||
ClearPlay, Inc. | ||||||||||||||||||||||||
Rent Expense | ||||||||||||||||||||||||
On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C. in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799, entitled “Multimedia Content Navigation and Playback” (the “799 patent”); 7,526,784, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “784 patent”); 7,543,318, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “318 patent”); 7,577,970, entitled “Multimedia Content Navigation and Playback” (the “970 patent”); and 8,117,282, entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums” (the “282 patent”). ClearPlay alleges that the AutoHop™ feature in our Hopper set-top box infringes the asserted patents. | ||||||||||||||||||||||||
Total rent expense for operating leases was $303 million, $252 million and $267 million in 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Patents and Intellectual Property | ||||||||||||||||||||||||
CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.) | ||||||||||||||||||||||||
Many entities, including some of our competitors, have or may in the future obtain patents and other intellectual property rights that cover or affect products or services that we offer or that we may offer in the future. We may not be aware of all intellectual property rights that our products or services may potentially infringe. Damages in patent infringement cases can be substantial, and in certain circumstances can be trebled. Further, we cannot estimate the extent to which we may be required in the future to obtain licenses with respect to patents held by others and the availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights with respect to components within our direct broadcast satellite system. We cannot be certain that these persons do not own the rights they claim, that our products do not infringe on these rights, and/or that these rights are not valid. Further, we cannot be certain that we would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products to avoid infringement. | ||||||||||||||||||||||||
On January 17, 2014, CRFD Research, Inc. (“CRFD”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the “233 patent”). The 233 patent is entitled “System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System,” and relates to transferring an ongoing software session from one device to another. CRFD alleges that our Hopper and Joey set-top boxes infringe the 233 patent. On the same day, CRFD filed similar complaints against AT&T Inc.; Comcast Corp.; DirecTV; Time Warner Cable Inc.; Cox Communications, Inc.; Akamai Technologies, Inc.; Cablevision Systems Corp. and Limelight Networks, Inc. CRFD is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
Contingencies | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Separation Agreement | ||||||||||||||||||||||||
Custom Media Technologies LLC | ||||||||||||||||||||||||
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 August 15, 2013, Custom Media Technologies LLC (“Custom Media”) filed complaints against DISH Network; AT&T Inc.; Charter Communications, Inc.; Comcast Corp.; Cox Communications, Inc.; DirecTV; 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. 6,269,275 (the “275 patent”). The 275 patent, which is entitled “Method and System for Customizing and Distributing Presentations for User Sites,” relates to the provision of customized presentations to viewers over a network, such as “a cable television network, an Internet or other computer network, a broadcast television network, and/or a satellite system.” Custom Media alleges that our DVR devices and DVR functionality infringe the 275 patent. Custom Media is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Pursuant to a stipulation between the parties, on November 6, 2013, the Court entered an order substituting DISH Network L.L.C., our wholly-owned subsidiary, as the defendant in DISH Network’s place. A trial date is set for September 19, 2016. | ||||||||||||||||||||||||
Litigation | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On March 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois, alleging violations of the Telephone Consumer Protection Act and Telephone Sales Rules, as well as analogous state statutes and state consumer protection laws. The plaintiffs allege that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs are seeking civil penalties and damages of approximately $270 million and that the federal plaintiff is seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs are also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We have also filed a motion for summary judgment, seeking dismissal of all claims, and the Court heard oral arguments on the parties’ summary judgment motions on October 17, 2014. | ||||||||||||||||||||||||
c4cast.com, Inc. | ||||||||||||||||||||||||
We intend to vigorously defend this case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
On May 7, 2012, c4cast.com, Inc. filed a complaint against DISH Network and its wholly-owned subsidiary Blockbuster L.L.C., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent No. 7,958,204 (the “204 patent”), which is entitled “Community-Selected Content.” The 204 patent relates to systems, methods and techniques for providing resources to participants over an electronic network. On August 29, 2013, c4cast.com, Inc. dismissed the action with prejudice, pursuant to a settlement under which DISH Network made an immaterial payment in exchange for a license to DISH Network and EchoStar of certain patents and patent applications. | ||||||||||||||||||||||||
Dragon Intellectual Property, LLC | ||||||||||||||||||||||||
California Institute of Technology | ||||||||||||||||||||||||
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 October 1, 2013, the California Institute of Technology (“Caltech”) filed complaints against DISH Network and its wholly-owned subsidiaries DISH Network L.L.C. and dishNET Satellite Broadband L.L.C., as well as Hughes Communications, Inc. and Hughes Network Systems, LLC, which are wholly-owned subsidiaries of EchoStar, in the United States District Court for the Central District of California. The complaint alleges infringement of United States Patent Nos. 7,116,710 (the “710 patent”), 7,421,032 (the “032 patent”), 7,916,781 (the “781 patent”) and 8,284,833 (the “833 patent”), each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech alleges that encoding data as specified by the DVB-S2 standard infringes each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claims that our Hopper set-top box, as well as the Hughes defendants’ satellite broadband products and services, infringe the asserted patents by implementing the DVB-S2 standard. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
ESPN | ||||||||||||||||||||||||
ClearPlay, Inc. | ||||||||||||||||||||||||
During 2008, our wholly-owned subsidiary DISH Network L.L.C. filed a lawsuit against ESPN, Inc.; ESPN Classic, Inc.; ABC Cable Networks Group; Soapnet L.L.C. and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State Supreme Court. Our complaint alleged that ESPN failed to provide us with certain HD feeds of the Disney Channel, ESPN News, Toon and ABC Family. In October 2011, the jury returned a verdict in favor of the defendants, which the New York State Supreme Court, Appellate Division, First Department (the “First Department”) affirmed on April 2, 2013. We sought leave to further appeal, which the New York Court of Appeals denied on August 27, 2013 on jurisdictional grounds. On September 19, 2013, we appealed the trial court’s final judgment to the First Department. On March 6, 2014, pursuant to a settlement and release agreement between the parties, we dismissed our appeal. | ||||||||||||||||||||||||
On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799 (the “799 patent”), entitled “Multimedia Content Navigation and Playback”; 7,526,784, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “784 patent”); 7,543,318, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “318 patent”); 7,577,970, entitled “Multimedia Content Navigation and Playback” (the “970 patent”); and 8,117,282, entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums” (the “282 patent”). ClearPlay alleges that the AutoHop feature in our Hopper set-top box infringes the asserted patents. | ||||||||||||||||||||||||
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary judgment on the counterclaim, finding that we were liable for some of the amount alleged to be owing but that the actual amount owing was disputed. On December 29, 2010, the First Department affirmed the partial grant of ESPN’s motion for summary judgment on the counterclaim. After the partial grant of ESPN’s motion for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements. On March 15, 2010, the New York State Supreme Court ruled that we owed the full amount of approximately $66 million under the applicable affiliation agreements. As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Consolidated Balance Sheets. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On June 21, 2011, the First Department affirmed the New York State Supreme Court’s ruling that we owed approximately $66 million under the applicable affiliation agreements and, on October 18, 2011, denied our motion for leave to appeal that decision to New York’s highest court, the New York Court of Appeals. We sought leave to appeal directly to the New York Court of Appeals and, on January 10, 2012, the New York Court of Appeals dismissed our motion for leave on the ground that the ruling upon which we appealed did not fully resolve all claims in the action. As a result of the First Department’s June 2011 ruling, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss) during 2011. On October 11, 2012, the New York State Supreme Court awarded ESPN $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim. As a result, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million related to this case as of December 31, 2012. During the first quarter 2013, we paid $71 million to ESPN related to the counterclaim and attorneys’ fees and $12 million for accrued interest. As a result of the parties’ settlement and release, no further appeals are possible, and this matter is now concluded. | ||||||||||||||||||||||||
CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.) | ||||||||||||||||||||||||
Garnet Digital, LLC | ||||||||||||||||||||||||
On January 17, 2014, CRFD Research, Inc. (“CRFD”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the “233 patent”). The 233 patent is entitled “System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System,” and relates to transferring an ongoing software session from one device to another. CRFD alleges that our Hopper and Joey set-top boxes infringe the 233 patent. On the same day, CRFD filed similar complaints against AT&T Inc., Comcast Corp., DirecTV, Time Warner Cable Inc., Cox Communications, Inc., Level 3 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 September 9, 2013, Garnet Digital, LLC (“Garnet Digital”) 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, alleging infringement of United States Patent No. 5,379,421 (the “421 patent”), which is entitled “Interactive Terminal for the Access of Remote Database Information.” The 421 patent relates to methods for accessing information from a remote computerized database and related devices. On the same day, Garnet Digital filed similar complaints in the same court against 15 other defendants, including AT&T Inc.; Comcast Corp.; DirecTV; TiVo, Inc. and Verizon Communications, Inc. Garnet Digital is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On July 30, 2014, the Court dismissed the claims against us and DISH Network with prejudice. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
The Hopper Litigation | ||||||||||||||||||||||||
Custom Media Technologies LLC | ||||||||||||||||||||||||
On May 24, 2012, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit in the United States District Court for the Southern District of New York against American Broadcasting Companies, Inc.; CBS Corporation; Fox Entertainment Group, Inc.; Fox Television Holdings, Inc.; Fox Cable Network Services, L.L.C. and NBCUniversal, LLC. In the lawsuit, we are seeking a declaratory judgment that we are not infringing any defendant’s copyright, or breaching any defendant’s retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop features of our Hopper set-top box. A consumer can use the PrimeTime Anytime feature, at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature, at his or her option, to watch certain recordings the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back at a certain point after the show’s original airing. | ||||||||||||||||||||||||
On August 15, 2013, Custom Media Technologies LLC (“Custom Media”) filed complaints against DISH Network, AT&T Inc., Charter Communications, Inc., Comcast Corp., Cox Communications, Inc., DirecTV, 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. 6,269,275 (the “275 patent”). The 275 patent, which is entitled “Method and System for Customizing and Distributing Presentations for User Sites,” relates to the provision of customized presentations to viewers over a network, such as “a cable television network, an Internet or other computer network, a broadcast television network, and/or a satellite system.” Custom Media is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
Later on May 24, 2012, (i) Fox Broadcasting Company; Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as Slingbox placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC; Universal Network Television, LLC; Open 4 Business Productions LLC and NBCUniversal, LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc.; CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
As a result of certain parties’ competing venue-related motions brought in both the New York and California actions, and certain networks’ filing various counterclaims and amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox and NBC parties in California. | ||||||||||||||||||||||||
Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) | ||||||||||||||||||||||||
California Actions. The NBC plaintiffs and Fox plaintiffs filed amended complaints in their respective California actions adding copyright claims against EchoStar and EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar. In addition, the Fox plaintiffs’ amended complaint added claims challenging the Hopper Transfers™ feature of our second-generation Hopper set-top box. | ||||||||||||||||||||||||
On September 15, 2011, LVL Patent Group, LLC filed a complaint against our wholly-owned subsidiary DISH Network L.L.C., as well as EchoStar, EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar, and DirecTV, in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 6,044,382, which is entitled “Data Transaction Assembly Server.” DirecTV was dismissed from the case on January 4, 2012. On July 12, 2012, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed the operative second amended complaint making the same claim. On January 24, 2013, Cyberfone Systems, LLC voluntarily dismissed the action against us and the EchoStar entities without prejudice. | ||||||||||||||||||||||||
On November 7, 2012, the California court denied the Fox plaintiffs’ motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features, and the Fox plaintiffs appealed. On March 27, 2013, at the request of the parties, the Central District of California granted a stay of all proceedings in the action brought by the NBC plaintiffs, pending resolution of the appeal by the Fox plaintiffs. On July 24, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the PrimeTime Anytime and AutoHop features. On August 7, 2013, the Fox plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on January 24, 2014. The United States Supreme Court granted the Fox plaintiffs an extension until May 23, 2014 to file a petition for writ of certiorari, but they did not file. As a result, the stay of the NBC plaintiffs’ action expired. On August 6, 2014, at the request of the parties, the Central District of California granted a further stay of all proceedings in the action brought by the NBC plaintiffs, pending a final judgment on all claims in the Fox plaintiffs’ action. No trial date is currently set on the NBC claims. | ||||||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||||
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their retransmission consent agreement; and (ii) us and EchoStar Technologies L.L.C. seeking to enjoin the Slingbox placeshifting functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach of their retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’ motion. The Fox plaintiffs appealed, and on July 14, 2014, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the Hopper Transfers feature and the Slingbox placeshifting functionality in our second-generation Hopper set-top box. On October 17, 2014, the California court heard oral argument on the Fox plaintiffs’ and our respective motions for summary judgment. The Fox claims are set for trial on February 24, 2015. | ||||||||||||||||||||||||
On March 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois, alleging violations of the Telephone Consumer Protection Act and Telephone Sales Rules, as well as analogous state statutes and state consumer protection laws. The plaintiffs allege that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs are seeking civil penalties and damages of approximately $270 million and that the federal plaintiff is seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs are also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We have also filed a motion for summary judgment, seeking dismissal of all claims. | ||||||||||||||||||||||||
New York Actions. Both the ABC and CBS parties filed counterclaims in the New York action adding copyright claims against EchoStar Technologies L.L.C., and the CBS parties have filed a counterclaim alleging that we fraudulently concealed the AutoHop feature when negotiating renewal of our CBS retransmission consent agreement. On November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion. The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, on March 4, 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit, and, on March 6, 2014, we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States District Court for the Southern District of New York. The CBS claims in the New York action are set to be trial-ready on May 29, 2015. | ||||||||||||||||||||||||
We intend to vigorously defend this case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately determines that we infringe the asserted copyrights, or are in breach of any of the retransmission consent agreements, we may be subject to substantial damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. In addition, as a result of this litigation, we may not be able to renew certain of our retransmission consent agreements and other programming agreements on favorable terms or at all. If we are unable to renew these agreements, there can be no assurance that we would be able to obtain substitute programming, or that such substitute programming would be comparable in quality or cost to our existing programming. Loss of access to existing programming could have a material adverse effect on our business, financial condition and results of operations, including, among other things, our gross new subscriber activations and subscriber churn rate. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Dragon Intellectual Property, LLC | ||||||||||||||||||||||||
Joao Control & Monitoring Systems 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 April 23, 2014, Joao Control & Monitoring Systems, LLC (“Joao Control”) filed a complaint against DISH Network in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 6,549,130 (the “130 patent”), which is entitled “Control Apparatus and Method for Vehicles and/or for Premises.” Joao alleges that we infringe the 130 patent by making, using, providing and/or importing remotely-accessed DVRs. On the same day, Joao Control also filed similar actions against DirecTV; Verizon Communications, Inc.; Time Warner Cable Inc.; Cox Communications, Inc.; and Cablevision Systems Corporation, among others. Joao Control is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Joao Control never served us with its complaint and on June 23, 2014, Joao Control dismissed its complaint against DISH Network without prejudice. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
LightSquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) | ||||||||||||||||||||||||
ESPN | ||||||||||||||||||||||||
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). | ||||||||||||||||||||||||
During 2008, our wholly-owned subsidiary DISH Network L.L.C. filed a lawsuit against ESPN, Inc., ESPN Classic, Inc., ABC Cable Networks Group, Soapnet L.L.C. and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State Supreme Court. Our complaint alleges that ESPN failed to provide us with certain HD feeds of the Disney Channel, ESPN News, Toon and ABC Family. In October 2011, the jury returned a verdict in favor of the defendants, which the New York State Supreme Court, Appellate Division, First Department (the “First Department”) affirmed on April 2, 2013. We sought leave to further appeal, which the New York Court of Appeals denied on August 27, 2013 on jurisdictional grounds. On September 19, 2013, we appealed the trial court’s final judgment to the First Department. On March 6, 2014, pursuant to a settlement and release agreement between the parties, we dismissed our appeal. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary judgment on the counterclaim, finding that we are liable for some of the amount alleged to be owing but that the actual amount owing was disputed. On December 29, 2010, the First Department affirmed the partial grant of ESPN’s motion for summary judgment on the counterclaim. After the partial grant of ESPN’s motion for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements. On March 15, 2010, the New York State Supreme Court ruled that we owe the full amount of approximately $66 million under the applicable affiliation agreements. As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Consolidated Balance Sheets. | ||||||||||||||||||||||||
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), 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 June 21, 2011, the First Department affirmed the New York State Supreme Court’s ruling that we owe approximately $66 million under the applicable affiliation agreements and, on October 18, 2011, denied our motion for leave to appeal that decision to New York’s highest court, the New York Court of Appeals. We sought leave to appeal directly to the New York Court of Appeals and, on January 10, 2012, the New York Court of Appeals dismissed our motion for leave on the ground that the ruling upon which we appealed does not fully resolve all claims in the action. As a result of the First Department’s June 2011 ruling, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss) during 2011. On October 11, 2012, the New York State Supreme Court awarded ESPN $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim. As a result, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million related to this case as of December 31, 2012. During the first quarter 2013, we paid $71 million to ESPN related to the counterclaim and attorneys’ fees and $12 million for accrued interest. As a result of the parties’ settlement and release, no further appeals are possible, and this matter is now concluded. | ||||||||||||||||||||||||
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 include, 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. | ||||||||||||||||||||||||
Garnet Digital, LLC | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On September 9, 2013, Garnet Digital, LLC (“Garnet Digital”) 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, alleging infringement of United States Patent No. 5,379,421 (the “421 patent”), which is entitled “Interactive Terminal for the Access of Remote Database Information.” The 421 patent relates to methods for accessing information from a remote computerized database and related devices. On the same day, Garnet Digital filed similar complaints in the same court against 15 other defendants, including AT&T Inc., Comcast Corp., DirecTV, TiVo, Inc., and Verizon Communications, Inc. Garnet Digital is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
LightSquared/Harbinger Capital Partners LLC (LightSquared Colorado Action) | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On July 8, 2014, Harbinger filed suit against DISH Network, LBAC, Mr. Ergen, SPSO, and certain other parties, in the United States District Court for the District of Colorado. The complaint asserts claims for tortious interference with contract and abuse of process, as well as claims alleging violations of the federal Racketeering Influenced and Corrupt Organization Act and the Colorado Organized Crime Control Act. Harbinger seeks to rely on many of the same facts and circumstances that were at issue in the LightSquared adversary proceeding pending in the Bankruptcy Court. Harbinger argues that the defendants’ alleged conduct, among other things, is responsible for Harbinger’s losing control of LightSquared and causing breaches of Harbinger’s stockholder agreement. The complaint seeks damages in excess of $500 million, which under federal and state law may be trebled. | ||||||||||||||||||||||||
The Hopper Litigation | ||||||||||||||||||||||||
DISH Network intends to vigorously defend any claims against it in this case and cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
On May 24, 2012, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit in the United States District Court for the Southern District of New York against American Broadcasting Companies, Inc., CBS Corporation, Fox Entertainment Group, Inc., Fox Television Holdings, Inc., Fox Cable Network Services, L.L.C. and NBCUniversal, LLC. In the lawsuit, we are seeking a declaratory judgment that we are not infringing any defendant’s copyright, or breaching any defendant’s retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop™ features of our Hopper set-top box. A consumer can use the PrimeTime Anytime feature, at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature, at his or her option, to watch certain recordings the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back the next day after the show’s original airing. | ||||||||||||||||||||||||
LightSquared Transaction Shareholder Derivative Actions | ||||||||||||||||||||||||
Later on May 24, 2012, (i) Fox Broadcasting Company, Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as Sling placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC, Universal Network Television, LLC, Open 4 Business Productions LLC and NBCUniversal, LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc., CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights. | ||||||||||||||||||||||||
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 has been 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. | ||||||||||||||||||||||||
As a result of certain parties’ competing venue-related motions brought in both the New York and California actions, and certain networks’ filing various counterclaims and amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox and NBC parties in California. | ||||||||||||||||||||||||
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, has been withdrawn. | ||||||||||||||||||||||||
California Actions | ||||||||||||||||||||||||
Five alleged shareholders have 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. | ||||||||||||||||||||||||
The NBC plaintiffs and Fox plaintiffs filed amended complaints in their respective California actions adding copyright claims against EchoStar and EchoStar Technologies L.L.C. (“EchoStar Technologies”), a wholly-owned subsidiary of EchoStar. In addition, the Fox plaintiffs’ amended complaint added claims challenging the Hopper Transfers™ feature of our second-generation Hopper set-top box. | ||||||||||||||||||||||||
On 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 November 7, 2012, the California court denied the Fox plaintiffs’ motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features, and the Fox plaintiffs appealed. On March 27, 2013, at the request of the parties, the Central District of California granted a stay of all proceedings in the action brought by the NBC plaintiffs, pending resolution of the appeal by the Fox plaintiffs. On July 24, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the PrimeTime Anytime and AutoHop features. On August 7, 2013, the Fox plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on January 24, 2014. | ||||||||||||||||||||||||
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 Director Defendants, other than Mr. Ergen and Mr. Clayton; and the final claim was made against Messrs. Cullen, Dodge and Kiser. | ||||||||||||||||||||||||
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their retransmission consent agreement; and (ii) us and EchoStar Technologies seeking to enjoin the Sling placeshifting functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach of their retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’ motion and on October 22, 2013, the Fox plaintiffs filed a notice of appeal. The Fox claims are set for trial on January 13, 2015. | ||||||||||||||||||||||||
DISH Network’s Board of Directors has 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. DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
New York Actions | ||||||||||||||||||||||||
Norman IP Holdings, LLC | ||||||||||||||||||||||||
Both the ABC and CBS parties filed counterclaims in the New York action adding copyright claims against EchoStar Technologies, and the CBS parties have filed a counterclaim alleging that we fraudulently concealed the AutoHop feature when negotiating renewal of our CBS retransmission consent agreement. On November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion. The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, on March 4, 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit, and, on March 6, 2014, we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States District Court for the Southern District of New York. The CBS claims in the New York action are set to be trial-ready on April 17, 2015. | ||||||||||||||||||||||||
On September 15, 2011, Norman IP Holdings, LLC (“Norman”) filed a patent infringement complaint (the “2011 Action”) against Lexmark International Corporation (“Lexmark”) and Brother International Corporation (“Brother”), in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,592,555 (the “555 patent”); 5,530,597 (the “597 patent”) and 5,502,689 (the “689 patent”) by Lexmark, and infringement of the 555 patent and the 689 patent by Brother. On January 27, 2012, Norman filed a second amended complaint in the 2011 Action that added DISH Network as a defendant, among others, in which it asserted the 555 patent and the 689 patent against us. On September 21, 2012, Norman served us with preliminary infringement contentions related to the 555 patent and the 689 patent, as well as the 597 patent, which outlined Norman’s claims with respect to certain DISH products. On February 8, 2013, Norman filed a third amended complaint in the 2011 Action, in which it added claims against us alleging infringement of the 597 patent. On April 8, 2013, Norman filed a fourth amended complaint in the 2011 Action, in which it added new claims against us alleging infringement of additional DISH products. On May 1, 2013, Norman filed a fifth amended complaint in the 2011 Action, in which it named Mercedes-Benz USA, LLC; Volkswagen Group of America, Inc.; Xerox Corporation; ZTE (USA) Inc. and ZTE Solutions, Inc. as defendants, in addition to us. On July 9, 2013, the Court ordered Norman to file a new sixth amended complaint limiting Norman’s claims against us to those specifically referenced in its September 21, 2012 preliminary infringement contentions. As a result, on July 10, 2013, Norman filed a sixth amended complaint in the 2011 Action, in which it asserted claims against our wholly-owned subsidiary DISH Network L.L.C. replacing DISH Network as defendant, alleging that the use of certain Broadcom chipsets in DISH DVR systems infringes the 689 patent. In addition, Norman withdrew all infringement claims against us regarding the 555 patent and the 597 patent. On July 12, 2013, we filed a motion to dismiss the 2011 Action, because Norman failed to comply with the Court’s July 9, 2013 order. | ||||||||||||||||||||||||
We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately determines that we infringe the asserted copyrights, or are in breach of any of the retransmission consent agreements, we may be subject to substantial damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. In addition, as a result of this litigation, we may not be able to renew certain of our retransmission consent agreements and other programming agreements on favorable terms or at all. If we are unable to renew these agreements, there can be no assurance that we would be able to obtain substitute programming, or that such substitute programming would be comparable in quality or cost to our existing programming. Loss of access to existing programming could have a material adverse effect on our business, financial condition and results of operations, including, among other things, our gross new subscriber activations and subscriber churn rate. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
In addition, on May 10, 2013, Norman filed a separate patent infringement complaint (the “2013 Action”) against us in the United States District Court for the Eastern District of Texas, asserting infringement of the 555, 597 and 689 patents, as well as United States Patent Nos. 5,608,873 (the “873 patent”) and 5,771,394 (the “394 patent”). The infringement claims asserted in the 2013 Action relate to different DISH products than Norman identified in the 2011 Action. | ||||||||||||||||||||||||
Lightsquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) | ||||||||||||||||||||||||
On October 18, 2013, the parties stipulated that Norman will dismiss all of its claims against DISH Network L.L.C. in the 2011 Action, and re-assert them in the 2013 Action. | ||||||||||||||||||||||||
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). | ||||||||||||||||||||||||
The 689 patent relates to a clock generator capable of shut-down mode and clock generation method, the 555 patent relates to a wireless communications privacy method and system, the 597 patent relates to an interrupt enable circuit that allows devices to exit processes without using a hardware reset, the 873 patent relates to a device and method for providing inter-processor communication in a multi-processor architecture, and the 394 patent relates to a servo loop control apparatus having a master microprocessor and at least one autonomous streamlined signal processor. Norman is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
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 May 30, 2014, Norman dismissed the 2013 Action against us with prejudice, pursuant to a settlement agreement. | ||||||||||||||||||||||||
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), 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. | ||||||||||||||||||||||||
Personalized Media Communications, Inc. | ||||||||||||||||||||||||
On October 29, 2013, the Bankruptcy Court dismissed all of the claims against LBAC and DISH Network 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 include, 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 equitable disallowance. These claims proceeded to a non-jury trial on January 9, 2014, which concluded on January 17, 2014. The parties submitted post-trial briefs and a hearing for closing arguments occurred on March 17, 2014. | ||||||||||||||||||||||||
During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against DISH Network; EchoStar and Motorola Inc., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,109,414; 4,965,825; 5,233,654; 5,335,277 and 5,887,243, which relate to satellite signal processing. PMC is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Subsequently, Motorola Inc. settled with PMC, leaving DISH Network and EchoStar as defendants. On July 18, 2012, pursuant to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide International, Inc.) and TVG-PMC, Inc. (collectively, “Gemstar”) as a party, and added a new claim against all defendants seeking a declaratory judgment as to the scope of Gemstar’s license to the patents in suit, under which DISH Network and EchoStar are sublicensees. On August 12, 2014, in response to the parties’ respective summary judgment motions related to the Gemstar license issues, the Court ruled in favor of PMC and dismissed all claims by or against Gemstar and entered partial final judgment in PMC’s favor as to those claims. On September 16, 2014, DISH Network and EchoStar filed a notice of appeal of that partial final judgment, which is pending. A trial date is set for January 12, 2015. PMC has informed DISH Network that it will not pursue at trial its claim for infringement of United States Patent No. 5,109,414. PMC’s damages expert contends that DISH Network and EchoStar are liable for damages ranging from approximately $500 million to $650 million as of March 31, 2012, which does not include pre-judgment interest and may be trebled under Federal law. | ||||||||||||||||||||||||
DISH Network and LBAC intend to vigorously defend 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. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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 Transaction Shareholder Derivative Actions | ||||||||||||||||||||||||
Phoenix Licensing, L.L.C./LPL Licensing, L.L.C. | ||||||||||||||||||||||||
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 operative amended complaint, Jacksonville PFPF 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 allege that (1) the debt purchases created an impermissible conflict of interest and (2) put at risk the LBAC Bid, which as noted above has been withdrawn. Jacksonville PFPF further claims 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. | ||||||||||||||||||||||||
On October 17, 2014, Phoenix Licensing, L.L.C. and LPL Licensing, L.L.C. (together referred to as “Phoenix”) 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, alleging infringement of United States Patent Nos. 5,987,434 entitled “Apparatus and Method for Transacting Marketing and Sales of Financial Products” (the “434 patent”); 7,890,366 entitled “Personalized Communication Documents, System and Method for Preparing Same” (the “366 patent); 8,352,317 entitled “System for Facilitating Production of Variable Offer Communications” (the “317 patent”); 8,234,184 entitled “Automated Reply Generation Direct Marketing System” (the “184 patent”); and 6,999,938 entitled “Automated Reply Generation Direct Marketing System” (the “938 patent”). Phoenix alleges that we infringe the asserted patents by making and using products and services that generate customized marketing materials. Phoenix is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
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 has been withdrawn. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Five alleged shareholders have 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. None of the plaintiffs in these actions is seeking a preliminary injunction. | ||||||||||||||||||||||||
Preservation Technologies, LLC | ||||||||||||||||||||||||
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. On December 13, 2013, City of Daytona Beach Police Officers and Firefighters Retirement System voluntarily dismissed its claims without prejudice. The United States District Court for the District of Nevada has stayed the action by Iron Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan until April 16, 2014. | ||||||||||||||||||||||||
In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against DISH Network in the United States District Court for the Central District of California. In the Operative Seventh Amended Complaint, filed on March 22, 2013, Preservation Technologies also names Netflix, Inc.; Hulu, LLC; AT&T Services, Inc.; Cox Communications, Inc.; Disney Online; American Broadcasting Companies, Inc.; Yahoo! Inc.; Wal-Mart Stores, Inc.; Vudu, Inc. and ESPN Internet Ventures as defendants. Preservation Technologies alleges that the BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services and our Hopper and Joey® set-top boxes infringe United States Patent Nos. 5,813,014; 5,832,499; 6,092,080; 6,353,831; 6,574,638; 6,199,060; 5,832,495; 6,549,911; 6,212,527 and 6,477,537. The patents relate to digital libraries, the management of multimedia assets and the cataloging of multimedia data. Preservation Technologies is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
DISH Network’s Board of Directors has established a Special Litigation Committee to review the factual allegations and legal claims in these actions. DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Effective June 18, 2014, Preservation Technologies dismissed all of its claims against DISH Network with prejudice, pursuant to a settlement agreement. | ||||||||||||||||||||||||
Norman IP Holdings, LLC | ||||||||||||||||||||||||
Qurio Holdings, Inc. | ||||||||||||||||||||||||
On September 15, 2011, Norman IP Holdings, LLC (“Norman”) filed a patent infringement complaint (the “2011 Action”) against Lexmark International Corporation (“Lexmark”) and Brother International Corporation (“Brother”), in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,592,555 (the “555 patent”), 5,530,597 (the “597 patent”) and 5,502,689 (the “689 patent”) by Lexmark, and infringement of the 555 patent and the 689 patent by Brother. On January 27, 2012, Norman filed a second amended complaint in the 2011 Action that added DISH Network as a defendant, among others, in which it asserted the 555 patent and the 689 patent against us. On September 21, 2012, Norman served us with preliminary infringement contentions related to the 555 patent and the 689 patent, as well as the 597 patent, which outlined Norman’s claims with respect to certain DISH products. On February 8, 2013, Norman filed a third amended complaint in the 2011 Action, in which it added claims against us alleging infringement of the 597 patent. On April 8, 2013, Norman filed a fourth amended complaint in the 2011 Action, in which it added new claims against us alleging infringement of additional DISH products. On May 1, 2013, Norman filed a fifth amended complaint in the 2011 Action, in which it named Mercedes-Benz USA, LLC, Volkswagen Group of America, Inc., Xerox Corporation, ZTE (USA) Inc., and ZTE Solutions, Inc. as defendants, in addition to us. On July 9, 2013, the Court ordered Norman to file a new sixth amended complaint limiting Norman’s claims against us to those specifically referenced in its September 21, 2012 preliminary infringement contentions. As a result, on July 10, 2013, Norman filed a sixth amended complaint in the 2011 Action, in which it asserted claims against our wholly-owned subsidiary DISH Network L.L.C. replacing DISH Network as defendant, alleging that the use of certain Broadcom chipsets in DISH DVR systems infringes the 689 patent. In addition, Norman withdrew all infringement claims against us regarding the 555 patent and the 597 patent. On July 12, 2013, we filed a motion to dismiss the 2011 Action, because Norman failed to comply with the Court’s July 9, 2013 order. | ||||||||||||||||||||||||
On September 26, 2014, Qurio Holdings, Inc. (“Qurio”) filed a complaint against DISH Network and 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. 8,102,863 entitled “Highspeed WAN To Wireless LAN Gateway” (the “863 Patent”) and United States Patent No. 7,787,904 entitled “Personal Area Network Having Media Player And Mobile Device Controlling The Same” (the “904 Patent”). On the same day, Qurio filed similar complaints against Comcast and DirecTV. Qurio is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
In addition, on May 10, 2013, Norman filed a separate patent infringement complaint (the “2013 Action”) against us in the United States District Court for the Eastern District of Texas, asserting infringement of the 555, 597 and 689 patents, as well as United States Patent Nos. 5,608,873 (the “873 patent”) and 5,771,394 (the “394 patent”). The infringement claims asserted in the 2013 Action relate to different DISH products than Norman identified in the 2011 Action. On June 26, 2013, we filed a motion to dismiss the 2013 Action, because Norman failed to join necessary parties. Our motion to dismiss is pending, and no trial date has been set for the 2013 Action. | ||||||||||||||||||||||||
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 cause 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. | ||||||||||||||||||||||||
On October 18, 2013, the parties stipulated that Norman will dismiss all of its claims against DISH Network L.L.C. in the 2011 Action, and re-assert them in the 2013 Action. | ||||||||||||||||||||||||
Ronald A. Katz Technology Licensing, L.P. | ||||||||||||||||||||||||
The 689 patent relates to a clock generator capable of shut-down mode and clock generation method, the 555 patent relates to a wireless communications privacy method and system, the 597 patent relates to an interrupt enable circuit that allows devices to exit processes without using a hardware reset, the 873 patent relates to a device and method for providing inter-processor communication in a multi-processor architecture, and the 394 patent relates to a servo loop control apparatus having a master microprocessor and at least one autonomous streamlined signal processor. Norman is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
During 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement action against our wholly-owned subsidiary DISH Network L.L.C., in the United States District Court for the Northern District of California. The suit originally alleged infringement of 19 patents owned by Katz. The patents relate to interactive voice response, or IVR, technology. The case has been transferred and consolidated for pretrial purposes in the United States District Court for the Central District of California by order of the Judicial Panel on Multidistrict Litigation. Only four patents remain in the case against us, of which all are expired and two are subject to granted reexamination proceedings before the United States Patent and Trademark Office. We and Katz entered into a settlement agreement effective October 8, 2014, under which Katz agreed to dismiss the action against us with prejudice. | ||||||||||||||||||||||||
We intend to vigorously defend these cases. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Technology Development and Licensing L.L.C. | ||||||||||||||||||||||||
Olympic Developments AG, LLC | ||||||||||||||||||||||||
On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against DISH Network and EchoStar, in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. The case has been stayed since July 2009 pending two reexamination petitions before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
On January 20, 2011, Olympic Developments AG, LLC (“Olympic”) filed suit against our wholly-owned subsidiary DISH Network L.L.C., Atlantic Broadband, Inc., Bright House Networks, LLC, Cable One, Inc., Cequel Communications Holdings I, LLC, CSC Holdings, LLC, GCI Communication Corp., Insight Communications Company, Inc., Knology, Inc., Mediacom Communications Corporation and RCN Telecom Services, LLC, in the United States District Court for the Central District of California, alleging infringement of United States Patent Nos. 5,475,585 and 6,246,400. The patents relate to on-demand services. Olympic is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On June 13, 2011, the case was transferred to the Northern District of California. On November 7, 2011, the case was stayed pending reexamination by the United States Patent and Trademark Office. On March 12, 2013, Olympic voluntarily dismissed its claims against us without prejudice. | ||||||||||||||||||||||||
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 cause 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. | ||||||||||||||||||||||||
Personalized Media Communications, Inc. | ||||||||||||||||||||||||
TQ Beta LLC | ||||||||||||||||||||||||
During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against DISH Network, EchoStar and Motorola Inc., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,109,414, 4,965,825, 5,233,654, 5,335,277 and 5,887,243, which relate to satellite signal processing. PMC is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Subsequently, Motorola Inc. settled with PMC, leaving DISH Network and EchoStar as defendants. On July 18, 2012, pursuant to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide International, Inc.) and TVG-PMC, Inc. (collectively, “Gemstar”) as a party, and added a new claim against all defendants seeking a declaratory judgment as to the scope of Gemstar’s license to the patents in suit, under which DISH Network and EchoStar are sublicensees. No trial date is currently set. | ||||||||||||||||||||||||
On June 30, 2014, TQ Beta LLC (“TQ Beta”) filed a complaint against us; our wholly-owned subsidiary DISH Network L.L.C; DISH Network; EchoStar; and EchoStar’s subsidiaries EchoStar Technologies L.L.C., Hughes Satellite Systems Corporation, and Sling Media Inc., in the United States District Court for the District of Delaware. The Complaint alleges infringement of United States Patent No. 7,203,456 (the “456 patent”), which is entitled “Method and Apparatus for Time and Space Domain Shifting of Broadcast Signals.” TQ Beta alleges that our Hopper set-top boxes, ViP 722 and ViP 722k DVR devices, as well as our DISH Anywhere service and DISH Anywhere mobile application, infringe the 456 patent. TQ Beta is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Pragmatus Telecom, LLC | ||||||||||||||||||||||||
Waste Disposal Inquiry | ||||||||||||||||||||||||
On December 5, 2012, Pragmatus Telecom, LLC (“Pragmatus”) filed a patent infringement lawsuit against DISH Network in the United States District Court for the District of Delaware, alleging infringement of United States Patent Nos. 6,311,231, 6,668,286, and 7,159,043. Pragmatus alleges that the click-to-chat and click-to-call customer support features of the DISH website and call center management systems infringe these patents. Pragmatus has brought similar complaints against more than 40 other companies, including Comcast Corporation, AT&T Inc., Sprint Spectrum LP dba Sprint PCS, Frontier Communications Corp., Bright House Networks L.L.C., United Parcel Services Inc., FedEx Corporation, General Motors Company and Ford Motor Company. Pragmatus is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On March 5, 2013, Pragmatus voluntarily dismissed with prejudice all claims in the action relating to allegedly infringing features provided by certain of our vendors. Pragmatus also voluntarily dismissed without prejudice all remaining claims in the action. | ||||||||||||||||||||||||
The California Attorney General and the Alameda County (California) District Attorney are investigating whether certain of our waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe that the outcome will have a material effect on our results of operations, financial condition or cash flows. | ||||||||||||||||||||||||
Premier International Associates, LLC | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
On August 3, 2012, Premier International Associates, LLC (“Premier International”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, and EchoStar and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. 6,243,725 (the “725 patent”), which is entitled “List Building System.” The 725 patent relates to a system for building an inventory of audio/visual works. Premier International is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On March 27, 2013, Premier International dismissed the action against us and the EchoStar entities with prejudice, pursuant to a settlement under which we and the EchoStar entities made an immaterial payment in exchange for a license to certain patents and patent applications. | ||||||||||||||||||||||||
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the ordinary course of business, including, among other things, disputes with programmers regarding fees. In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. | ||||||||||||||||||||||||
Preservation Technologies, LLC | ||||||||||||||||||||||||
In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against DISH Network in the United States District Court for the Central District of California. In the Operative Seventh Amended Complaint, filed on March 22, 2013, Preservation Technologies also names Netflix, Inc., Hulu, LLC, AT&T Services, Inc., Cox Communications, Inc., Disney Online, American Broadcasting Companies, Inc., Yahoo! Inc., Wal-Mart Stores, Inc., Vudu, Inc. and ESPN Internet Ventures as defendants. Preservation Technologies alleges that the BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services and our Hopper and Joey set-top boxes infringe United States Patent Nos. 5,813,014, 5,832,499, 6,092,080, 6,353,831, 6,574,638, 6,199,060, 5,832,495, 6,549,911, 6,212,527 and 6,477,537. The patents relate to digital libraries, the management of multimedia assets and the cataloging of multimedia data. Preservation Technologies is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
Ronald A. Katz Technology Licensing, L.P. | ||||||||||||||||||||||||
During 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement action against our wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Northern District of California. The suit originally alleged infringement of 19 patents owned by Katz. The patents relate to interactive voice response, or IVR, technology. The case has been transferred and consolidated for pretrial purposes in the United States District Court for the Central District of California by order of the Judicial Panel on Multidistrict Litigation. Only four patents remain in the case against us, of which all are expired and two are subject to granted reexamination proceedings before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
Technology Development and Licensing L.L.C. | ||||||||||||||||||||||||
On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against DISH Network and EchoStar, in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. In July 2009, the Court granted DISH Network’s motion to stay the case pending two reexamination petitions before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
TQP Development, LLC | ||||||||||||||||||||||||
On April 4, 2012, TQP Development, LLC (“TQP”) filed suit against our wholly-owned subsidiary DISH Network L.L.C., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent No. 5,412,730, which is entitled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.” TQP is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On August 9, 2013, all claims in the action were dismissed with prejudice. | ||||||||||||||||||||||||
Voom HD Holdings | ||||||||||||||||||||||||
In January 2008, Voom HD Holdings LLC (“Voom”) filed a lawsuit against our wholly-owned subsidiary DISH Network L.L.C., in New York Supreme Court, alleging breach of contract and other claims arising from our termination of the affiliation agreement governing carriage of certain Voom HD channels on the DISH branded pay-TV service and seeking over $2.5 billion in damages. | ||||||||||||||||||||||||
On October 21, 2012, we entered into a confidential settlement agreement and release (the “Voom Settlement Agreement”) with Voom and CSC Holdings, LLC (“Cablevision”), and for certain limited purposes, MSG Holdings, L.P., The Madison Square Garden Company and EchoStar. The Voom Settlement Agreement resolved the litigation between the parties relating to the Voom programming services. Pursuant to the terms of the Voom Settlement Agreement, among other things: (i) the litigation between the parties relating to the Voom programming services was dismissed with prejudice and the parties released each other for all claims against each other related thereto; (ii) we agreed to pay $700 million in cash to Voom; (iii) DISH Media Holdings Corporation, a wholly-owned subsidiary of DISH Network, agreed to enter into an agreement to transfer its ownership interest in Voom to Rainbow Programming Holdings, LLC, an affiliate of Voom; and (iv) an affiliate of Cablevision agreed to enter into an agreement to transfer certain of its wireless multichannel video distribution and data service licenses (the “MVDDS Licenses”) to us. On October 23, 2012, we paid Voom $700 million. | ||||||||||||||||||||||||
Separately, we entered into a multi-year affiliation agreement with AMC Network Entertainment LLC, WE: Women’s Entertainment LLC, The Independent Film Channel, The Sundance Channel L.L.C, each of which are subsidiaries of AMC Networks Inc., and Fuse Channel LLC, a subsidiary of The Madison Square Garden Company, for the carriage of AMC, WE, IFC, Sundance Channel and the Fuse channel. | ||||||||||||||||||||||||
Since the Voom Settlement Agreement and the multi-year affiliation agreement were entered into contemporaneously, we accounted for all components of both agreements at fair value in the context of the Voom Settlement Agreement. We determined the fair value of the multi-year affiliation agreement and the MVDDS Licenses using a market-based approach and a probability-weighted discounted cash flow analysis, respectively. Based on market data and similar agreements we have with other content providers, we allocated $54 million of the payments under the multi-year affiliation agreement to the fair value of the Voom Settlement Agreement. The resulting liability was recorded on our Consolidated Balance Sheets as “Accrued Programming” and is being amortized as contra “Subscriber-related expenses” on a straight-line basis over the term of the agreement. Evaluating all potential uses for the MVDDS Licenses, we assessed their fair value at $24 million and recorded these on our Consolidated Balance Sheets as “FCC Authorizations.” The fair value of the Voom Settlement Agreement was assessed at $730 million and was recorded as “Litigation expense” on our Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2012. | ||||||||||||||||||||||||
Waste Disposal Inquiry | ||||||||||||||||||||||||
The California Attorney General and the Alameda County (California) District Attorney are investigating whether certain of our waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe that the outcome will have a material effect on our results of operations, financial condition or cash flows. | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the ordinary course of business, including, among other things, disputes with programmers regarding fees. In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. |
Financial_Information_for_Subs
Financial Information for Subsidiary Guarantors | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Financial Information for Subsidiary Guarantors | ||
Financial Information for Subsidiary Guarantors | 9. Financial Information for Subsidiary Guarantors | 12. Financial Information for Subsidiary Guarantors |
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. | 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. | |
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. |
Valuation_and_Qualifying_Accou
Valuation and Qualifying Accounts | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Valuation and Qualifying Accounts | ||||||||||||||
Valuation and Qualifying Accounts | 13. Valuation and Qualifying Accounts | |||||||||||||
Our valuation and qualifying accounts as of December 31, 2013, 2012 and 2011 were as follows: | ||||||||||||||
Allowance for doubtful accounts | Balance at | Charged to | Deductions | Balance at | ||||||||||
Beginning | Costs and | End of | ||||||||||||
of Year | Expenses | Year | ||||||||||||
(In thousands) | ||||||||||||||
For the years ended: | ||||||||||||||
December 31, 2013 | $ | 13,834 | $ | 125,664 | $ | (123,517 | ) | $ | 15,981 | |||||
December 31, 2012 | $ | 11,916 | $ | 116,742 | $ | (114,824 | ) | $ | 13,834 | |||||
December 31, 2011 | $ | 29,650 | $ | 94,678 | $ | (112,412 | ) | $ | 11,916 |
Quarterly_Financial_Data_Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ||||||||||||||
Quarterly Financial Data (Unaudited) | 14. Quarterly Financial Data (Unaudited) | |||||||||||||
Our quarterly results of operations are summarized as follows: | ||||||||||||||
For the Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
(In thousands) | ||||||||||||||
Year ended December 31, 2013: | ||||||||||||||
Total revenue | $ | 3,336,258 | $ | 3,444,922 | $ | 3,448,860 | $ | 3,465,572 | ||||||
Operating income (loss) | 514,113 | 601,161 | 494,094 | 518,178 | ||||||||||
Net income (loss) attributable to DISH DBS | 206,231 | 233,882 | 186,527 | 198,382 | ||||||||||
Year ended December 31, 2012: | ||||||||||||||
Total revenue | $ | 3,247,226 | $ | 3,317,621 | $ | 3,291,877 | $ | 3,294,876 | ||||||
Operating income (loss) | 573,970 | 502,238 | (222,334 | ) | 539,061 | |||||||||
Net income (loss) attributable to DISH DBS | 277,490 | 221,910 | (240,719 | ) | 225,585 |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Related Party Transactions | |||||||||||||||||||||||||
Related Party Transactions | 10. Related Party Transactions | 15. Related Party Transactions | |||||||||||||||||||||||
Related Party Transactions with DISH Network | Related Party Transactions with DISH Network | ||||||||||||||||||||||||
On October 14, 2014, we paid a dividend of $1.5 billion to DOC in connection with, among other things, DISH Network’s general corporate purposes. | On April 19, 2011, we paid a dividend of $1.5 billion to DOC in connection with, among other things, the funding of DISH Network’s investments in DBSD North America and DISH Network’s acquisition of most of the assets of Blockbuster, Inc. | ||||||||||||||||||||||||
On May 2, 2014, DISH Network contributed its equity interest in DISH Digital to us. We recorded all of the assets and liabilities at historical cost and the difference was recorded as a deemed distribution in “Stockholder’s equity (deficit)” on our Condensed Consolidated Balance Sheets. As a result, all operating activities of DISH Digital are included in our financial results beginning May 2, 2014. | On August 10, 2011, we paid a dividend of $700 million to DOC in connection with, among other things, the funding of the TerreStar Transaction. | ||||||||||||||||||||||||
On March 28, 2014, we paid a dividend of $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 wireless spectrum licenses in the recent H Block auction. See Note 8 for further information. | On November 1, 2011, the board of directors of DISH Network declared a dividend of $2.00 per share on its outstanding Class A and Class B common stock, or $893 million in the aggregate. On November 30, 2011, we paid a dividend of $1.3 billion to DOC to fund the payment of DISH Network’s dividend and other potential DISH Network cash needs. | ||||||||||||||||||||||||
Blockbuster. On April 26, 2011, DISH Network completed the acquisition of most of the assets of Blockbuster, Inc. During the three and nine months ended September 30, 2013, we recorded $3 million and $11 million, respectively, of “Subscriber-related expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for Blockbuster services provided to our subscribers related to certain of our promotions. As of December 31, 2013, Blockbuster had ceased material operations. As a result, during the three and nine months ended September 30, 2014, we did not record any expense related to these services. | On October 1, 2012, we made a distribution to DOC of the assets and liabilities associated with the satellite broadband business with a fair value of $66 million. This distribution resulted in a reduction in our historical net assets of $9 million and a deemed dividend of $57 million. | ||||||||||||||||||||||||
Advertising Sales. We provide advertising services to DISH Network’s broadband business. During the three months ended September 30, 2014 and 2013, we recorded revenue associated with these services of $5 million and $5 million, respectively, in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we recorded revenue associated with these services of $14 million and $11 million, respectively. | On December 2, 2012, the board of directors of DISH Network declared a dividend of $1.00 per share on its outstanding Class A and Class B common stock, or $453 million in the aggregate. On December 27, 2012, we paid a dividend of $850 million to DOC to fund the payment of DISH Network’s dividend and other potential DISH Network cash needs. | ||||||||||||||||||||||||
Blockbuster, Broadband, Wireless and Other Operations. We provide certain administrative support such as legal, information systems, marketing, human resources, accounting and finance services to DISH Network’s Blockbuster, Broadband, Wireless and other operations. In addition, we provide call center, installation and other services to DISH Network for its Broadband business. During the three months ended September 30, 2014 and 2013, the costs associated with these services were $3 million and $3 million, respectively. During the nine months ended September 30, 2014 and 2013, the costs associated with these services were $8 million and $7 million, respectively. | We expect to pay a dividend of approximately $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 H Block wireless spectrum licenses in the H Block auction. See Note 11 for further information. | ||||||||||||||||||||||||
Related Party Transactions with EchoStar | Blockbuster. On April 26, 2011, our parent, DISH Network, completed the acquisition of most of the assets of Blockbuster, Inc. During the year ended December 31, 2013, 2012 and 2011, we recorded $11 million, $21 million and $4 million, respectively, of “Subscriber-related expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss) for Blockbuster services provided to our subscribers related to certain of our promotions. | ||||||||||||||||||||||||
Following the Spin-off, DISH Network and EchoStar have operated as separate publicly-traded companies, and, except for the Satellite and Tracking Stock Transaction described in Note 4 and below, neither entity has any ownership interest in the other. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. | Advertising Sales. We provide advertising services to DISH Network’s broadband business. During the year ended December 31, 2013, we received revenue associated with these services of $15 million in “Subscriber-related revenue” on our Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2012 and 2011, we did not receive revenue associated with these services. | ||||||||||||||||||||||||
EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a supplier of a majority of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. | Blockbuster, Broadband, Wireless and Other Operations. We provide certain administrative support such as legal, information systems, marketing, human resources, accounting and finance services to DISH Network’s Blockbuster, Broadband, Wireless and other operations. In addition, we provide call center, installation and other services to DISH Network for its Broadband business. During the years ended December 31, 2013, 2012 and 2011, the costs associated with these services were $10 million, $11 million and $2 million, respectively. | ||||||||||||||||||||||||
In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. | Related Party Transactions with EchoStar | ||||||||||||||||||||||||
“Equipment sales, services and other revenue — EchoStar” | Following the Spin-off, EchoStar has operated as a separate public company, and we have no continued ownership interest in EchoStar. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. | ||||||||||||||||||||||||
Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2014, we and EchoStar extended this agreement until December 31, 2015. EchoStar may terminate the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate this agreement if certain entities acquire us. | EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a key supplier of a majority of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. | ||||||||||||||||||||||||
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 automatically renewed on January 1, 2014 for an additional one-year period until January 1, 2015 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 and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. | ||||||||||||||||||||||||
Management Services Agreement. In connection with the Spin-off, DISH Network entered into a Management Services Agreement with EchoStar pursuant to which DISH Network has made certain of its officers available to provide services (which were primarily legal and accounting services) to EchoStar. Effective June 15, 2013, the Management Services Agreement was terminated by EchoStar. EchoStar made payments to DISH Network based upon an allocable portion of the personnel costs and expenses incurred by DISH Network with respect to any such officers (taking into account wages and fringe benefits). These allocations were based upon the estimated percentages of time spent by DISH Network’s executive officers performing services for EchoStar under the Management Services Agreement. EchoStar also reimbursed DISH Network for direct out-of-pocket costs incurred by DISH Network for management services provided to EchoStar. DISH Network and EchoStar evaluated all charges for reasonableness at least annually and made any adjustments to these charges as DISH Network and EchoStar mutually agreed upon. | “Equipment sales, services and other revenue — EchoStar” | ||||||||||||||||||||||||
Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased on the applicable satellite and the length of the lease. The term of each lease is set forth below: | Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2013, we and EchoStar extended this agreement until December 31, 2014. EchoStar may terminate the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate this agreement if certain entities acquire us. | ||||||||||||||||||||||||
· EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. Upon termination, EchoStar is responsible, among other things, for relocating this satellite from the 45 degree orbital location back to the 61.5 degree orbital location. | 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 automatically renewed on January 1, 2014 for an additional one-year period until January 1, 2015 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. | ||||||||||||||||||||||||
Real Estate Lease Agreements. Since the Spin-off, DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: | Management Services Agreement. In connection with the Spin-off, DISH Network entered into a Management Services Agreement with EchoStar pursuant to which DISH Network has made certain of its officers available to provide services (which were primarily legal and accounting services) to EchoStar. Specifically, Paul W. Orban remains employed by DISH Network, but also served as EchoStar’s Senior Vice President and Controller through April 2012. In addition, R. Stanton Dodge remains employed by us, but also served as EchoStar’s Executive Vice President, General Counsel and Secretary through November 2011. The Management Services Agreement automatically renewed on January 1, 2013 for an additional one-year period until January 1, 2014. Effective June 15, 2013, the Management Services Agreement was terminated by EchoStar. EchoStar made payments to DISH Network based upon an allocable portion of the personnel costs and expenses incurred by DISH Network with respect to any such officers (taking into account wages and fringe benefits). These allocations were based upon the estimated percentages of time spent by DISH Network’s executive officers performing services for EchoStar under the Management Services Agreement. EchoStar also reimbursed DISH Network for direct out-of-pocket costs incurred by DISH Network for management services provided to EchoStar. DISH Network and EchoStar evaluated all charges for reasonableness at least annually and made any adjustments to these charges as DISH Network and EchoStar mutually agreed upon. | ||||||||||||||||||||||||
· El Paso Lease Agreement. During 2012, DISH Network leased certain space at 1285 Joe Battle Blvd. El Paso, Texas to EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. | Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite and the length of the lease. The term of each lease is set forth below: | ||||||||||||||||||||||||
· American Fork Occupancy License Agreement. During 2013, DISH Network subleased certain space at 796 East Utah Valley Drive, American Fork, Utah to EchoStar for a period ending on July 31, 2017. | EchoStar I. During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leased certain satellite capacity from us on EchoStar I. We and EchoStar mutually agreed to terminate this satellite capacity agreement effective as of July 1, 2012. | ||||||||||||||||||||||||
“Satellite and transmission expenses” | EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location. Effective March 1, 2014, this lease was converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. Upon termination, EchoStar is responsible, among other things, for relocating this satellite from the 45 degree orbital location back to the 61.5 degree orbital location. | ||||||||||||||||||||||||
During the three months ended September 30, 2014 and 2013, we incurred $169 million and $130 million, respectively, for satellite and transmission expenses from EchoStar. These amounts are recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we incurred $476 million and $365 million, respectively, for these satellite and transmission expenses. The agreements pertaining to these expenses are discussed below. | Real Estate Lease Agreements. Since the Spin-off, DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: | ||||||||||||||||||||||||
Broadcast Agreement. Effective January 1, 2012, we and EchoStar entered into a broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us, including teleport services such as transmission and downlinking, channel origination services, and channel management services, for the period from January 1, 2012 to December 31, 2016. The fees for services provided under the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. We have the ability to terminate channel origination services and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar. If we terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. | El Paso Lease Agreement. During 2012, DISH Network leased certain space at 1285 Joe Battle Blvd. El Paso, Texas to EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. | ||||||||||||||||||||||||
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services. | American Fork Occupancy License Agreement. During 2013, DISH Network subleased certain space at 796 East Utah Valley Drive, American Fork, Utah to EchoStar for a period ending on July 31, 2017. | ||||||||||||||||||||||||
Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain satellite 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. The term of each lease is set forth below: | “Satellite and transmission expenses — EchoStar” | ||||||||||||||||||||||||
· EchoStar I, VII, X, XI and XIV. On March 1, 2014, we began leasing certain capacity from EchoStar on the EchoStar I, VII, X, XI and XIV satellites. The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that any options to renew such agreements will be exercised. | Broadcast Agreement. In connection with the Spin-off, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provided certain broadcast services to us, including teleport services such as transmission and downlinking, channel origination services, and channel management services for a period ending on January 1, 2012 (the “Prior Broadcast Agreement”). We had the ability to terminate channel origination services and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar. If we terminated teleport services for a reason other than EchoStar’s breach, we were obligated to pay EchoStar the aggregate amount of the remainder of the expected cost of providing the teleport services. The fees for the services provided under the Prior Broadcast Agreement were calculated at cost plus a fixed margin, which varied depending on the nature of the products and services provided. | ||||||||||||||||||||||||
· EchoStar VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. | Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us for the period from January 1, 2012 to December 31, 2016. The material terms of the 2012 Broadcast Agreement are substantially the same as the material terms of the Prior Broadcast Agreement, except that: (i) the fees for services provided under the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided; and (ii) if we terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. | ||||||||||||||||||||||||
· 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. | Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services. | ||||||||||||||||||||||||
· EchoStar XII. The lease for EchoStar XII generally terminates upon the earlier of: (i) the end-of-life or replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal options. We generally have the option to renew the lease on a year-to-year basis through the end of the satellite’s life. There can be no assurance that any options to renew this agreement will be exercised. | Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain satellite 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 and the length of the lease. See Note 16 for further information regarding certain satellite capacity leased from EchoStar. The term of each lease is set forth below: | ||||||||||||||||||||||||
· EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Under the original transponder service agreement, the initial term generally expired upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the transponder(s) on which service was being provided under the agreement failed; or (iv) ten years following the actual service commencement date. Prior to expiration of the initial term, we also had the option to renew on a year-to-year basis through the end-of-life of the satellite. 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. Prior to expiration of the initial term, we have the option to renew for an additional six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions, to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year renewal options, then we have the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that any options to renew this agreement will be exercised. | EchoStar VI, VIII and XII. The leases for EchoStar VI, VIII and XII generally terminate upon the earlier of: (i) the end of life or replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal options. We generally have the option to renew each lease 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. Beginning in the first quarter 2013, the leases for the EchoStar VI and VIII satellites expired in accordance with their terms and we no longer leased capacity from EchoStar on EchoStar VI and VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this lease was converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. | ||||||||||||||||||||||||
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. | 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. | ||||||||||||||||||||||||
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. | EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Under the original transponder service agreement, the initial term generally expired upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the transponder(s) on which service was being provided under the agreement failed; or (iv) ten years following the actual service commencement date. Prior to expiration of the initial term, we also had the option to renew on a year-to-year basis through the end-of-life of the satellite. 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. Prior to expiration of the initial term, we have the option to renew for an additional six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions, to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year renewal options, then we have the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that any options to renew this agreement will be exercised. | ||||||||||||||||||||||||
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 third quarter 2012, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. | 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 11. | ||||||||||||||||||||||||
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. | 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. | ||||||||||||||||||||||||
103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. Unless earlier terminated under the terms and conditions of the DISH 103 Spectrum Development Agreement, the term generally will continue for the duration of the 103 Spectrum Rights. | 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 third quarter 2012, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. | ||||||||||||||||||||||||
In connection with the 103 Spectrum Development Agreement, during May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). During June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date. Upon in-orbit failure or end-of-life of the SES-3 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that we will exercise our option to receive service on a replacement satellite. | 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. | ||||||||||||||||||||||||
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 a period ending on December 31, 2016 (the “2012 TT&C Agreement”). 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. | 103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. During the third quarter 2013, we made a $23 million payment to EchoStar in exchange for these rights. In accordance with accounting principles that apply to transfers of assets between companies under common control, we recorded EchoStar’s net book value of this asset of $20 million in “Other noncurrent assets, net” on our Consolidated Balance Sheets and recorded the amount in excess of EchoStar’s net book value of $3 million as a capital distribution. 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. | ||||||||||||||||||||||||
As part of the Satellite and Tracking Stock Transaction, on February 20, 2014, we amended the 2012 TT&C Agreement to cease the provision of TT&C services from EchoStar for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. As of March 1, 2014, EchoStar is providing us TT&C services for the EchoStar XV satellite. | In connection with the 103 Spectrum Development Agreement, during May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). During June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date. Upon in-orbit failure or end of life of the SES-3 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that we will exercise our option to receive service on a replacement satellite. | ||||||||||||||||||||||||
“General and administrative expenses” | TT&C Agreement. In connection with the Spin-off, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we received TT&C services from EchoStar for a period ending on January 1, 2012 (the “Prior TT&C Agreement”). The fees for services provided under the Prior TT&C Agreement were calculated at cost plus a fixed margin. We were able to terminate the Prior TT&C Agreement for any reason upon 60 days notice. Effective January 1, 2012, we entered into a new TT&C agreement pursuant to which we receive TT&C services from EchoStar for a period ending on December 31, 2016 (the “2012 TT&C Agreement”). The material terms of the 2012 TT&C Agreement are substantially the same as the material terms of the Prior TT&C Agreement, except that 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. | ||||||||||||||||||||||||
During the three months ended September 30, 2014 and 2013, we incurred $25 million and $17 million, respectively, for general and administrative expenses from EchoStar. These amounts are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we incurred $74 million and $50 million, respectively, for these general and administrative expenses. The agreements pertaining to these expenses are discussed below. In addition, the expenses incurred pursuant to the Commercial Agreement discussed in “DISH Digital” under “Other Agreements — EchoStar” below, are also included in these amounts. | As part of the Satellite and Tracking Stock Transaction, on February 20, 2014, we amended the 2012 TT&C Agreement to cease the provision of TT&C services from EchoStar for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. | ||||||||||||||||||||||||
Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services. | “General and administrative expenses — EchoStar” | ||||||||||||||||||||||||
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: | Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services. | ||||||||||||||||||||||||
· Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East in Englewood, Colorado is for a period ending on December 31, 2016. This agreement can be terminated by either party upon six months prior notice. | 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. | · Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East in Englewood, Colorado is for a period ending on December 31, 2016. This agreement can be terminated by either party upon six months prior notice. | ||||||||||||||||||||||||
· Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016, with a renewal option for one additional year. | · Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016. | ||||||||||||||||||||||||
· EchoStar Data Networks Sublease Agreement. The sublease for certain space at 211 Perimeter Center in Atlanta, Georgia is for a period ending on October 31, 2016. | · Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016, with a renewal option for one additional year. | ||||||||||||||||||||||||
· Gilbert Lease Agreement. The lease for certain space at 801 N. DISH Dr. in Gilbert, Arizona terminated on May 31, 2014. | · EchoStar Data Networks Sublease Agreement. The sublease for certain space at 211 Perimeter Center in Atlanta, Georgia is for a period ending on October 31, 2016. | ||||||||||||||||||||||||
· Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. | · Gilbert Lease Agreement. The lease for certain space at 801 N. DISH Dr. in Gilbert, Arizona is a month to month lease and can be terminated by either party upon 30 days prior notice. | ||||||||||||||||||||||||
DISHOnline.com Services Agreement. Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we receive certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. We have the option to renew this agreement for successive one year terms and the agreement may be terminated for any reason upon at least 120 days notice to EchoStar. In November 2014, we exercised our right to renew this agreement for a one-year period ending on December 31, 2015. | · Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. | ||||||||||||||||||||||||
DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | DISHOnline.com Services Agreement. Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we receive certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. We have the option to renew this agreement for three successive one year terms and the agreement may be terminated for any reason upon at least 120 days notice to EchoStar. In November 2013, we exercised our right to renew this agreement for a one-year period ending on December 31, 2014. | ||||||||||||||||||||||||
SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive certain services related to placeshifting. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | ||||||||||||||||||||||||
Application Development Agreement. During the fourth quarter 2012, we and EchoStar entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which EchoStar provides us with certain services relating to the development of web-based applications for set-top boxes for a period ending on February 1, 2015. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or EchoStar at any time upon at least 90 days notice. The fees for services provided under the Application Development Agreement are calculated at EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. | SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive certain services related to placeshifting. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | ||||||||||||||||||||||||
XiP Encryption Agreement. During the third quarter 2012, we entered into an encryption agreement with EchoStar for our whole-home HD DVR line of set-top boxes (the “XiP Encryption Agreement”) pursuant to which EchoStar provides certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. The term of the XiP Encryption Agreement is for a period until December 31, 2014. Under the XiP Encryption Agreement, we have the option, but not the obligation, to extend the XiP Encryption Agreement for one additional year upon 180 days notice prior to the end of the term. On May 5, 2014, we provided EchoStar notice to extend the XiP Encryption Agreement for one additional year until December 31, 2015. We and EchoStar each have the right to terminate the XiP Encryption Agreement for any reason upon at least 30 days notice and 180 days notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. | Application Development Agreement. During the fourth quarter 2012, we and EchoStar entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which EchoStar provides us with certain services relating to the development of web-based applications for set-top boxes for a period ending on February 1, 2015. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or EchoStar at any time upon at least 90 days notice. The fees for services provided under the Application Development Agreement are calculated at EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. | ||||||||||||||||||||||||
Other Agreements — EchoStar | XiP Encryption Agreement. During the third quarter 2012, we entered into an encryption agreement with EchoStar for our whole-home HD DVR line of set-top boxes (the “XiP Encryption Agreement”) pursuant to which EchoStar provides certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. The term of the XiP Encryption Agreement is for a period until December 31, 2014. Under the XiP Encryption Agreement, we have the option, but not the obligation, to extend the XiP Encryption Agreement for one additional year upon 180 days notice prior to the end of the term. We and EchoStar each have the right to terminate the XiP Encryption Agreement for any reason upon at least 30 days notice and 180 days notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. | ||||||||||||||||||||||||
Receiver Agreement. EchoStar is currently our primary supplier of set-top box receivers. Effective January 1, 2012, we and EchoStar entered into a receiver agreement (the “2012 Receiver Agreement”) pursuant to which we have the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from EchoStar for the period from January 1, 2012 to December 31, 2014. We have an option, but not the obligation, to extend the 2012 Receiver Agreement for one additional year upon 180 days notice prior to the end of the term. On May 5, 2014, we provided EchoStar notice to extend the 2012 Receiver Agreement for one additional year until December 31, 2015. The 2012 Receiver Agreement allows us to purchase digital set-top boxes, related accessories and other equipment from EchoStar either: (i) at a cost (decreasing as EchoStar reduces costs and increasing as costs increase) plus a dollar mark-up which will depend upon the cost of the product subject to a collar on EchoStar’s mark-up; or (ii) at cost plus a fixed margin, which will depend on the nature of the equipment purchased. Under the 2012 Receiver Agreement, EchoStar’s margins will be increased if they are able to reduce the costs of their digital set-top boxes and their margins will be reduced if these costs increase. EchoStar provides us with standard manufacturer warranties for the goods sold under the 2012 Receiver Agreement. Additionally, the 2012 Receiver Agreement includes an indemnification provision, whereby the parties indemnify each other for certain intellectual property matters. We are able to terminate the 2012 Receiver Agreement for any reason upon at least 60 days notice to EchoStar. EchoStar is able to terminate the 2012 Receiver Agreement if certain entities acquire us. | Other Agreements — EchoStar | ||||||||||||||||||||||||
For the three months ended September 30, 2014 and 2013, we purchased set-top boxes and other equipment from EchoStar of $293 million and $341 million, respectively. For the nine months ended September 30, 2014 and 2013, we purchased set-top boxes and other equipment from EchoStar of $883 million and $947 million, respectively. Included in these amounts are purchases of certain broadband equipment from EchoStar under the 2012 Receiver Agreement. These amounts are initially included in “Inventory” and are subsequently capitalized as “Property and equipment, net” on our Condensed Consolidated Balance Sheets or expensed as “Subscriber acquisition costs” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the equipment is deployed. | Receiver Agreement. EchoStar is currently our sole supplier of set-top box receivers. In connection with the Spin-off, we and EchoStar entered into a receiver agreement pursuant to which we had the right, but not the obligation, to purchase digital set-top boxes and related accessories, and other equipment from EchoStar for a period ending on January 1, 2012 (the “Prior Receiver Agreement”). The Prior Receiver Agreement allowed us to purchase digital set-top boxes, related accessories and other equipment from EchoStar at cost plus a fixed percentage margin, which varied depending on the nature of the equipment purchased. Additionally, EchoStar provided us with standard manufacturer warranties for the goods sold under the Prior Receiver Agreement. We were able to terminate the Prior Receiver Agreement for any reason upon at least 60 days notice to EchoStar. EchoStar was able to terminate the Prior Receiver Agreement if certain entities were to acquire us. The Prior Receiver Agreement also included an indemnification provision, whereby the parties indemnified each other for certain intellectual property matters. | ||||||||||||||||||||||||
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. | Effective January 1, 2012, we and EchoStar entered into a new agreement (the “2012 Receiver Agreement”) pursuant to which we have the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from EchoStar for the period from January 1, 2012 to December 31, 2014. We have an option, but not the obligation, to extend the 2012 Receiver Agreement for one additional year upon 180 days notice prior to the end of the term. The material terms of the 2012 Receiver Agreement are substantially the same as the material terms of the Prior Receiver Agreement, except that the 2012 Receiver Agreement allows us to purchase digital set-top boxes, related accessories and other equipment from EchoStar either: (i) at a cost (decreasing as EchoStar reduces costs and increasing as costs increase) plus a dollar mark-up which will depend upon the cost of the product subject to a collar on EchoStar’s mark-up; or (ii) at cost plus a fixed margin, which will depend on the nature of the equipment purchased. Under the 2012 Receiver Agreement, EchoStar’s margins will be increased if they are able to reduce the costs of their digital set-top boxes and their margins will be reduced if these costs increase. | ||||||||||||||||||||||||
In light of the tax sharing agreement, among other things, and in connection with DISH Network’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, during the third quarter 2013, DISH Network and EchoStar agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’ examination of these consolidated tax returns. As a result, DISH Network agreed to pay EchoStar $83 million of the tax benefit DISH Network received or will receive. Any payment to EchoStar, including accrued interest, will be made at such time as EchoStar would have otherwise been able to realize such tax benefit. In addition, during the third quarter 2013, DISH Network and EchoStar agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between DISH Network and EchoStar for such combined returns, through the taxable period ending on December 31, 2017. | For the years ended December 31, 2013, 2012 and 2011, we purchased set-top boxes and other equipment from EchoStar of $1.242 billion, $1.005 billion and $1.158 billion, respectively. Included in these amounts for 2012 and 2013 are purchases of certain broadband equipment from EchoStar under the 2012 Receiver Agreement. These amounts are initially included in “Inventory” and are subsequently capitalized as “Property and equipment, net” on our Consolidated Balance Sheets or expensed as “Subscriber acquisition costs” on our Consolidated Statements of Operations and Comprehensive Income (Loss) when the equipment is deployed. | ||||||||||||||||||||||||
RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), our wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the United States Department of Agriculture to receive up to approximately $14 million in broadband stimulus grant funds (the “Grant Funds”). Effective November 2011, DISH Broadband and HNS entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which HNS provides certain portions of the equipment and broadband service used to implement our RUS program. The RUS Agreement expired during June 2013, when the Grant Funds were exhausted. During the nine months ended September 30, 2013, we expensed $3 million under the RUS Agreement, which is included in “Cost of sales — equipment, services and other” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). | 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. | ||||||||||||||||||||||||
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. | In light of the tax sharing agreement, among other things, and in connection with DISH Network’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, during the third quarter 2013, DISH Network and EchoStar agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’ examination of these consolidated tax returns. As a result, DISH Network agreed to pay EchoStar $83 million of the tax benefit DISH Network received or will receive. This resulted in a reduction of DISH Network’s recorded unrecognized tax benefits. Any payment to EchoStar, including accrued interest, will be made at such time as EchoStar would have otherwise been able to realize such tax benefit. In addition, during the third quarter 2013, DISH Network and EchoStar agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between DISH Network and EchoStar for such combined returns, through the taxable period ending on December 31, 2017. | ||||||||||||||||||||||||
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 will be 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. | RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), our wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the United States Department of Agriculture to receive up to approximately $14 million in broadband stimulus grant funds (the “Grant Funds”). Effective November 2011, DISH Broadband and Hughes Network Systems, LLC (“HNS”) a wholly-owned subsidiary of Hughes Communications, Inc. (“Hughes”), entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which HNS provides certain portions of the equipment and broadband service used to implement our RUS program. The RUS Agreement expired during June 2013, when the Grant Funds were exhausted. During the years ended December 31, 2013 and 2012, we expensed $3 million and $7 million, respectively, under the RUS Agreement, which is included in “Cost of sales — equipment, services and other” on our Consolidated Statement of Operations and Comprehensive Income (Loss). During the year ended December 31, 2011, we did not record any expense under the RUS Agreement. | ||||||||||||||||||||||||
Patent Cross-License Agreements. During 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. If both options are exercised, the aggregate additional payments to such third-party would total less than $3 million. However, DISH Network and EchoStar may elect to extend their respective Cross-License Agreement independently of each other. 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. | 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. | ||||||||||||||||||||||||
DISH Digital. On May 2, 2014, DISH Network contributed its equity interest in DISH Digital to us. See “Related Party Transactions with DISH Network” within the related party section previously discussed. Effective July 1, 2012, DISH Network and EchoStar formed DISH Digital, which was owned two-thirds by DISH Network and one-third by EchoStar and was consolidated into DISH Network’s financial statements beginning July 1, 2012. DISH Digital was formed to develop and commercialize certain advanced technologies. At that time, DISH Network, EchoStar and DISH Digital entered into the following agreements with respect to DISH Digital: (i) a contribution agreement pursuant to which DISH Network and EchoStar contributed certain assets in exchange for its respective ownership interests in DISH Digital; (ii) a limited liability company operating agreement (the “Operating Agreement”), which provides for the governance of DISH Digital; and (iii) a commercial agreement (the “Commercial Agreement”) pursuant to which, among other things, DISH Digital has: (a) certain rights and corresponding obligations with respect to its business; and (b) the right, but not the obligation, to receive certain services from DISH Network and EchoStar, respectively. Since this was a formation of an entity under common control and a step-up in basis was not allowed, each party’s contributions were recorded at historical book value for accounting purposes. DISH Network consolidated DISH Digital with EchoStar’s ownership position recorded as non-controlling interest. | 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 will be 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. | ||||||||||||||||||||||||
Effective August 1, 2014, EchoStar and DISH Digital entered into the Exchange Agreement pursuant to which, among other things, DISH Digital distributed certain assets to EchoStar and EchoStar reduced its interest in DISH Digital to a ten percent non-voting interest. We now have a ninety percent equity interest and a 100% voting interest in DISH Digital. In addition, we, EchoStar and DISH Digital amended and restated the Operating Agreement, primarily to reflect the changes implemented by the Exchange Agreement. Finally, we, EchoStar and DISH Digital amended and restated the Commercial Agreement, pursuant to which, among other things, DISH Digital: (1) continues to have certain rights and corresponding obligations with respect to its business; (2) continues to have the right, but not the obligation, to receive certain services from us and EchoStar; and (3) has a license from EchoStar to use certain of the assets distributed to EchoStar as part of the Exchange Agreement. | Our total litigation accrual for TiVo was $517 million as of December 31, 2010. As a result of the settlement agreement, during 2011, we reversed $335 million of this accrual and made a payment of approximately $290 million for our portion of the initial payment to TiVo. Of this amount, approximately $182 million related to periods prior to 2011 and the remaining $108 million represented a prepayment. Our $108 million prepayment and our $190 million share of the remaining payments, a total of $298 million, is being expensed ratably as a subscriber-related expense from April 1, 2011 through July 31, 2018, the expiration date of the ‘389 patent. In connection with our TiVo settlement, TiVo agreed to advertise and market certain of our products and services. As a result, during 2011, $6 million was recognized as a reduction of litigation expense and we recorded a pre-paid marketing asset on our Consolidated Statements of Operations and Comprehensive Income (Loss) and our Consolidated Balance Sheets, respectively, which is being amortized as costs of sales over the term of the agreement. | ||||||||||||||||||||||||
Since the Exchange Agreement is among entities under common control, we recorded the difference between the historical cost basis of the assets transferred to EchoStar and our historical cost basis in EchoStar’s one-third noncontrolling interest in DISH Digital as a $6 million, net of deferred taxes, capital distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. In addition, we recorded the initial fair value of EchoStar’s ten percent non-voting interest as a $14 million, net of deferred taxes, deemed distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. All services provided to DISH Digital by EchoStar under the Commercial Agreement are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See “General and administrative expenses” within the related party section previously discussed. | In addition, under the settlement agreement, TiVo granted DISH Network a license under its ‘389 patent and certain related patents, for the remaining life of those patents, with respect to DISH-branded and co-branded products and services. | ||||||||||||||||||||||||
Satellite and Tracking Stock Transaction with EchoStar. To improve our position in the growing consumer satellite broadband market, among other reasons, on February 20, 2014, we entered into the Satellite and Tracking Stock Transaction with EchoStar pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and HSSC the Transferred Satellites, including related in-orbit incentive obligations and cash interest payments of approximately $59 million and approximately $11 million in cash in exchange for the Tracking Stock; and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites. The Satellite and Tracking Stock Transaction is further described below: | DISH Network and EchoStar, on the one hand, and TiVo, on the other hand, also agreed on mutual releases of certain related claims and agreed not to challenge each other’s DVR technology-related patents that are licensed under the settlement agreement. | ||||||||||||||||||||||||
· Transaction Agreement. On February 20, 2014, DOLLC, DNLLC and EchoStar XI Holding L.L.C., all indirect wholly-owned subsidiaries of us, entered into the Transaction Agreement with EchoStar, HSSC and Alpha Company LLC, a wholly-owned subsidiary of EchoStar, pursuant to which, on March 1, 2014, we, among other things, transferred to EchoStar and HSSC the Transferred Satellites in exchange for the Tracking Stock. The Tracking Stock generally tracks the Hughes Retail Group. The shares of the Tracking Stock issued to us represent an aggregate 80% economic interest in the Hughes Retail Group. Since the Satellite and Tracking Stock Transaction is among entities under common control, we recorded the Tracking Stock at EchoStar and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. Although our investment in the Tracking Stock represents an aggregate 80% economic interest in the Hughes Retail Group, we have no operational control or significant influence over the Hughes Retail Group business, and currently there is no public market for the Tracking Stock. As such, the Tracking Stock is accounted for under the cost method of accounting. The Transaction Agreement includes, among other things, customary mutual provisions for representations, warranties and indemnification. | Because both DISH Network and EchoStar were defendants in the TiVo lawsuit, DISH Network and EchoStar were jointly and severally liable to TiVo for any final damages and sanctions that could have been awarded by the District Court. As previously disclosed, DISH Network determined that it was obligated under the agreements entered into in connection with the Spin-off to indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar contributed an amount equal to its $5 million intellectual property liability limit under the receiver agreement. DISH Network and EchoStar further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to DISH Network for other intellectual property claims that may arise under the receiver agreement. DISH Network and EchoStar also agreed that DISH Network would each be entitled to joint ownership of, and a cross-license to use, any intellectual property developed in connection with any potential new alternative technology. Any amounts that EchoStar is responsible for under the settlement agreement with TiVo are in addition to the $5 million contribution previously made by EchoStar. | ||||||||||||||||||||||||
· Satellite Capacity Leased from EchoStar. On February 20, 2014, we entered into satellite capacity agreements with certain subsidiaries of EchoStar pursuant to which, beginning March 1, 2014, we, among other things, lease certain satellite capacity on the Transferred Satellites. See further discussion under “Satellite and transmission expenses — Satellite Capacity Leased from EchoStar.” | Patent Cross-License Agreements. During 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. If both options are exercised, the aggregate additional payments to such third party would total less than $3 million. However, DISH Network and EchoStar may elect to extend their respective Cross-License Agreement independently of each other. 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. | ||||||||||||||||||||||||
· Investor Rights Agreement. On February 20, 2014, EchoStar, HSSC, DOLLC and DNLLC (DOLLC and DNLLC, collectively referred to as the “DISH Investors”) also entered into the Investor Rights Agreement with respect to the Tracking Stock. The Investor Rights Agreement provides, among other things, certain information and consultation rights for the DISH Investors; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate as to the DISH Investors at such time as the DISH Investors no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. | Sprint Settlement Agreement. On November 3, 2011, DISH Network and Sprint entered into the Sprint Settlement Agreement pursuant to which all disputed issues relating to the DBSD Transaction and the TerreStar Transaction were resolved between DISH Network and Sprint, including, but not limited to, issues relating to the costs allegedly incurred by Sprint to relocate users from the spectrum then licensed to DBSD North America and TerreStar (the “Sprint Clearing Costs”). EchoStar was a party to the Sprint Settlement Agreement solely for the purposes of executing a mutual release between it and Sprint relating to the Sprint Clearing Costs. EchoStar was a holder of certain TerreStar debt instruments. In March 2012, EchoStar’s remaining debt instruments were exchanged for a right to receive a distribution in accordance with the terms of the liquidating trust established pursuant to TerreStar’s chapter 11 plan of liquidation. Pursuant to the terms of the Sprint Settlement Agreement, DISH Network made a net payment of approximately $114 million to Sprint. | ||||||||||||||||||||||||
Other Agreements | Voom Settlement Agreement. On October 21, 2012, we entered into the Voom Settlement Agreement with Voom HD Holdings LLC (“Voom”) and CSC Holdings, LLC (“Cablevision”), and for certain limited purposes, MSG Holdings, L.P., The Madison Square Garden Company and EchoStar. The Voom Settlement Agreement resolved the litigation between the parties relating to the Voom programming services. EchoStar was a party to the Voom Settlement Agreement solely for the purposes of executing a mutual release of claims with Voom, Cablevision, MSG Holdings, L.P. and The Madison Square Garden Company relating to the Voom programming services. | ||||||||||||||||||||||||
In November 2009, Mr. Roger Lynch became employed by both DISH Network and EchoStar as an Executive Vice President. Mr. Lynch is responsible for the development and implementation of advanced technologies that are of potential utility and importance to both DISH Network and EchoStar. Mr. Lynch’s compensation consists of cash and equity compensation and is borne by both EchoStar and DISH Network. | Other Agreements | ||||||||||||||||||||||||
Related Party Transactions with NagraStar L.L.C. | In November 2009, Mr. Roger Lynch became employed by both DISH Network and EchoStar as Executive Vice President. Mr. Lynch is responsible for the development and implementation of advanced technologies that are of potential utility and importance to both DISH Network and EchoStar. Mr. Lynch’s compensation consists of cash and equity compensation and is borne by both EchoStar and DISH Network. | ||||||||||||||||||||||||
NagraStar is a joint venture between EchoStar and Nagra USA, Inc. that is our provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. These expenses are recorded in “Subscriber-related expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). We record all payables in “Trade accounts payable — other” or “Other accrued expenses” on our Condensed Consolidated Balance Sheets. | Related Party Transactions with NagraStar L.L.C. | ||||||||||||||||||||||||
The table below summarizes our transactions with NagraStar. | NagraStar is a joint venture between EchoStar and Nagra USA, Inc. that is our provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. | ||||||||||||||||||||||||
For the Three Months | For the Nine Months | The table below summarizes our transactions with NagraStar. | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | For the Years Ended December 31, | |||||||||||||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||||||||||||||||
Purchases (including fees): | (In thousands) | ||||||||||||||||||||||||
Purchases from NagraStar | $ | 20,914 | $ | 22,563 | $ | 60,964 | $ | 69,129 | Purchases (including fees): | ||||||||||||||||
Purchases from NagraStar | $ | 91,712 | $ | 72,549 | $ | 77,705 | |||||||||||||||||||
As of | As of December 31, | ||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | ||||||||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||||||||
(In thousands) | Amounts Payable and Commitments: | ||||||||||||||||||||||||
Amounts Payable and Commitments: | Amounts payable to NagraStar | $ | 23,417 | $ | 21,930 | ||||||||||||||||||||
Amounts payable to NagraStar | $ | 13,924 | $ | 20,954 | |||||||||||||||||||||
Commitments to NagraStar | $ | 7,749 | $ | 2,463 |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events | |
Subsequent Events | 16. Subsequent Events |
Related Party Transactions with EchoStar | |
Satellite and Tracking Stock Transaction with EchoStar. To improve our position in the growing consumer satellite broadband market, among other reasons, on February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a wholly-owned subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV, including related in-orbit incentive obligations and interest payments of approximately $59 million) and approximately $11 million in cash in exchange for shares of a series of preferred tracking stock issued by EchoStar and shares of a series of preferred tracking stock issued by HSSC; and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on these five satellites (collectively, the “Satellite and Tracking Stock Transaction”). The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will result in operating lease obligations of $148 million due 2014, $175 million due 2015, $123 million due 2016, $102 million due 2017, $102 million due 2018 and $329 million due thereafter. The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will also result in a reduction of our long-term debt obligations associated with our in-orbit incentive payments of $5 million due 2014, $5 million due 2015, $4 million due 2016, $4 million due 2017, $4 million due 2018 and $22 million due thereafter and a reduction in our interest expense associated with our in-orbit incentive payments of $3 million due 2014, $2 million due 2015, $2 million due 2016, $2 million due 2017, $1 million due 2018 and $5 million due thereafter. | |
Since these agreements are among entities under common control, we will record the Tracking Stock at EchoStar and HSSC’s historical cost basis for those instruments. Any difference between the historical cost basis of the Tracking Stock received and the net carrying value of the five satellites included in the Satellite and Tracking Stock Transaction will be recorded as a capital transaction in “Additional paid-in capital” on our Consolidated Balance Sheet. The Tracking Stock will be accounted for on a cost basis. The Satellite and Tracking Stock Transaction is further described below: | |
Transaction Agreement. On February 20, 2014, DISH Operating L.L.C. (“DOLLC”) and DISH Network L.L.C. (“DNLLC”, together with DOLLC, the “DISH Investors”) and EchoStar XI Holding L.L.C., all indirect wholly-owned subsidiaries of DISH Network, entered into a Transaction Agreement (the “Transaction Agreement”) with EchoStar, HSSC and Alpha Company LLC, a wholly-owned subsidiary of EchoStar, pursuant to which, on March 1, 2014, we, among other things, transferred to EchoStar and HSSC five of our satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV, including related in-orbit incentive obligations and interest payments of approximately $59 million) and approximately $11 million in cash in exchange for an aggregate of 6,290,499 shares of preferred tracking stock issued by EchoStar and 81.128 shares of preferred tracking stock issued by HSSC (collectively, the “Tracking Stock”). The Tracking Stock generally tracks the residential retail satellite broadband business of Hughes Network Systems, LLC, a wholly-owned subsidiary of HSSC (“Hughes”), including without limitation the operations, assets and liabilities attributed to the Hughes residential retail satellite broadband business (collectively, the “Hughes Retail Group”). The shares of the Tracking Stock issued to the DISH Investors represent an aggregate 80% economic interest in the Hughes Retail Group. The Transaction Agreement includes, among other things, customary mutual provisions for representations, warranties and indemnification. | |
Satellite Capacity Leased from EchoStar. On February 20, 2014, we entered into satellite capacity agreements with certain subsidiaries of EchoStar pursuant to which, beginning March 1, 2014, we, among other things, lease certain satellite capacity on the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. The total fees for the services provided under each satellite capacity agreement depends, among other things, upon the number of transponders on the applicable satellite and the length of the lease. 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. | |
Investor Rights Agreement. On February 20, 2014, EchoStar, HSSC and the DISH Investors also entered into an Investor Rights Agreement (the “Investor Rights Agreement”) with respect to the Tracking Stock. The Investor Rights Agreement provides, among other things, certain information and consultation rights for the DISH Investors; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate as to the DISH Investors at such time as the DISH Investors no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Summary of Significant Accounting Policies | ||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation | |||
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 interest. Non-majority owned 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. Certain prior period amounts have been reclassified to conform to the current period presentation. | ||||
Use of Estimates | Use of Estimates | Use of Estimates | ||
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Sustained economic weakness has increased 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. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Weak economic conditions have increased 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 the Consolidated Financial Statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. | |||
Cash and Cash Equivalents | Cash and Cash Equivalents | |||
We consider all liquid investments purchased with a remaining maturity of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents as of December 31, 2013 and 2012 may consist of money market funds, government bonds, corporate notes and commercial paper. The cost of these investments approximates their fair value. | ||||
Marketable Investment Securities | Marketable Investment Securities | |||
We currently classify all marketable investment securities as available-for-sale. We adjust the carrying value 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. Declines in the fair value of a marketable investment security which are determined to be “other-than-temporary” are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. | ||||
We evaluate our marketable investment securities portfolio on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary. This quarterly evaluation consists of reviewing, among other things: | ||||
· the fair value of our marketable investment securities compared to the carrying amount, | ||||
· the historical volatility of the price of each security, and | ||||
· any market and company specific factors related to each security. | ||||
Declines in the fair value of debt and equity investments below cost basis are generally accounted for as follows: | ||||
Length of Time Investment | Treatment of the Decline in Value | |||
Has Been In a Continuous | (absent specific factors to the contrary) | |||
Loss Position | ||||
Less than six months | Generally, considered temporary. | |||
Six to nine months | Evaluated on a case by case basis to determine whether any company or market-specific factors exist indicating that such decline is other-than-temporary. | |||
Greater than nine months | Generally, considered other-than-temporary. The decline in value is recorded as a charge to earnings. | |||
Additionally, in situations where the fair value of a debt security is below its carrying amount, we consider the decline to be other-than-temporary and record a charge to earnings if any of the following factors apply: | ||||
· we have the intent to sell the security, | ||||
· it is more likely than not that we will be required to sell the security before maturity or recovery, or | ||||
· we do not expect to recover the security’s entire amortized cost basis, even if there is no intent to sell the security. | ||||
In general, we use the first in, first out method to determine the cost basis on sales of marketable investment securities. | ||||
Trade Accounts Receivable | Trade Accounts Receivable | |||
Management estimates the amount of required allowances for the potential non-collectability of accounts receivable based upon past collection experience and consideration of other relevant factors. However, past experience may not be indicative of future collections and therefore additional charges could be incurred in the future to reflect differences between estimated and actual collections. | ||||
Inventory | Inventory | |||
Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The cost of manufactured inventory includes the cost of materials, labor, freight-in, royalties and manufacturing overhead. | ||||
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. | ||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | |||
We review our long-lived assets and identifiable finite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For assets which are held and used in operations, the asset would be impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash flows. Once an impairment is determined, the actual impairment recognized is the difference between the carrying value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash flow, estimated future operating results, trends and other available information in assessing whether the carrying value of assets are recoverable. | ||||
DBS Satellites. We currently evaluate our DBS satellite fleet for impairment as one asset group whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. We do not believe any triggering event has occurred which would indicate impairment as of December 31, 2013. | ||||
Indefinite Lived Intangible Assets | Indefinite Lived Intangible Assets | |||
We do not amortize indefinite lived intangible assets, but test these assets for impairment annually during the fourth quarter or more often if indicators of impairment arise. Intangible assets that have finite lives are amortized over their estimated useful lives and tested for impairment as described above for long-lived assets. Our intangible assets with indefinite lives primarily consist of FCC licenses. Generally, we have determined that our FCC licenses have indefinite useful lives due to the following: | ||||
· FCC licenses are a non-depleting asset; | ||||
· existing FCC licenses are integral to our business segments and will contribute to cash flows indefinitely; | ||||
· replacement satellite applications are generally authorized by the FCC subject to certain conditions, without substantial cost under a stable regulatory, legislative and legal environment; | ||||
· maintenance expenditures to obtain future cash flows are not significant; | ||||
· FCC licenses are not technologically dependent; and | ||||
· we intend to use these assets indefinitely. | ||||
DBS FCC Licenses. We combine all of our indefinite lived DBS FCC licenses that we currently utilize or plan to utilize in the future into a single unit of accounting. The analysis encompasses future cash flows from satellites transmitting from such licensed orbital locations, including revenue attributable to programming offerings from such satellites, the direct operating and subscriber acquisition costs related to such programming, and future capital costs for replacement satellites. Projected revenue and cost amounts include projected subscribers. In conducting our annual impairment test in 2013, we determined that the estimated fair value of the DBS FCC licenses, calculated using a discounted cash flow analysis, exceeded their carrying amounts. | ||||
Long-Term Deferred Revenue, Distribution and Carriage Payments | Long-Term Deferred Revenue, Distribution and Carriage Payments | |||
Certain programmers provide us up-front payments. Such amounts are deferred and recognized as reductions to “Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (generally up to ten years). The current and long-term portions of these deferred credits are recorded in our Consolidated Balance Sheets in “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and other long-term liabilities,” respectively. | ||||
Sales Taxes | Sales Taxes | |||
We account for sales taxes imposed on our goods and services on a net basis in our Consolidated Statements of Operations and Comprehensive Income (Loss). Since we primarily act as an agent for the governmental authorities, the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity. | ||||
Income Taxes and Accounting for Uncertainty in Income Taxes | Income Taxes | |||
We establish a provision for income taxes currently payable or receivable and for income tax amounts deferred to future periods. Deferred tax assets and liabilities are recorded for the estimated future tax effects of differences that exist between the book and tax basis of assets and liabilities. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. | ||||
Accounting for Uncertainty in Income Taxes | ||||
From time to time, we engage in transactions where the tax consequences may be subject to uncertainty. We record a liability when, in management’s judgment, a tax filing position does not meet the more likely than not threshold. For tax positions that meet the more likely than not threshold, we may record a liability depending on management’s assessment of how the tax position will ultimately be settled. We adjust our estimates periodically for ongoing examinations by and settlements with various taxing authorities, as well as changes in tax laws, regulations and precedent. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of “Interest expense, net of amounts capitalized” and “Other, net,” respectively, on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Fair Value Measurements | 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: | 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, including U.S. treasury notes; | · Level 1, defined as observable inputs being quoted prices in active markets for identical assets, including U.S. treasury notes; | |||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and | ||||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; 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. | |||
· 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 December 31, 2013 and 2012, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | |||
As of September 30, 2014 and December 31, 2013, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | |||
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | ||||
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs | |||
Costs of issuing debt are generally deferred and amortized to interest expense ratably over the terms of the respective notes. See Note 7. | ||||
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 service is recognized when programming is broadcast to subscribers. Payments received from our Pay-TV subscribers in advance of the broadcast or service period are recorded as “Deferred revenue and other” in our Consolidated Balance Sheets until earned. | ||||
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 18 months to five years. Revenue from advertising sales is recognized when the related services are performed. | ||||
Subscriber fees for pay-TV equipment rental and other hardware related fees, including fees for DVRs, equipment upgrade fees and additional outlet fees from subscribers with receivers with multiple tuners, advertising services and fees earned from our in-home service operations are recognized as revenue as earned. Generally, revenue from equipment sales and equipment upgrades is 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 web-site. 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. | ||||
Subscriber-Related Expenses | Subscriber-Related Expenses | |||
The cost of television programming distribution rights is generally incurred on a per subscriber basis and various upfront carriage payments are recognized when the related programming is distributed to subscribers. Long-term flat rate programming contracts are charged to expense using the straight-line method over the term of the agreement. The cost of television programming rights to distribute live sporting events for a season or tournament is charged to expense using the straight-line method over the course of the season or tournament. “Subscriber-related expenses” in the Consolidated Statements of Operations and Comprehensive Income (Loss) principally include programming expenses, costs for pay-TV services incurred in connection with our in-home service and call center operations, billing costs, refurbishment and repair costs related to receiver systems, subscriber retention and other variable subscriber expenses. These costs are recognized as the services are performed or as incurred. | ||||
Subscriber Acquisition Costs | Subscriber Acquisition Costs | |||
Subscriber acquisition costs in our Consolidated Statements of Operations and Comprehensive Income (Loss) consist of costs incurred to acquire new Pay-TV subscribers through third parties and our direct sales distribution channel. Subscriber acquisition costs include the following line items from our Consolidated Statements of Operations and Comprehensive Income (Loss): | ||||
· “Cost of sales — subscriber promotion subsidies - EchoStar” includes the cost of our receiver systems sold to retailers and other distributors of our equipment and receiver systems sold directly by us to subscribers. | ||||
· “Other subscriber acquisition costs” includes net costs related to promotional incentives and costs related to installation and other promotional subsidies and advertising and marketing expenses related to the acquisition of new Pay-TV subscribers. | ||||
We characterize amounts paid to our independent retailers as consideration for equipment installation services and for equipment buydowns (incentives and rebates) as a reduction of revenue. We expense payments for equipment installation services as “Other subscriber acquisition costs.” Our payments for equipment buydowns represent a partial or complete return of the retailer’s purchase price and are, therefore, netted against the proceeds received from the retailer. We report the net cost from our various sales promotions through our independent retailer network as a component of “Other subscriber acquisition costs.” Net proceeds from the sale of subscriber related equipment pursuant to our subscriber acquisition promotions are not recognized as revenue. | ||||
Advertising Costs | Advertising Costs | |||
Our advertising costs associated with acquiring new Pay-TV subscribers are expensed as incurred. During the years ended December 31, 2013, 2012 and 2011, we recorded advertising costs of $448 million, $429 million and $329 million, respectively, within “Other subscriber acquisition costs” and “General and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Deferred Cost of Sales | Deferred Cost of Sales | |||
On May 22, 2013, we launched a promotion whereby qualifying new Pay-TV subscribers may choose either an Apple® iPad® 2 or programming credits when they, among other things, commit to a two-year contract. The costs of the iPad 2 are recorded as short-term or long-term deferred cost of sales expense within “Other current assets” and “Other noncurrent assets, net,” respectively, on our Consolidated Balance Sheets and are amortized on a straight-line basis over the related contract term to “Cost of sales — equipment, services and other” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Equipment Lease Programs | Equipment Lease Programs | |||
Pay-TV subscribers have the choice of leasing or purchasing the satellite receiver and other equipment necessary to receive our pay-TV service. Most of our new Pay-TV subscribers choose to lease equipment and thus we retain title to such equipment. Equipment leased to new and existing Pay-TV subscribers is capitalized and depreciated over their estimated useful lives. |
Statements_of_Cash_Flow_Data_T
Statements of Cash Flow Data (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Schedule of supplemental cash flow statement disclosure | |||||||||||||||||||
For the Nine Months | For the Years Ended December 31, | ||||||||||||||||||
Ended September 30, | 2013 | 2012 | 2011 | ||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||
(In thousands) | Cash paid for interest | $ | 875,006 | $ | 537,512 | $ | 545,406 | ||||||||||||
Supplemental Disclosure of Cash Flow Information: | Cash received for interest | 36,242 | 22,431 | 11,468 | |||||||||||||||
Cash paid for interest | $ | 652,150 | $ | 662,264 | Cash paid for income taxes | 1,351 | 20,624 | 14,661 | |||||||||||
Cash received for interest | 26,242 | 26,771 | Cash paid for income taxes to DISH Network | 433,120 | 272,599 | 384,462 | |||||||||||||
Cash paid for income taxes | 4,355 | 751 | Satellites and other assets financed under capital lease obligations | 1,070 | 5,857 | 10,548 | |||||||||||||
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | Receipt of marketable investment securities with no cash consideration | — | 13,237 | — | |||||||||||||
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | Net satellite broadband assets distributed to DISH Network | — | 8,628 | — | |||||||||||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 432,080 | — | |||||||||||||||||
Investment in EchoStar and HSSC preferred tracking stock - cost method | 316,204 | — | |||||||||||||||||
Transfer of liabilities and other | 44,540 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $31,274 | 51,466 | — | |||||||||||||||||
DISH Digital Exchange Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 8,978 | — | |||||||||||||||||
Transfer of investments and intangibles, net | 25,097 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $3,542 | 5,845 | — | |||||||||||||||||
Deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest, net of deferred taxes of $8,491 | 14,009 | — | |||||||||||||||||
Marketable_Investment_Securiti1
Marketable Investment Securities and Restricted Cash and Cash Equivalents (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of marketable investment securities and restricted cash and cash equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Marketable investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable investment securities: | Current marketable investment securities - VRDNs | $ | 105,854 | $ | 124,007 | |||||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - VRDNs | $ | 20,538 | $ | 105,854 | Current marketable investment securities - other | 4,011,472 | 2,145,663 | |||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - other | 3,728,301 | 4,011,472 | Total current marketable investment securities | 4,117,326 | 2,269,670 | |||||||||||||||||||||||||||||||||||||||||||||||
Total current marketable investment securities | 3,748,839 | 4,117,326 | Restricted marketable investment securities (1) | 63,902 | 49,044 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted marketable investment securities (1) | 74,194 | 63,902 | Total marketable investment securities | 4,181,228 | 2,318,714 | |||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities | 3,823,033 | 4,181,228 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 18,878 | 72,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 6,490 | 18,878 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,200,106 | $ | 2,391,331 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in EchoStar preferred tracking stock - cost method (2) | 228,795 | — | (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Consolidated Balance Sheets. | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in HSSC preferred tracking stock - cost method (2) | 87,409 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities - cost method (2) | 13,546 | 5,396 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,159,273 | $ | 4,205,502 | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Other investment securities are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of unrealized gain (loss) on marketable investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of December 31, 2013 | As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment | Unrealized | Investment | Unrealized | Marketable | Marketable | |||||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | Investment | Unrealized | Investment | Unrealized | |||||||||||||||||||||||||||||||||||||||||
(In thousands) | Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | ||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | — | $ | — | $ | 105,854 | $ | — | $ | — | $ | — | Debt securities: | |||||||||||||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | 6,767 | (1,263 | ) | 5,504 | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | VRDNs | $ | 105,854 | $ | — | $ | — | $ | — | $ | 124,007 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||
Equity securities: | Other (including restricted) | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 2,181,064 | 7,335 | (1,144 | ) | 6,191 | |||||||||||||||||||||||||||||||||||||||||
Other | 42,658 | 29,421 | — | 29,421 | 26,523 | 13,286 | — | 13,286 | Equity securities: | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 36,188 | $ | (1,263 | ) | $ | 34,925 | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | Other (1) | 26,523 | 13,286 | — | 13,286 | 13,643 | 406 | — | 406 | |||||||||||||||||||||||||
Total | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | $ | 2,318,714 | $ | 7,741 | $ | (1,144 | ) | $ | 6,597 | ||||||||||||||||||||||||||||||||||
(1) In connection with certain commercial arrangements that we entered into during the third quarter 2012, among other things, we received shares of common stock from a single issuer for no cash consideration. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of available-for-sale securities in continuous unrealized loss position by length of time and their fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities: | Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | $ | 1,858,459 | $ | (1,243 | ) | $ | 2,002,239 | $ | (2,820 | ) | Less than 12 months | $ | 2,002,239 | $ | (2,820 | ) | $ | 724,739 | $ | (865 | ) | |||||||||||||||||||||||||||||||
12 months or more | 168,734 | (20 | ) | 38,043 | (535 | ) | 12 months or more | 38,043 | (535 | ) | 29,045 | (279 | ) | |||||||||||||||||||||||||||||||||||||||
Total | $ | 2,027,193 | $ | (1,263 | ) | $ | 2,040,282 | $ | (3,355 | ) | Total | $ | 2,040,282 | $ | (3,355 | ) | $ | 753,784 | $ | (1,144 | ) | |||||||||||||||||||||||||||||||
Schedule of investments measured at fair value on a recurring basis | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents (including restricted) | $ | 4,183,698 | $ | 67,535 | $ | 4,116,163 | $ | — | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | Cash equivalents (including restricted) | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | $ | 3,014,946 | $ | 59,386 | $ | 2,955,560 | $ | — | |||||||||||||||||||
Debt securities: | Debt securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | 20,538 | $ | — | $ | 105,854 | $ | — | $ | 105,854 | $ | — | VRDNs | $ | 105,854 | $ | — | $ | 105,854 | $ | — | $ | 124,007 | $ | — | $ | 124,007 | $ | — | |||||||||||||||||||
Other (including restricted) | 3,759,837 | — | 3,759,837 | — | 4,048,851 | — | 4,048,851 | — | Other (including restricted) | 4,048,851 | — | 4,048,851 | — | 2,181,064 | — | 2,181,064 | — | |||||||||||||||||||||||||||||||||||
Equity securities | 42,658 | 42,658 | — | — | 26,523 | 26,523 | — | — | Equity securities | 26,523 | 26,523 | — | — | 13,643 | 13,643 | — | — | |||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 42,658 | $ | 3,780,375 | $ | — | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | Total | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | $ | 2,318,714 | $ | 13,643 | $ | 2,305,071 | $ | — |
Inventory_Tables
Inventory (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||
Inventory | ||||||||||||||||
Schedule of inventory | ||||||||||||||||
As of | As of December 31, | |||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||
(In thousands) | Finished goods | $ | 299,975 | $ | 259,274 | |||||||||||
Finished goods | $ | 280,369 | $ | 299,975 | Raw materials | 102,563 | 122,758 | |||||||||
Raw materials | 159,210 | 102,563 | Work-in-process | 110,108 | 82,361 | |||||||||||
Work-in-process | 88,237 | 110,108 | Total (1) | $ | 512,646 | $ | 464,393 | |||||||||
Total | $ | 527,816 | $ | 512,646 | ||||||||||||
(1) The increase in inventory as of December 31, 2013 primarily related to an increase in Hopper® and Joey® set-top boxes and broadband equipment. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
Schedule of property and equipment | |||||||||||||||||||||||||
Depreciable | As of | Depreciable | |||||||||||||||||||||||
Life | September 30, | December 31, | Life | As of December 31, | |||||||||||||||||||||
(In Years) | 2014 | 2013 | (In Years) | 2013 | 2012 | ||||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Equipment leased to customers | 5-Feb | $ | 3,526,090 | $ | 3,496,994 | Equipment leased to customers | 5-Feb | $ | 3,496,994 | $ | 3,424,911 | ||||||||||||||
EchoStar I (1) | 12 | — | 201,607 | EchoStar I | 12 | 201,607 | 201,607 | ||||||||||||||||||
EchoStar VII (1) | 15 | — | 177,000 | EchoStar VII | 15 | 177,000 | 177,000 | ||||||||||||||||||
EchoStar X (1) | 15 | — | 177,192 | EchoStar X | 15 | 177,192 | 177,192 | ||||||||||||||||||
EchoStar XI (1) | 15 | — | 200,198 | EchoStar XI | 15 | 200,198 | 200,198 | ||||||||||||||||||
EchoStar XIV (1) | 15 | — | 316,541 | EchoStar XIV | 15 | 316,541 | 316,541 | ||||||||||||||||||
EchoStar XV | 15 | 277,658 | 277,658 | EchoStar XV | 15 | 277,658 | 277,658 | ||||||||||||||||||
Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | ||||||||||||||||||
Furniture, fixtures, equipment and other | 10-Jan | 661,321 | 600,439 | Furniture, fixtures, equipment and other | 10-Jan | 600,439 | 580,588 | ||||||||||||||||||
Buildings and improvements | Jan-40 | 83,258 | 80,439 | Buildings and improvements | Jan-40 | 80,439 | 74,398 | ||||||||||||||||||
Land | — | 5,504 | 5,504 | Land | - | 5,504 | 5,207 | ||||||||||||||||||
Construction in progress | — | 19,006 | 39,043 | Construction in progress | - | 39,043 | 20,469 | ||||||||||||||||||
Total property and equipment | 5,072,656 | 6,072,434 | Total property and equipment | 6,072,434 | 5,955,588 | ||||||||||||||||||||
Accumulated depreciation (1) | (2,591,343 | ) | (3,093,111 | ) | Accumulated depreciation | (3,093,111 | ) | (2,948,204 | ) | ||||||||||||||||
Property and equipment, net | $ | 2,481,313 | $ | 2,979,323 | Property and equipment, net | $ | 2,979,323 | $ | 3,007,384 | ||||||||||||||||
(1) Property and equipment and accumulated depreciation decreased $1.073 billion and $633 million, respectively, as a result of the Satellite and Tracking Stock Transaction. See Note 4 and Note 10 for further discussion | |||||||||||||||||||||||||
Schedule of construction in progress | |||||||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Computer hardware projects | $ | 20,216 | $ | 2,115 | |||||||||||||||||||||
Software projects | 15,017 | 6,088 | |||||||||||||||||||||||
Other | 3,810 | 12,266 | |||||||||||||||||||||||
Construction in progress | $ | 39,043 | $ | 20,469 | |||||||||||||||||||||
Schedule of depreciation and amortization expense | |||||||||||||||||||||||||
For the Three Months | For the Nine Months | For the Years Ended December 31, | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | 2013 | 2012 | 2011 | |||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | (In thousands) | |||||||||||||||||||||
(In thousands) | Equipment leased to customers | $ | 739,266 | $ | 649,394 | $ | 725,904 | ||||||||||||||||||
Equipment leased to customers | $ | 208,208 | $ | 188,524 | $ | 607,584 | $ | 538,457 | Satellites | 108,682 | 123,431 | 128,352 | |||||||||||||
Satellites | 15,261 | 27,171 | 53,723 | 81,512 | Buildings, furniture, fixtures, equipment and other | 58,039 | 58,081 | 50,699 | |||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 22,671 | 14,054 | 58,181 | 43,441 | 148 degree orbital location (1) | — | 67,776 | — | |||||||||||||||||
Total depreciation and amortization | $ | 246,140 | $ | 229,749 | $ | 719,488 | $ | 663,410 | Total depreciation and amortization | $ | 905,987 | $ | 898,682 | $ | 904,955 | ||||||||||
(1) See “FCC Authorizations” below. | |||||||||||||||||||||||||
Schedule of DBS Satellites | |||||||||||||||||||||||||
Degree | Estimated | ||||||||||||||||||||||||
Launch | Orbital | Useful Life | |||||||||||||||||||||||
Satellites | Date | Location | (Years) | ||||||||||||||||||||||
Owned: | |||||||||||||||||||||||||
EchoStar I (1)(5) | December 1995 | 77 | 12 | ||||||||||||||||||||||
EchoStar VII (2)(5) | February 2002 | 119 | 15 | ||||||||||||||||||||||
EchoStar X (2)(5) | February 2006 | 110 | 15 | ||||||||||||||||||||||
EchoStar XI (2)(5) | July 2008 | 110 | 15 | ||||||||||||||||||||||
EchoStar XIV (5) | March 2010 | 119 | 15 | ||||||||||||||||||||||
EchoStar XV | July 2010 | 45 | 15 | ||||||||||||||||||||||
Leased from EchoStar: | |||||||||||||||||||||||||
EchoStar VIII (1)(3)(4) | August 2002 | 77 | NA | ||||||||||||||||||||||
EchoStar IX (1)(3) | August 2003 | 121 | NA | ||||||||||||||||||||||
EchoStar XII (1)(4) | July 2003 | 61.5 | NA | ||||||||||||||||||||||
Nimiq 5 (1)(3) | September 2009 | 72.7 | NA | ||||||||||||||||||||||
EchoStar XVI (1) | November 2012 | 61.5 | NA | ||||||||||||||||||||||
QuetzSat-1 (1)(3) | September 2011 | 77 | NA | ||||||||||||||||||||||
Leased from Other Third Party: | |||||||||||||||||||||||||
Anik F3 | April 2007 | 118.7 | NA | ||||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | ||||||||||||||||||||||
Under Construction: | |||||||||||||||||||||||||
EchoStar XVIII | 2015 | 110 | 15 | ||||||||||||||||||||||
(1) See Note 15 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) During the fourth quarter 2012, the estimated useful life of these satellites was extended from 12 years to 15 years on a prospective basis based on management’s assessment of, among other things, these satellites’ useful lives, technological obsolescence risk, estimated remaining fuel life and estimated useful lives of our other DBS satellites. This increase in the estimated useful life of these satellites had an immaterial effect on our results of operations. | |||||||||||||||||||||||||
(3) We lease a portion of the capacity on these satellites. | |||||||||||||||||||||||||
(4) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | |||||||||||||||||||||||||
(5) On February 20, 2014, we entered into agreements with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 16 for further discussion of our Subsequent Events. |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||
Schedule of interest on long-term debt | ||||||||||||||||||||||||||||
Annual | ||||||||||||||||||||||||||||
Semi-Annual | Debt Service | |||||||||||||||||||||||||||
Payment Dates | Requirements | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 | April 1 and October 1 | $ | 66,250 | |||||||||||||||||||||||||
7 3/4% Senior Notes due 2015 | May 31 and November 30 | $ | 58,125 | |||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | February 1 and August 1 | $ | 106,875 | |||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | January 15 and July 15 | $ | 41,625 | |||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | April 1 and October 1 | $ | 51,000 | |||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | March 1 and September 1 | $ | 110,250 | |||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | May 1 and November 1 | $ | 56,375 | |||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | June 1 and December 1 | $ | 135,000 | |||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | January 15 and July 15 | $ | 117,500 | |||||||||||||||||||||||||
5% Senior Notes due 2023 | March 15 and September 15 | $ | 75,000 | |||||||||||||||||||||||||
Schedule of carrying and fair values of the entity's debt facilities | ||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||
Carrying | Carrying | Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||||
Value | Fair Value | Value | Fair Value | Value | Value | |||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (1) | $ | 900,000 | $ | 900,000 | $ | 1,000,000 | $ | 1,040,200 | 7 % Senior Notes due 2013 (1) | — | — | 500,000 | 521,875 | |||||||||||||||
7 3/4% Senior Notes due 2015 (2) | 650,001 | 673,564 | 750,000 | 813,750 | 6 5/8% Senior Notes due 2014 (2) | 1,000,000 | 1,040,200 | 1,000,000 | 1,078,500 | |||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,591,875 | 1,500,000 | 1,657,500 | 7 3/4% Senior Notes due 2015 | 750,000 | 813,750 | 750,000 | 844,725 | |||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 918,099 | 900,000 | 946,962 | 7 1/8% Senior Notes due 2016 | 1,500,000 | 1,657,500 | 1,500,000 | 1,683,750 | |||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,207,200 | 1,200,000 | 1,221,792 | 4 5/8% Senior Notes due 2017 | 900,000 | 946,962 | 900,000 | 940,500 | |||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,589,000 | 1,400,000 | 1,603,000 | 4 1/4% Senior Notes due 2018 | 1,200,000 | 1,221,792 | — | — | |||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,127,500 | 1,100,000 | 1,104,950 | 7 7/8% Senior Notes due 2019 | 1,400,000 | 1,603,000 | 1,400,000 | 1,669,500 | |||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,146,260 | 2,000,000 | 2,122,500 | 5 1/8% Senior Notes due 2020 | 1,100,000 | 1,104,950 | — | — | |||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 2,040,000 | 2,000,000 | 1,997,500 | 6 3/4% Senior Notes due 2021 | 2,000,000 | 2,122,500 | 2,000,000 | 2,280,000 | |||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,447,500 | 1,500,000 | 1,458,090 | 5 7/8% Senior Notes due 2022 | 2,000,000 | 1,997,500 | 2,000,000 | 2,150,000 | |||||||||||||||||||
Mortgages and other notes payable (3) | 14,892 | 14,892 | 59,313 | 59,313 | 5 % Senior Notes due 2023 | 1,500,000 | 1,458,090 | 1,500,000 | 1,548,750 | |||||||||||||||||||
Subtotal | 13,164,893 | $ | 13,655,890 | 13,409,313 | $ | 14,025,557 | Mortgages and other notes payable | 59,313 | 59,313 | 65,427 | 65,427 | |||||||||||||||||
Unamortized discounts, net | (16,142 | ) | (19,198 | ) | Subtotal | 13,409,313 | $ | 14,025,557 | 11,615,427 | $ | 12,783,027 | |||||||||||||||||
Capital lease obligations (4) | 201,867 | NA | 219,902 | NA | Capital lease obligations (3) | 219,902 | NA | 248,304 | NA | |||||||||||||||||||
Total long-term debt and capital lease obligations (including current portion) | $ | 13,350,618 | $ | 13,610,017 | Total long-term debt and capital | |||||||||||||||||||||||
lease obligations (including current portion) | $ | 13,629,215 | $ | 11,863,731 | ||||||||||||||||||||||||
(1) During the nine months ended September 30, 2014, we repurchased $100 million of our 6 5/8% Senior Notes due 2014 in open market trades. The remaining balance of $900 million was redeemed on October 1, 2014 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | ||||||||||||||||||||||||||||
(2) During the nine months ended September 30, 2014, we repurchased $100 million of our 7 3/4% Senior Notes due 2015 in open market trades. The remaining balance of $650 million matures on May 31, 2015 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | (1) During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | |||||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction, which resulted in a decrease in “Mortgages and other notes payable” of $44 million related to the in-orbit incentive obligations associated with the Transferred Satellites. See Note 4 and Note 10 for further discussion. | (2) Our 6 5/8% Senior Notes with an aggregate principal balance of $1.0 billion mature on October 1, 2014 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Consolidated Balance Sheets as of December 31, 2013. | |||||||||||||||||||||||||||
(4) Disclosure regarding fair value of capital leases is not required. | (3) Disclosure regarding fair value of capital leases is not required. | |||||||||||||||||||||||||||
Schedule of other long term debt and capital lease obligations | ||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Satellites and other capital lease obligations | $ | 219,902 | $ | 248,304 | ||||||||||||||||||||||||
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates ranging from approximately 6% to 13% | 59,313 | 65,427 | ||||||||||||||||||||||||||
Total | 279,215 | 313,731 | ||||||||||||||||||||||||||
Less current portion | (32,607 | ) | (34,787 | ) | ||||||||||||||||||||||||
Other long-term debt and capital lease obligations, net of current portion | $ | 246,608 | $ | 278,944 | ||||||||||||||||||||||||
Future minimum lease payments under capital lease obligations | Future minimum lease payments under the capital lease obligations, together with the present value of the net minimum lease payments as of December 31, 2013 are as follows (in thousands): | |||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||
2014 | $ | 77,944 | ||||||||||||||||||||||||||
2015 | 76,007 | |||||||||||||||||||||||||||
2016 | 76,007 | |||||||||||||||||||||||||||
2017 | 76,007 | |||||||||||||||||||||||||||
2018 | 75,982 | |||||||||||||||||||||||||||
Thereafter | 162,331 | |||||||||||||||||||||||||||
Total minimum lease payments | 544,278 | |||||||||||||||||||||||||||
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments | (254,832 | ) | ||||||||||||||||||||||||||
Net minimum lease payments | 289,446 | |||||||||||||||||||||||||||
Less: Amount representing interest | (69,544 | ) | ||||||||||||||||||||||||||
Present value of net minimum lease payments | 219,902 | |||||||||||||||||||||||||||
Less: Current portion | (26,829 | ) | ||||||||||||||||||||||||||
Long-term portion of capital lease obligations | $ | 193,073 |
Income_Taxes_and_Accounting_fo1
Income Taxes and Accounting for Uncertainty in Income Taxes (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Income Taxes and Accounting for Uncertainty in Income Taxes | |||||||||||
Schedule of components of the (provision for) benefit from income taxes | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
(In thousands) | |||||||||||
Current (provision) benefit: | |||||||||||
Federal | $ | (361,662 | ) | $ | (127,291 | ) | $ | (277,920 | ) | ||
State | (13,272 | ) | 10,673 | (36,408 | ) | ||||||
Foreign | (13,316 | ) | — | — | |||||||
(388,250 | ) | (116,618 | ) | (314,328 | ) | ||||||
Deferred (provision) benefit: | |||||||||||
Federal | (65,955 | ) | (126,561 | ) | (553,393 | ) | |||||
State | (5,450 | ) | (42,747 | ) | (35,887 | ) | |||||
Decrease (increase) in valuation allowance | — | — | 6,761 | ||||||||
(71,405 | ) | (169,308 | ) | (582,519 | ) | ||||||
Total benefit (provision) | $ | (459,655 | ) | $ | (285,926 | ) | $ | (896,847 | ) | ||
Schedule of reconciliation of amounts computed by applying the statutory Federal tax rate to income before taxes | |||||||||||
For the Years Ended December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||
% of pre-tax (income)/loss | |||||||||||
Statutory rate | (35.0 | ) | (35.0 | ) | (35.0 | ) | |||||
State income taxes, net of Federal benefit | (1.0 | ) | (2.7 | ) | (2.0 | ) | |||||
Other | 0.2 | 0.6 | (0.3 | ) | |||||||
Decrease (increase) in valuation allowance | — | — | 0.3 | ||||||||
Total benefit (provision) for income taxes | (35.8 | ) | (37.1 | ) | (37.0 | ) | |||||
Schedule of deferred tax assets and liabilities | |||||||||||
As of December 31, | |||||||||||
2013 | 2012 | ||||||||||
(In thousands) | |||||||||||
Deferred tax assets: | |||||||||||
NOL, credit and other carryforwards | $ | 10,645 | $ | 9,565 | |||||||
Accrued expenses | 48,416 | 75,996 | |||||||||
Stock-based compensation | 23,006 | 26,351 | |||||||||
Deferred revenue | 54,331 | 67,023 | |||||||||
Total deferred tax assets | 136,398 | 178,935 | |||||||||
Valuation allowance | (7,469 | ) | (7,656 | ) | |||||||
Deferred tax asset after valuation allowance | 128,929 | 171,279 | |||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and amortization | (1,272,014 | ) | (1,234,003 | ) | |||||||
Unrealized gains on investments | (2,204 | ) | (773 | ) | |||||||
Other liabilities | (36,629 | ) | (29,130 | ) | |||||||
Total deferred tax liabilities | (1,310,847 | ) | (1,263,906 | ) | |||||||
Net deferred tax asset (liability) | $ | (1,181,918 | ) | $ | (1,092,627 | ) | |||||
Current portion of net deferred tax asset | $ | 65,457 | $ | 91,722 | |||||||
Noncurrent portion of net deferred tax asset (liability) | (1,247,375 | ) | (1,184,349 | ) | |||||||
Total net deferred tax asset (liability) | $ | (1,181,918 | ) | $ | (1,092,627 | ) | |||||
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits included in long-term deferred revenue, distribution and carriage payments and other long-term liabilities | |||||||||||
For the Years Ended December 31, | |||||||||||
Unrecognized tax benefit | 2013 | 2012 | 2011 | ||||||||
(In thousands) | |||||||||||
Balance as of beginning of period | $ | 185,669 | $ | 190,935 | $ | 170,226 | |||||
Additions based on tax positions related to the current year | 9,533 | 5,949 | 9,836 | ||||||||
Reductions based on tax positions related to current years | — | — | (1,170 | ) | |||||||
Additions based on tax positions related to prior years | 66,307 | 1,581 | 16,610 | ||||||||
Reductions based on tax positions related to prior years | — | (3,461 | ) | — | |||||||
Reductions based on tax positions related to settlements with taxing authorities | (103,311 | ) | — | (1,185 | ) | ||||||
Reductions based on tax positions related to the lapse of the statute of limitations | (12,314 | ) | (9,335 | ) | (3,382 | ) | |||||
Balance as of end of period | $ | 145,884 | $ | 185,669 | $ | 190,935 |
Employee_Benefit_Plans_Tables
Employee Benefit Plans (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Employee Benefit Plans | |||||||||||
Schedule of expense recognized related to the 401(k) Plan | |||||||||||
For the Years Ended December 31, | |||||||||||
Expense Recognized Related to the 401(k) Plan | 2013 | 2012 | 2011 | ||||||||
(In thousands) | |||||||||||
Matching contributions, net of forfeitures | $ | 5,994 | $ | 2,750 | $ | 1,521 | |||||
Discretionary stock contributions, net of forfeitures | $ | 26,096 | $ | 23,772 | $ | 22,331 |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Schedule of stock awards outstanding | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
DISH Network Awards | EchoStar Awards | |||||||||||||||||
Stock Awards Outstanding | Stock | Restricted | Stock | Restricted | ||||||||||||||
Options | Stock | Options | Stock | |||||||||||||||
Units | Units | |||||||||||||||||
Held by DISH DBS employees | 11,938,090 | 1,863,165 | 542,048 | 41,622 | ||||||||||||||
Schedule of exercise prices for stock options outstanding and exercisable associated with employees | ||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||
Number | Weighted- | Weighted- | Number | Weighted- | Weighted- | |||||||||||||
Outstanding | Average | Average | Exercisable | Average | Average | |||||||||||||
as of | Remaining | Exercise | as of | Remaining | Exercise | |||||||||||||
December 31, | Contractual | Price | December 31, | Contractual | Price | |||||||||||||
2013 | Life | 2013 | Life | |||||||||||||||
$ — | - | $ 10.00 | 1,514,885 | 3.79 | $ | 6.33 | 1,411,885 | 3.68 | $ | 6.33 | ||||||||
$10.01 | - | $ 15.00 | 138,286 | 5.49 | $ | 12.16 | 23,085 | 5.28 | $ | 12.75 | ||||||||
$15.01 | - | $ 20.00 | 3,860,300 | 4.12 | $ | 17.37 | 426,700 | 2.75 | $ | 17.72 | ||||||||
$20.01 | - | $ 25.00 | 1,560,312 | 4.06 | $ | 21.47 | 893,412 | 2.62 | $ | 21.34 | ||||||||
$25.01 | - | $ 30.00 | 2,238,007 | 7.09 | $ | 27.8 | 1,200,907 | 6.64 | $ | 27.71 | ||||||||
$30.01 | - | $ 35.00 | 437,800 | 6.95 | $ | 32.04 | 88,300 | 5.29 | $ | 31.82 | ||||||||
$35.01 | - | $ 40.00 | 2,159,500 | 9.03 | $ | 36.64 | 7,000 | 9.01 | $ | 36.4 | ||||||||
$40.01 | - | $ 45.00 | 10,000 | 4.5 | $ | 42.52 | 10,000 | 4.5 | $ | 42.52 | ||||||||
$45.01 | - | $ 50.00 | 19,000 | 9.36 | $ | 45.68 | — | — | $ | — | ||||||||
$ — | - | $ 50.00 | 11,938,090 | 5.65 | $ | 22.49 | 4,061,289 | 4.28 | $ | 17.88 | ||||||||
Schedule of stock option activity associated with employees | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Options | Weighted- | Options | Weighted- | Options | Weighted- | |||||||||||||
Average | Average | Average | ||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||
Price | Price | Price | ||||||||||||||||
Total options outstanding, beginning of period (1) | 13,018,490 | $ | 18.99 | 17,640,074 | $ | 20.38 | 18,447,004 | $ | 17.76 | |||||||||
Granted | 2,225,500 | $ | 36.75 | 589,500 | $ | 32.25 | 3,198,500 | $ | 28.52 | |||||||||
Exercised | (3,172,900 | ) | $ | 14.7 | (4,406,888 | ) | $ | 18.51 | (1,640,462 | ) | $ | 12.36 | ||||||
Forfeited and cancelled | (133,000 | ) | $ | 30.25 | (804,196 | ) | $ | 20.34 | (2,364,968 | ) | $ | 12.11 | ||||||
Total options outstanding, end of period | 11,938,090 | $ | 22.49 | 13,018,490 | $ | 18.99 | 17,640,074 | $ | 20.38 | |||||||||
Performance based options outstanding, end of period (2) | 6,468,500 | $ | 24.92 | 6,400,700 | $ | 18.71 | 8,022,975 | $ | 18.89 | |||||||||
Exercisable at end of period | 4,061,289 | $ | 17.88 | 4,310,489 | $ | 17.92 | 6,387,798 | $ | 21.73 | |||||||||
(1) The beginning of period weighted-average exercise price for the year ended December 31, 2013 of $18.99 does not reflect the 2012 Stock Option Adjustment, which occurred subsequent to December 31, 2012. The beginning of period weighted-average exercise price for the year ended December 31, 2012 of $20.38 does not reflect the 2011 Stock Option Adjustment, which occurred subsequent to December 31, 2011. | ||||||||||||||||||
(2) These stock options are included in the caption “Total options outstanding, end of period.” See discussion of the 2005 LTIP, 2008 LTIP, 2013 LTIP and Other Employee Performance Awards below. | ||||||||||||||||||
Schedule of realized tax benefits from stock awards exercised | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Tax benefit from stock awards exercised | $ | 37,583 | $ | 22,898 | $ | 9,786 | ||||||||||||
Schedule of aggregate intrinsic value of stock options associated with employees | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
Options | Options | |||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||
(In thousands) | ||||||||||||||||||
Aggregate intrinsic value | $ | 422,987 | $ | 162,600 | ||||||||||||||
Schedule of restricted stock unit activity associated with employees | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
Restricted | Weighted- | Restricted | Weighted- | Restricted | Weighted- | |||||||||||||
Stock | Average | Stock | Average | Stock | Average | |||||||||||||
Awards | Grant Date | Awards | Grant Date | Awards | Grant Date | |||||||||||||
Fair Value | Fair Value | Fair Value | ||||||||||||||||
Total restricted stock units outstanding, beginning of period | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | 1,271,984 | $ | 22.06 | |||||||||
Granted | 990,000 | $ | 36.53 | — | $ | — | 300,000 | $ | 30.67 | |||||||||
Vested | (135,250 | ) | $ | 29.19 | (24,795 | ) | $ | 22.94 | (14,705 | ) | $ | 11.09 | ||||||
Forfeited and cancelled | (68,333 | ) | $ | 32.91 | (78,166 | ) | $ | 27.2 | (377,570 | ) | $ | 26.23 | ||||||
Total restricted stock units outstanding, end of period | 1,863,165 | $ | 29.27 | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | |||||||||
Restricted Performance Units outstanding, end of period (1) | 1,863,165 | $ | 29.27 | 1,076,748 | $ | 22.82 | 1,179,709 | $ | 23.11 | |||||||||
(1) These Restricted Performance Units are included in the caption “Total restricted stock units outstanding, end of period.” See discussion of the 2005 LTIP, 2008 LTIP, 2013 LTIP and Other Employee Performance Awards below. | ||||||||||||||||||
Schedule of awards outstanding pursuant to performance-based stock incentive plans | ||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||
Performance Based Stock Options | Number of | Weighted- | ||||||||||||||||
Awards | Average | |||||||||||||||||
Exercise | ||||||||||||||||||
Price | ||||||||||||||||||
2005 LTIP | 1,878,500 | $ | 20.83 | |||||||||||||||
2013 LTIP | 1,920,000 | $ | 36.53 | |||||||||||||||
Other employee performance awards | 2,670,000 | $ | 19.46 | |||||||||||||||
Total | 6,468,500 | $ | 24.92 | |||||||||||||||
Restricted Performance Units | ||||||||||||||||||
2005 LTIP | 208,165 | |||||||||||||||||
2013 LTIP | 960,000 | |||||||||||||||||
Other employee performance awards | 695,000 | |||||||||||||||||
Total | 1,863,165 | |||||||||||||||||
Schedule of allocated non-cash, stock-based compensation expense for all employees | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Subscriber-related | $ | 1,947 | $ | 1,607 | $ | 1,914 | ||||||||||||
General and administrative | 27,700 | 36,966 | 29,249 | |||||||||||||||
Total non-cash, stock based compensation | $ | 29,647 | $ | 38,573 | $ | 31,163 | ||||||||||||
Schedule of assumptions of Black-Scholes option valuation model | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
Stock Options | 2013 | 2012 | 2011 | |||||||||||||||
Risk-free interest rate | 0.91% - 2.66% | 0.41% - 1.29% | 0.36% - 3.18% | |||||||||||||||
Volatility factor | 32.37% - 39.87% | 33.15% - 39.50% | 31.74% - 45.56% | |||||||||||||||
Expected term of options in years | 5.6 - 10.0 | 3.1 - 5.9 | 3.6 - 10.0 | |||||||||||||||
Weighted-average fair value of options granted | $14.49 - $21.09 | $ 6.72 - $13.79 | $ 8.73 - $14.77 | |||||||||||||||
LTIP 2005 | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Schedule of non-cash, stock-based compensation expense recognized | ||||||||||||||||||
2005 LTIP | ||||||||||||||||||
Total | Vested | |||||||||||||||||
Portion (1) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
DISH Network awards held by DISH DBS employees | $ | 32,251 | $ | 31,124 | ||||||||||||||
EchoStar awards held by DISH DBS employees | 5,575 | 5,497 | ||||||||||||||||
Total | $ | 37,826 | $ | 36,621 | ||||||||||||||
(1) Represents the amount of this award that has met the foregoing vesting schedule and would therefore vest upon achievement of the performance condition. | ||||||||||||||||||
LTIP 2008, LTIP 2013 and Other | ||||||||||||||||||
Stock-Based Compensation | ||||||||||||||||||
Schedule of non-cash, stock-based compensation expense recognized | ||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||
Non-Cash, Stock-Based Compensation Expense Recognized | 2013 | 2012 | 2011 | |||||||||||||||
(In thousands) | ||||||||||||||||||
2008 LTIP | $ | 2,719 | $ | 9,025 | $ | 18,944 | ||||||||||||
2013 LTIP | 8,137 | — | — | |||||||||||||||
Other employee performance awards | 4,045 | 7,471 | 144 | |||||||||||||||
Total non-cash, stock-based compensation expense recognized for performance based awards | $ | 14,901 | $ | 16,496 | $ | 19,088 | ||||||||||||
Schedule of unrecognized non-cash, stock-based compensation expense | ||||||||||||||||||
Estimated Remaining Non-Cash, Stock-Based Compensation Expense | 2013 LTIP | Other | ||||||||||||||||
Employee | ||||||||||||||||||
Performance | ||||||||||||||||||
Awards | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
Expense estimated to be recognized during 2014 | $ | 5,460 | $ | 432 | ||||||||||||||
Estimated contingent expense subsequent to 2014 | 52,311 | 38,817 | ||||||||||||||||
Total estimated remaining expense over the term of the plan | $ | 57,771 | $ | 39,249 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||
Schedule of future maturities of long-term debt, capital lease and contractual obligations | |||||||||||||||||||||||
Payments due by period | |||||||||||||||||||||||
Total | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | |||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Long-term debt obligations | $ | 13,409,313 | $ | 1,005,778 | $ | 756,159 | $ | 1,504,669 | $ | 904,903 | $ | 1,205,197 | $ | 8,032,607 | |||||||||
Capital lease obligations | 219,902 | 26,829 | 27,372 | 30,058 | 32,994 | 36,175 | 66,474 | ||||||||||||||||
Interest expense on long-term debt and capital lease obligations | 4,718,745 | 838,801 | 741,005 | 655,467 | 599,028 | 528,620 | 1,355,824 | ||||||||||||||||
Satellite-related obligations | 1,717,153 | 250,741 | 230,225 | 230,138 | 225,464 | 225,246 | 555,339 | ||||||||||||||||
Operating lease obligations | 179,355 | 45,868 | 36,204 | 31,793 | 15,150 | 8,438 | 41,902 | ||||||||||||||||
Purchase obligations | 3,019,689 | 1,826,577 | 444,657 | 322,253 | 165,059 | 136,059 | 125,084 | ||||||||||||||||
Total | $ | 23,264,157 | $ | 3,994,594 | $ | 2,235,622 | $ | 2,774,378 | $ | 1,942,598 | $ | 2,139,735 | $ | 10,177,230 |
Valuation_and_Qualifying_Accou1
Valuation and Qualifying Accounts (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Valuation and Qualifying Accounts | ||||||||||||||
Summary of activity in the allowance for doubtful accounts | ||||||||||||||
Allowance for doubtful accounts | Balance at | Charged to | Deductions | Balance at | ||||||||||
Beginning | Costs and | End of | ||||||||||||
of Year | Expenses | Year | ||||||||||||
(In thousands) | ||||||||||||||
For the years ended: | ||||||||||||||
December 31, 2013 | $ | 13,834 | $ | 125,664 | $ | (123,517 | ) | $ | 15,981 | |||||
December 31, 2012 | $ | 11,916 | $ | 116,742 | $ | (114,824 | ) | $ | 13,834 | |||||
December 31, 2011 | $ | 29,650 | $ | 94,678 | $ | (112,412 | ) | $ | 11,916 |
Quarterly_Financial_Data_Unaud1
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Quarterly Financial Data (Unaudited) | ||||||||||||||
Schedule of quarterly results of operations | ||||||||||||||
For the Three Months Ended | ||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||
(In thousands) | ||||||||||||||
Year ended December 31, 2013: | ||||||||||||||
Total revenue | $ | 3,336,258 | $ | 3,444,922 | $ | 3,448,860 | $ | 3,465,572 | ||||||
Operating income (loss) | 514,113 | 601,161 | 494,094 | 518,178 | ||||||||||
Net income (loss) attributable to DISH DBS | 206,231 | 233,882 | 186,527 | 198,382 | ||||||||||
Year ended December 31, 2012: | ||||||||||||||
Total revenue | $ | 3,247,226 | $ | 3,317,621 | $ | 3,291,877 | $ | 3,294,876 | ||||||
Operating income (loss) | 573,970 | 502,238 | (222,334 | ) | 539,061 | |||||||||
Net income (loss) attributable to DISH DBS | 277,490 | 221,910 | (240,719 | ) | 225,585 |
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Related Party Transactions | |||||||||||||||||||||||||
Schedule of transactions with NagraStar | |||||||||||||||||||||||||
For the Three Months | For the Nine Months | For the Years Ended December 31, | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | 2013 | 2012 | 2011 | |||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | (In thousands) | |||||||||||||||||||||
(In thousands) | Purchases (including fees): | ||||||||||||||||||||||||
Purchases (including fees): | Purchases from NagraStar | $ | 91,712 | $ | 72,549 | $ | 77,705 | ||||||||||||||||||
Purchases from NagraStar | $ | 20,914 | $ | 22,563 | $ | 60,964 | $ | 69,129 | |||||||||||||||||
As of December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
As of | (In thousands) | ||||||||||||||||||||||||
September 30, | December 31, | Amounts Payable and Commitments: | |||||||||||||||||||||||
2014 | 2013 | Amounts payable to NagraStar | $ | 23,417 | $ | 21,930 | |||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Amounts Payable and Commitments: | |||||||||||||||||||||||||
Amounts payable to NagraStar | $ | 13,924 | $ | 20,954 | |||||||||||||||||||||
Commitments to NagraStar | $ | 7,749 | $ | 2,463 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Advertising Costs | |||
Advertising costs | $448 | $429 | $329 |
Deferred Cost of Sales | |||
Customer contract commitment period associated with deferred cost of sales promotional items | 2 years | ||
Minimum | |||
Marketable Investment Securities | |||
The length of time an investment has been in a continuous loss position in which the decline in value would be evaluated on a case by case basis to determine if the decline in value is other-than-temporary | 6 months | ||
Length of time an investment has been in a continuous loss position in which the decline in value is considered other-than-temporary | 9 months | ||
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 | 18 months | ||
Maximum | |||
Marketable Investment Securities | |||
Length of time an investment has been in a continuous loss position in which the decline in value is considered as temporary | 6 months | ||
The length of time an investment has been in a continuous loss position in which the decline in value would be evaluated on a case by case basis to determine if the decline in value is other-than-temporary | 9 months | ||
Property and Equipment | |||
Useful life of property and equipment | 40 years | ||
Long-Term Deferred Revenue, Distribution and Carriage Payments | |||
Deferred upfront payment, amortization period | 10 years | ||
Revenue Recognition | |||
Period of deferral for the portion of subscriber fees that are deferred | 5 years |
Statements_of_Cash_Flow_Data_D
Statements of Cash Flow Data (Details) (USD $) | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Supplemental Cash Flow Information | |||||
Cash paid for interest | $652,150 | $662,264 | $875,006 | $537,512 | $545,406 |
Cash received for interest | 26,242 | 26,771 | 36,242 | 22,431 | 11,468 |
Cash paid for income taxes | 4,355 | 751 | 1,351 | 20,624 | 14,661 |
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | 433,120 | 272,599 | 384,462 |
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | 1,070 | 5,857 | 10,548 |
Receipt of marketable investment securities with no cash consideration | 13,237 | ||||
Net satellite broadband assets distributed to DISH Network | $8,628 |
Marketable_Investment_Securiti2
Marketable Investment Securities and Restricted Cash and Cash Equivalents (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Marketable investment securities and restricted cash and cash equivalents: | ||||
Current marketable investment securities | $3,748,839,000 | $4,117,326,000 | $2,269,670,000 | |
Restricted marketable investment securities | 74,194,000 | 63,902,000 | 49,044,000 | |
Total marketable investment securities | 3,823,033,000 | 4,181,228,000 | 2,318,714,000 | |
Restricted cash and cash equivalents | 6,490,000 | 18,878,000 | 72,617,000 | |
Total marketable investment securities and restricted cash and cash equivalents | 4,200,106,000 | 2,391,331,000 | ||
Restricted cash related to litigation released during the period | 42,000,000 | |||
Current marketable investment securities - VRDNs | ||||
Marketable investment securities and restricted cash and cash equivalents: | ||||
Current marketable investment securities | 20,538,000 | 105,854,000 | 124,007,000 | |
Settlement period | 5 days | 5 days | ||
Current marketable investment securities - other | ||||
Marketable investment securities and restricted cash and cash equivalents: | ||||
Current marketable investment securities | $3,728,301,000 | $4,011,472,000 | $2,145,663,000 |
Marketable_Investment_Securiti3
Marketable Investment Securities and Restricted Cash and Cash Equivalents (Details 2) (USD $) | 3 Months Ended | |||
Sep. 30, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accumulated net unrealized gains (losses) | ||||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | $15,000,000 | $7,000,000 | ||
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss) | 25,000,000 | 11,000,000 | 6,000,000 | |
Components of available-for-sale investments | ||||
Debt securities | 3,748,839,000 | 4,117,326,000 | 2,269,670,000 | |
Total marketable investment securities | 3,823,033,000 | 4,181,228,000 | 2,318,714,000 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||||
Unrealized Gains | 18,733,000 | 7,741,000 | ||
Unrealized Losses | -3,355,000 | -1,144,000 | ||
Unrealized Gains Losses, Net | 15,378,000 | 6,597,000 | ||
Contractual maturities of restricted and non-restricted marketable investment securities | ||||
Debt securities with contractual maturities within one year | 2,487,000,000 | 3,819,000,000 | ||
Debt securities with contractual maturities extending longer than one year through and including five years | 1,270,000,000 | 314,000,000 | ||
Debt securities with contractual maturities extending longer than five years through and including ten years | 1,000,000 | |||
Debt securities with contractual maturities longer than ten years | 23,000,000 | 21,000,000 | ||
VRDNs | ||||
Components of available-for-sale investments | ||||
Debt securities | 20,538,000 | 105,854,000 | 124,007,000 | |
Other (including restricted) | ||||
Components of available-for-sale investments | ||||
Debt security | 3,759,837,000 | 4,048,851,000 | 2,181,064,000 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||||
Unrealized Gains | 5,447,000 | 7,335,000 | ||
Unrealized Losses | -3,355,000 | -1,144,000 | ||
Unrealized Gains Losses, Net | 2,092,000 | 6,191,000 | ||
Equity Securities | ||||
Components of available-for-sale investments | ||||
Equity securities | 42,658,000 | 26,523,000 | 13,643,000 | |
Unrealized Gains (Losses) on Marketable Investment Securities | ||||
Unrealized Gains | 13,286,000 | 406,000 | ||
Unrealized Gains Losses, Net | 13,286,000 | 406,000 | ||
Additional disclosures | ||||
Amount of cash consideration for receiving shares of common stock from a single issuer | $0 |
Marketable_Investment_Securiti4
Marketable Investment Securities and Restricted Cash and Cash Equivalents (Details 3) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Fair value of marketable investment securities in a loss position | |||
Total | $2,027,193 | $2,040,282 | $753,784 |
Unrealized loss on marketable investment securities in a loss position | |||
Total | -3,355 | -1,144 | |
Debt Securities | |||
Fair value of marketable investment securities in a loss position | |||
Less than 12 Months | 1,858,459 | 2,002,239 | 724,739 |
12 Months or More | 168,734 | 38,043 | 29,045 |
Unrealized loss on marketable investment securities in a loss position | |||
Less than 12 months | -2,820 | -865 | |
12 months or More | ($535) | ($279) |
Marketable_Investment_Securiti5
Marketable Investment Securities and Restricted Cash and Cash Equivalents (Details 4) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Fair value of marketable securities | |||
Debt securities | $3,748,839 | $4,117,326 | $2,269,670 |
Total marketable investment securities | 3,823,033 | 4,181,228 | 2,318,714 |
Transfer of investments from Level 1 to Level 2 | 0 | 0 | |
Transfer of investments from Level 2 to Level 1 | 0 | 0 | |
VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | 3,759,837 | 4,048,851 | 2,181,064 |
Equity Securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Total | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 4,183,698 | 3,743,328 | 3,014,946 |
Total marketable investment securities | 3,823,033 | 4,181,228 | 2,318,714 |
Fair value measurements on recurring basis | Total | VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Fair value measurements on recurring basis | Total | Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | 3,759,837 | 4,048,851 | 2,181,064 |
Fair value measurements on recurring basis | Total | Equity Securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 1 | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 67,535 | 275,277 | 59,386 |
Total marketable investment securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 1 | Equity Securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 2 | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 4,116,163 | 3,468,051 | 2,955,560 |
Total marketable investment securities | 3,780,375 | 4,154,705 | 2,305,071 |
Fair value measurements on recurring basis | Level 2 | VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Fair value measurements on recurring basis | Level 2 | Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | $3,759,837 | $4,048,851 | $2,181,064 |
Inventory_Details
Inventory (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Inventory | |||
Finished goods | $280,369 | $299,975 | $259,274 |
Raw materials | 159,210 | 102,563 | 122,758 |
Work-in-process | 88,237 | 110,108 | 82,361 |
Total inventory | $527,816 | $512,646 | $464,393 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2012 | Dec. 31, 2013 |
Property and Equipment | ||||
Total property and equipment | $5,955,588 | $5,072,656 | $6,072,434 | |
Accumulated depreciation | -2,948,204 | -2,591,343 | -3,093,111 | |
Property and equipment, net | 3,007,384 | 2,481,313 | 2,979,323 | |
Minimum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 1 year | |||
Maximum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 40 years | |||
Equipment leased to customers | ||||
Property and Equipment | ||||
Total property and equipment | 3,424,911 | 3,526,090 | 3,496,994 | |
Equipment leased to customers | Minimum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 2 years | 2 years | ||
Equipment leased to customers | Maximum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 5 years | 5 years | ||
EchoStar I | ||||
Property and Equipment | ||||
Total property and equipment | 201,607 | 201,607 | ||
Estimate Useful life of assets | 12 years | 12 years | ||
EchoStar VII | ||||
Property and Equipment | ||||
Total property and equipment | 177,000 | 177,000 | ||
Estimate Useful life of assets | 15 years | 15 years | 12 years | 15 years |
EchoStar X | ||||
Property and Equipment | ||||
Total property and equipment | 177,192 | 177,192 | ||
Estimate Useful life of assets | 15 years | 15 years | 12 years | 15 years |
EchoStar XI | ||||
Property and Equipment | ||||
Total property and equipment | 200,198 | 200,198 | ||
Estimate Useful life of assets | 15 years | 15 years | 12 years | 15 years |
EchoStar XIV | ||||
Property and Equipment | ||||
Total property and equipment | 316,541 | 316,541 | ||
Estimate Useful life of assets | 15 years | 15 years | ||
EchoStar XV | ||||
Property and Equipment | ||||
Total property and equipment | 277,658 | 277,658 | 277,658 | |
Estimate Useful life of assets | 15 years | 15 years | ||
Satellites acquired under capital lease agreements | ||||
Property and Equipment | ||||
Total property and equipment | 499,819 | 499,819 | 499,819 | |
Satellites acquired under capital lease agreements | Minimum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 10 years | 10 years | ||
Satellites acquired under capital lease agreements | Maximum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 15 years | 15 years | ||
Furniture, fixtures, equipment and other | ||||
Property and Equipment | ||||
Total property and equipment | 580,588 | 661,321 | 600,439 | |
Furniture, fixtures, equipment and other | Minimum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 1 year | 1 year | ||
Furniture, fixtures, equipment and other | Maximum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 10 years | 10 years | ||
Buildings and improvements | ||||
Property and Equipment | ||||
Total property and equipment | 74,398 | 83,258 | 80,439 | |
Buildings and improvements | Minimum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 1 year | 1 year | ||
Buildings and improvements | Maximum | ||||
Property and Equipment | ||||
Estimate Useful life of assets | 40 years | 40 years | ||
Land | ||||
Property and Equipment | ||||
Total property and equipment | 5,207 | 5,504 | 5,504 | |
Construction in progress | ||||
Property and Equipment | ||||
Total property and equipment | 20,469 | 19,006 | 39,043 | |
Construction in progress | Computer hardware projects | ||||
Property and Equipment | ||||
Total property and equipment | 2,115 | 20,216 | ||
Construction in progress | Software projects | ||||
Property and Equipment | ||||
Total property and equipment | 6,088 | 15,017 | ||
Construction in progress | Other | ||||
Property and Equipment | ||||
Total property and equipment | $12,266 | $3,810 |
Property_and_Equipment_Details1
Property and Equipment (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | $246,140 | $229,749 | $719,488 | $663,410 | $905,987 | $898,682 | $904,955 |
Equipment leased to customers | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | 208,208 | 188,524 | 607,584 | 538,457 | 739,266 | 649,394 | 725,904 |
Satellites | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | 15,261 | 27,171 | 53,723 | 81,512 | 108,682 | 123,431 | 128,352 |
Buildings, furniture, fixtures, equipment and other | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | 22,671 | 14,054 | 58,181 | 43,441 | 58,039 | 58,081 | 50,699 |
148 degree orbital location | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | $67,776 | ||||||
DBS satellites | |||||||
Depreciation and amortization expense | |||||||
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator | 14 | ||||||
Owned Satellites | 6 | ||||||
Number of satellites utilized under operating lease | 6 | ||||||
Number of satellites utilized under capital lease | 2 |
Property_and_Equipment_Details2
Property and Equipment (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Sep. 30, 2012 |
satellite | |||||||||
Property and Equipment | |||||||||
Number of other satellites to be relocated in the event of failure or loss of any satellite | 1 | ||||||||
Depreciation and amortization expense | $246,140 | $229,749 | $719,488 | $663,410 | $905,987 | $898,682 | $904,955 | ||
Minimum | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 1 year | ||||||||
Maximum | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 40 years | ||||||||
EchoStar I | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 12 years | 12 years | |||||||
EchoStar VII | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | 15 years | 12 years | |||||
EchoStar X | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | 15 years | 12 years | |||||
EchoStar XI | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | 15 years | 12 years | |||||
EchoStar XIV | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | |||||||
EchoStar XV | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | |||||||
EchoStar XII | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 18 months | ||||||||
EchoStar XVIII | |||||||||
Property and Equipment | |||||||||
Estimate Useful life of assets | 15 years | 15 years | |||||||
148 degree orbital location | |||||||||
Property and Equipment | |||||||||
Depreciation and amortization expense | $67,776 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Oct. 02, 2013 | 16-May-12 | 28-May-13 | Jun. 30, 2013 | Apr. 05, 2013 | 5-May-11 | Jul. 26, 2012 | Dec. 27, 2012 | |
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 7.00% | ||||||||||||||
Premiums, interest expense and deferred financing costs, as applicable | $207,149,000 | $220,596,000 | $631,405,000 | $663,823,000 | $878,550,000 | $647,298,000 | $552,036,000 | ||||||||
7 % Senior Notes due 2013 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | ||||||||||
Debt repurchased | 49,000,000 | 49,000,000 | |||||||||||||
Principal balance of debt redeemed | 500,000,000 | 451,000,000 | |||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
6 5/8% Senior Notes due 2014 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 6.63% | 6.63% | 6.63% | 6.63% | |||||||||||
Debt repurchased | 100,000,000 | 100,000,000 | |||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Annual Debt Service Requirements | 66,250,000 | ||||||||||||||
7 3/4% Senior Notes due 2015 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | 7.75% | |||||||||||
Debt repurchased | 100,000,000 | 100,000,000 | |||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Annual Debt Service Requirements | 58,125,000 | ||||||||||||||
7 1/8% Senior Notes due 2016 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 7.13% | 7.13% | 7.13% | 7.13% | |||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Annual Debt Service Requirements | 106,875,000 | ||||||||||||||
4 5/8% Senior Notes due 2017 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 4.63% | 4.63% | 4.63% | 4.63% | 4.63% | ||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 900,000,000 | ||||||||||||||
Term of debt instrument | 5 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Annual Debt Service Requirements | 41,625,000 | ||||||||||||||
4 5/8% Senior Notes due 2017 | Redemption Prior to July 15, 2015 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
5% Senior Notes due 2017 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 5.00% | ||||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Aggregate principal amount | 1,250,000,000 | ||||||||||||||
Term of debt instrument | 4 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Premiums, interest expense and deferred financing costs, as applicable | 7,000,000 | ||||||||||||||
4 1/4% Senior Notes due 2018 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 4.25% | 4.25% | 4.25% | 4.25% | 4.25% | ||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 1,200,000,000 | ||||||||||||||
Term of debt instrument | 5 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Annual Debt Service Requirements | 51,000,000 | ||||||||||||||
4 1/4% Senior Notes due 2018 | Redemption Prior to April 1, 2016 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
7 7/8% Senior Notes due 2019 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 7.88% | 7.88% | 7.88% | 7.88% | |||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Annual Debt Service Requirements | 110,250,000 | ||||||||||||||
5 1/8% Senior Notes due 2020 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 5.13% | 5.13% | 5.13% | 5.13% | 5.13% | ||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 1,100,000,000 | ||||||||||||||
Term of debt instrument | 7 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Annual Debt Service Requirements | 56,375,000 | ||||||||||||||
5 1/8% Senior Notes due 2020 | Redemption Prior to May 1, 2016 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
6 3/4% Senior Notes due 2021 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | 6.75% | ||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 2,000,000,000 | ||||||||||||||
Term of debt instrument | 10 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 99.09% | ||||||||||||||
Annual Debt Service Requirements | 135,000,000 | ||||||||||||||
6 3/4% Senior Notes due 2021 | Redemption Prior to June 1, 2014 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
5 7/8% Senior Notes due 2022 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 5.88% | 5.88% | 5.88% | 5.88% | 5.88% | ||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 1,000,000,000 | 1,000,000,000 | |||||||||||||
Term of debt instrument | 10 years | 10 years | |||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | 100.75% | |||||||||||||
Annual Debt Service Requirements | 117,500,000 | ||||||||||||||
5 7/8% Senior Notes due 2022 | Redemption Prior to July 15, 2015 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
5% Senior Notes due 2023 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | ||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||||
Percentage of principal amount at which notes may be required to be repurchased in event of change of control | 101.00% | ||||||||||||||
Aggregate principal amount | 1,500,000,000 | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Annual Debt Service Requirements | 75,000,000 | ||||||||||||||
5% Senior Notes due 2023 | Redemption Prior to March 15, 2016 | |||||||||||||||
Long-term debt | |||||||||||||||
Maximum percentage of the aggregate principal amount of notes with net proceeds of certain equity offerings or capital contributions | 35.00% | ||||||||||||||
6 1/4% Senior Notes due 2023 | |||||||||||||||
Long-term debt | |||||||||||||||
Interest rate (as a percent) | 6.25% | ||||||||||||||
Aggregate principal amount | 1,350,000,000 | ||||||||||||||
Term of debt instrument | 10 years | ||||||||||||||
Debt instrument issuance as a percentage of the face amount | 100.00% | ||||||||||||||
Premiums, interest expense and deferred financing costs, as applicable | $23,000,000 |
LongTerm_Debt_Details_2
Long-Term Debt (Details 2) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
Oct. 02, 2013 | Dec. 31, 2013 | Oct. 01, 2014 | Sep. 30, 2014 | Dec. 31, 2012 | Sep. 30, 2013 | 16-May-12 | Apr. 05, 2013 | 5-May-11 | Dec. 27, 2012 | |
Long-term debt | ||||||||||
Carrying Value | $13,409,313,000 | $13,164,893,000 | $11,615,427,000 | |||||||
Fair Value | 14,025,557,000 | 13,655,890,000 | 12,783,027,000 | |||||||
Capital lease obligations | 219,902,000 | 201,867,000 | 248,304,000 | |||||||
Total long-term debt and capital lease obligations (including current portion) | 13,629,215,000 | 11,863,731,000 | ||||||||
Interest rate (as a percent) | 7.00% | |||||||||
7 % Senior Notes due 2013 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 500,000,000 | |||||||||
Fair Value | 521,875,000 | |||||||||
Interest rate (as a percent) | 7.00% | 7.00% | 7.00% | 7.00% | ||||||
Debt repurchased | 49,000,000 | |||||||||
Principal balance of debt redeemed | 451,000,000 | 500,000,000 | ||||||||
6 5/8% Senior Notes due 2014 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,000,000,000 | 900,000,000 | 1,000,000,000 | |||||||
Fair Value | 1,040,200,000 | 900,000,000 | 1,078,500,000 | |||||||
Interest rate (as a percent) | 6.63% | 6.63% | 6.63% | |||||||
Debt repurchased | 100,000,000 | |||||||||
Principal balance reclassified to current portion of long-term debt and capital lease obligations | 1,000,000,000 | |||||||||
6 5/8% Senior Notes due 2014 | Subsequent event | ||||||||||
Long-term debt | ||||||||||
Principal balance of debt redeemed | 900,000,000 | |||||||||
7 3/4% Senior Notes due 2015 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 750,000,000 | 650,001,000 | 750,000,000 | |||||||
Fair Value | 813,750,000 | 673,564,000 | 844,725,000 | |||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | |||||||
Debt repurchased | 100,000,000 | |||||||||
Principal balance reclassified to current portion of long-term debt and capital lease obligations | 650,000,000 | |||||||||
7 1/8% Senior Notes due 2016 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,500,000,000 | 1,500,000,000 | 1,500,000,000 | |||||||
Fair Value | 1,657,500,000 | 1,591,875,000 | 1,683,750,000 | |||||||
Interest rate (as a percent) | 7.13% | 7.13% | 7.13% | |||||||
4 5/8% Senior Notes due 2017 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 900,000,000 | 900,000,000 | 900,000,000 | |||||||
Fair Value | 946,962,000 | 918,099,000 | 940,500,000 | |||||||
Interest rate (as a percent) | 4.63% | 4.63% | 4.63% | 4.63% | ||||||
4 1/4% Senior Notes due 2018 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,200,000,000 | 1,200,000,000 | ||||||||
Fair Value | 1,221,792,000 | 1,207,200,000 | ||||||||
Interest rate (as a percent) | 4.25% | 4.25% | 4.25% | 4.25% | ||||||
7 7/8% Senior Notes due 2019 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,400,000,000 | 1,400,000,000 | 1,400,000,000 | |||||||
Fair Value | 1,603,000,000 | 1,589,000,000 | 1,669,500,000 | |||||||
Interest rate (as a percent) | 7.88% | 7.88% | 7.88% | |||||||
5 1/8% Senior Notes due 2020 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,100,000,000 | 1,100,000,000 | ||||||||
Fair Value | 1,104,950,000 | 1,127,500,000 | ||||||||
Interest rate (as a percent) | 5.13% | 5.13% | 5.13% | 5.13% | ||||||
6 3/4% Senior Notes due 2021 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |||||||
Fair Value | 2,122,500,000 | 2,146,260,000 | 2,280,000,000 | |||||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | ||||||
5 7/8% Senior Notes due 2022 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |||||||
Fair Value | 1,997,500,000 | 2,040,000,000 | 2,150,000,000 | |||||||
Interest rate (as a percent) | 5.88% | 5.88% | 5.88% | 5.88% | ||||||
5% Senior Notes due 2023 | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 1,500,000,000 | 1,500,000,000 | 1,500,000,000 | |||||||
Fair Value | 1,458,090,000 | 1,447,500,000 | 1,548,750,000 | |||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | ||||||
Mortgages and other notes payable | ||||||||||
Long-term debt | ||||||||||
Carrying Value | 59,313,000 | 14,892,000 | 65,427,000 | |||||||
Fair Value | $59,313,000 | $14,892,000 | $65,427,000 |
LongTerm_Debt_Details_3
Long-Term Debt (Details 3) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Other long-term debt and capital lease obligations | ||
Total | $279,215 | $313,731 |
Less current portion | -32,607 | -34,787 |
Other long-term debt and capital lease obligations, net of current portion | 246,608 | 278,944 |
Satellite and other capital lease obligations | ||
Other long-term debt and capital lease obligations | ||
Total | 219,902 | 248,304 |
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates ranging from approximately 6% to 13% | ||
Other long-term debt and capital lease obligations | ||
Total | $59,313 | $65,427 |
Interest rate, low end of range (as a percent) | 6.00% | |
Interest rate, high end of range (as a percent) | 13.00% |
LongTerm_Debt_Details_4
Long-Term Debt (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Capital lease obligations | |||
Estimated fair value of satellites acquired under capital leases | $500,000,000 | $500,000,000 | |
Accumulated depreciation on satellites acquired under capital leases | 236,000,000 | 194,000,000 | |
Depreciation expense - capital leases | 43,000,000 | 43,000,000 | 43,000,000 |
Future minimum lease payments under the capital lease obligation, together with the present value of the net minimum lease payments | |||
2014 | 77,944,000 | ||
2015 | 76,007,000 | ||
2016 | 76,007,000 | ||
2017 | 76,007,000 | ||
2018 | 75,982,000 | ||
Thereafter | 162,331,000 | ||
Total minimum lease payments | 544,278,000 | ||
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments | -254,832,000 | ||
Net minimum lease payments | 289,446,000 | ||
Less: Amount representing interest | -69,544,000 | ||
Present value of net minimum lease payments | 219,902,000 | ||
Less: Current portion | -26,829,000 | ||
Long-term portion of capital lease obligations | $193,073,000 | ||
FSS Satellite Anik F3 | |||
Capital lease obligations | |||
Ku-band capacity leased (as a percent) | 100.00% | ||
Term of capital lease | 15 years | ||
Canadian DBS Satellite Ciel II | |||
Capital lease obligations | |||
Satellite capacity leased (as a percent) | 100.00% | ||
Initial term of capital lease | 10 years |
Income_Taxes_and_Accounting_fo2
Income Taxes and Accounting for Uncertainty in Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Taxes and Accounting for Uncertainty in Income Taxes | |||||||
Net operating loss carryforwards | $0 | ||||||
Net operating loss carryforwards | |||||||
Cash paid for income taxes to DISH Network | 322,632,000 | 274,894,000 | 433,120,000 | 272,599,000 | 384,462,000 | ||
Current (provision) benefit: | |||||||
Federal | -361,662,000 | -127,291,000 | -277,920,000 | ||||
State | -13,272,000 | 10,673,000 | -36,408,000 | ||||
Foreign | -13,316,000 | ||||||
Total current (provision) benefit | -388,250,000 | -116,618,000 | -314,328,000 | ||||
Deferred (provision) benefit: | |||||||
Federal | -65,955,000 | -126,561,000 | -553,393,000 | ||||
State | -5,450,000 | -42,747,000 | -35,887,000 | ||||
Decrease (increase) in valuation allowance | 6,761,000 | ||||||
Total deferred (provision) benefit | 87,889,000 | -62,826,000 | -71,405,000 | -169,308,000 | -582,519,000 | ||
Total benefit (provision) | -62,109,000 | -97,151,000 | -287,523,000 | -346,228,000 | -459,655,000 | -285,926,000 | -896,847,000 |
Reconciliation of amounts computed by applying the statutory Federal tax rate to income before taxes | |||||||
Statutory rate (as a percent) | -35.00% | -35.00% | -35.00% | ||||
State income taxes, net of Federal benefit (as a percent) | -1.00% | -2.70% | -2.00% | ||||
Other (as a percent) | 0.20% | 0.60% | -0.30% | ||||
Decrease (increase) in valuation allowance (as a percent) | 0.30% | ||||||
Total benefit (provision) for income taxes (as a percent) | -35.80% | -37.10% | -37.00% | ||||
Deferred tax assets: | |||||||
NOL, credit and other carryforwards | 10,645,000 | 9,565,000 | |||||
Accrued expenses | 48,416,000 | 75,996,000 | |||||
Stock-based compensation | 23,006,000 | 26,351,000 | |||||
Deferred revenue | 54,331,000 | 67,023,000 | |||||
Total deferred tax assets | 136,398,000 | 178,935,000 | |||||
Valuation allowance | -7,469,000 | -7,656,000 | |||||
Deferred tax asset after valuation allowance | 128,929,000 | 171,279,000 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | -1,272,014,000 | -1,234,003,000 | |||||
Unrealized gains on investments | -2,204,000 | -773,000 | |||||
Other liabilities | -36,629,000 | -29,130,000 | |||||
Total deferred tax liabilities | -1,310,847,000 | -1,263,906,000 | |||||
Net deferred tax asset (liability) | -1,181,918,000 | -1,092,627,000 | |||||
Current portion of net deferred tax asset | 65,457,000 | 91,722,000 | |||||
Noncurrent portion of net deferred tax asset (liability) | -1,247,375,000 | -1,184,349,000 | |||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits included in long-term deferred revenue, distribution and carriage payments and other long-term liabilities | |||||||
Balance as of beginning of period | 145,884,000 | 185,669,000 | 185,669,000 | 190,935,000 | 170,226,000 | ||
Additions based on tax positions related to the current year | 9,533,000 | 5,949,000 | 9,836,000 | ||||
Reductions based on tax positions related to the current years | -1,170,000 | ||||||
Additions based on tax positions related to prior years | 66,307,000 | 1,581,000 | 16,610,000 | ||||
Reductions based on tax positions related to prior years | -3,461,000 | ||||||
Reductions based on tax positions related to settlements with taxing authorities | -103,311,000 | -1,185,000 | |||||
Reductions based on tax positions related to the lapse of the statute of limitations | -12,314,000 | -9,335,000 | -3,382,000 | ||||
Balance as of end of period | 145,884,000 | 185,669,000 | 190,935,000 | ||||
Unrecognized tax benefits if recognized, could favorably affect our effective tax rate | 146,000,000 | ||||||
Interest and penalty (benefit) expense | 8,000,000 | 6,000,000 | -1,000,000 | ||||
Accrued interest and penalties | 13,000,000 | 15,000,000 | |||||
State | |||||||
Net operating loss carryforwards | |||||||
NOL benefit for state income tax purposes | 5,000,000 | ||||||
Tax benefits related to credit carryforwards | $11,000,000 |
Employee_Benefit_Plans_Details
Employee Benefit Plans (Details) (USD $) | 12 Months Ended | ||
Share data in Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
401(k) Employee Savings Plan | |||
Employer matching contribution as a percentage of voluntary employee contributions under 401(k) plan | 50.00% | ||
Employer maximum annual contribution per employee under 401(k) plan | $2,500 | ||
Expense recognized related to 401(k) plan | |||
Matching contributions, net of forfeitures, under 401(k) plan | 5,994,000 | 2,750,000 | 1,521,000 |
Discretionary stock contributions, net of forfeitures, under 401(k) plan | 26,096,000 | 23,772,000 | 22,331,000 |
Employee Stock Purchase Plan | |||
Employee Stock Purchase Plan | |||
Minimum number of calendar quarters to be employed for full-time employees to be eligible to participate in the ESPP | 3 months | ||
Maximum fair value of capital stock permitted to be purchased by employees in any one year under ESPP | $25,000 | ||
Employee Stock Purchase Plan | Class A common stock | |||
Employee Stock Purchase Plan | |||
Number of shares authorized to be issued under Employee Stock Purchase Plan (ESPP) | 2.8 | ||
Shares of common stock available for future grant under stock incentive plans | 1.1 | ||
Purchase price as percentage of closing market price on the last business day of each calendar quarter under ESPP | 85.00% | ||
Number of shares of common stock purchased under ESPP | 0.1 | 0.1 | 0.1 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | |||||
Dec. 31, 2013 | Dec. 28, 2012 | Dec. 02, 2011 | Jan. 31, 2013 | Jan. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
employee | employee | |||||||
DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Percentage of stock awards vesting per year (as a percent) | 20.00% | |||||||
Class A common stock | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Shares of common stock available for future grant under stock incentive plans | 69,700,000 | |||||||
Dividend in cash per share (in dollars per share) | $1 | $2 | ||||||
Class B common stock | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Dividend in cash per share (in dollars per share) | $1 | $2 | ||||||
Stock Options | Maximum | ||||||||
Stock-Based Compensation | ||||||||
Expiration term | 10 years | |||||||
Stock Options | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Stock Awards Outstanding (in shares) | 11,938,090 | 13,018,490 | 17,640,074 | 18,447,004 | ||||
Stock Options | Class A common stock | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Stock Awards Outstanding (in shares) | 11,900,000 | |||||||
Stock Options | Long-Term Performance Based Plans | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Stock Awards Outstanding (in shares) | 6,468,500 | 6,400,700 | 8,022,975 | |||||
Stock Options | 2012 stock option adjustment | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Number of stock options subject to an exercise price change in connection with the Stock Option Adjustment (in shares) | 12,900,000 | |||||||
Number of employees affected by stock option adjustment | 400 | |||||||
Reduction in exercise price due to dividend declaration (in dollars per share) | $0.77 | |||||||
Stock Options | 2011 stock option adjustment | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Number of stock options subject to an exercise price change in connection with the Stock Option Adjustment (in shares) | 17,300,000 | |||||||
Number of employees affected by stock option adjustment | 400 | |||||||
Reduction in exercise price due to dividend declaration (in dollars per share) | $2 | |||||||
Restricted Stock Units | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Restricted stock units outstanding (in shares) | 1,863,165 | 1,076,748 | 1,179,709 | 1,271,984 | ||||
Restricted Stock Units | Long-Term Performance Based Plans | DISH Network Awards | ||||||||
Stock-Based Compensation | ||||||||
Restricted stock units outstanding (in shares) | 1,863,165 | 1,076,748 | 1,179,709 |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Stock Options | DISH Network Awards | ||||
Stock-Based Compensation | ||||
Stock Awards Outstanding (in shares) | 11,938,090 | 13,018,490 | 17,640,074 | 18,447,004 |
Stock Options | DISH Network Awards | Held by DISH DBS employees | ||||
Stock-Based Compensation | ||||
Stock Awards Outstanding (in shares) | 11,938,090 | |||
Stock Options | EchoStar awards | Held by DISH DBS employees | ||||
Stock-Based Compensation | ||||
Stock Awards Outstanding (in shares) | 542,048 | |||
Restricted Stock Units | DISH Network Awards | Held by DISH DBS employees | ||||
Stock-Based Compensation | ||||
Stock Awards Outstanding (in shares) | 1,863,165 | |||
Restricted Stock Units | EchoStar awards | Held by DISH DBS employees | ||||
Stock-Based Compensation | ||||
Stock Awards Outstanding (in shares) | 41,622 |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details 3) (Stock Options, DISH Network Awards, USD $) | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Exercise prices for stock options outstanding and exercisable: | ||||
Number of stock options outstanding (in shares) | 11,938,090 | 13,018,490 | 17,640,074 | 18,447,004 |
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $22.49 | $18.99 | $20.38 | $17.76 |
Number of stock options exercisable | 4,061,289 | 4,310,489 | 6,387,798 | |
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $17.88 | $17.92 | $21.73 | |
Range of Exercise Prices $00.00 - $10.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $0 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $10 | |||
Number of stock options outstanding (in shares) | 1,514,885 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 3 years 9 months 14 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $6.33 | |||
Number of stock options exercisable | 1,411,885 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 3 years 8 months 5 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $6.33 | |||
Range of Exercise Prices $10.01 - $15.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $10.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $15 | |||
Number of stock options outstanding (in shares) | 138,286 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 5 years 5 months 26 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $12.16 | |||
Number of stock options exercisable | 23,085 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 5 years 3 months 11 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $12.75 | |||
Range of Exercise Prices $15.01 - $20.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $15.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $20 | |||
Number of stock options outstanding (in shares) | 3,860,300 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 4 years 1 month 13 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $17.37 | |||
Number of stock options exercisable | 426,700 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 2 years 9 months | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $17.72 | |||
Range of Exercise Prices $20.01 - $25.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $20.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $25 | |||
Number of stock options outstanding (in shares) | 1,560,312 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 4 years 22 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $21.47 | |||
Number of stock options exercisable | 893,412 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 2 years 7 months 13 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $21.34 | |||
Range of Exercise Prices $25.01 - $30.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $25.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $30 | |||
Number of stock options outstanding (in shares) | 2,238,007 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 7 years 1 month 2 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $27.80 | |||
Number of stock options exercisable | 1,200,907 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 6 years 7 months 20 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $27.71 | |||
Range of Exercise Prices $30.01 - $35.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $30.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $35 | |||
Number of stock options outstanding (in shares) | 437,800 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 6 years 11 months 12 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $32.04 | |||
Number of stock options exercisable | 88,300 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 5 years 3 months 14 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $31.82 | |||
Range of Exercise Prices $35.01 - $40.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $35.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $40 | |||
Number of stock options outstanding (in shares) | 2,159,500 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 9 years 11 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $36.64 | |||
Number of stock options exercisable | 7,000 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 9 years 4 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $36.40 | |||
Range of Exercise Prices $40.01 - $45.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $40.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $45 | |||
Number of stock options outstanding (in shares) | 10,000 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 4 years 6 months | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $42.52 | |||
Number of stock options exercisable | 10,000 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 4 years 6 months | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $42.52 | |||
Range of Exercise Prices $45.01 - $50.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $45.01 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $50 | |||
Number of stock options outstanding (in shares) | 19,000 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 9 years 4 months 10 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $45.68 | |||
Range of Exercise Prices $00.00 - $50.00 | ||||
Exercise prices for stock options outstanding and exercisable: | ||||
Exercise prices, outstanding stock option awards, low end of range (in dollars per share) | $0 | |||
Exercise prices, outstanding stock option awards, high end of range (in dollars per share) | $50 | |||
Number of stock options outstanding (in shares) | 11,938,090 | |||
Outstanding, Weighted-Average Remaining Contractual Life | 5 years 7 months 24 days | |||
Outstanding, Weighted-Average Exercise Price (in dollars per share) | $22.49 | |||
Number of stock options exercisable | 4,061,289 | |||
Exercisable, Weighted-Average Remaining Contractual Life | 4 years 3 months 11 days | |||
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $17.88 |
StockBased_Compensation_Detail3
Stock-Based Compensation (Details 4) (Stock Options, DISH Network Awards, USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Stock option activity | |||
Total options outstanding, beginning of period (in shares) | 13,018,490 | 17,640,074 | 18,447,004 |
Granted (in shares) | 2,225,500 | 589,500 | 3,198,500 |
Exercised (in shares) | -3,172,900 | -4,406,888 | -1,640,462 |
Forfeited and cancelled (in shares) | -133,000 | -804,196 | -2,364,968 |
Total options outstanding, end of period (in shares) | 11,938,090 | 13,018,490 | 17,640,074 |
Exercisable at the end of the period (in shares) | 4,061,289 | 4,310,489 | 6,387,798 |
Weighted-Average Exercise Price | |||
Total options outstanding, beginning of the period (in dollars per share) | $18.99 | $20.38 | $17.76 |
Granted (in dollars per share) | $36.75 | $32.25 | $28.52 |
Exercised (in dollars per share) | $14.70 | $18.51 | $12.36 |
Forfeited and cancelled (in dollars per share) | $30.25 | $20.34 | $12.11 |
Total options outstanding at the end of the period (in dollars per share) | $22.49 | $18.99 | $20.38 |
Exercisable, Weighted-Average Exercise Price (in dollars per share) | $17.88 | $17.92 | $21.73 |
Long-Term Performance Based Plans | |||
Stock option activity | |||
Total options outstanding, end of period (in shares) | 6,468,500 | 6,400,700 | 8,022,975 |
Weighted-Average Exercise Price | |||
Total options outstanding at the end of the period (in dollars per share) | $24.92 | $18.71 | $18.89 |
StockBased_Compensation_Detail4
Stock-Based Compensation (Details 5) (Stock Options, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stock Options | |||
Stock-Based Compensation | |||
Tax benefit from stock awards exercised | $37,583 | $22,898 | $9,786 |
StockBased_Compensation_Detail5
Stock-Based Compensation (Details 6) (Stock Options, DISH Network Awards, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Stock Options | DISH Network Awards | |
Aggregate intrinsic value | |
Aggregate intrinsic value of stock options outstanding | $422,987 |
Aggregate intrinsic value of stock options exercisable | $162,600 |
StockBased_Compensation_Detail6
Stock-Based Compensation (Details 7) (Restricted Stock Units, DISH Network Awards, USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Restricted stock unit activity | |||
Total restricted stock units outstanding, beginning of period (in shares) | 1,076,748 | 1,179,709 | 1,271,984 |
Granted (in shares) | 990,000 | 300,000 | |
Vested (in shares) | -135,250 | -24,795 | -14,705 |
Forfeited and cancelled (in shares) | -68,333 | -78,166 | -377,570 |
Total restricted stock units outstanding, end of period (in shares) | 1,863,165 | 1,076,748 | 1,179,709 |
Weighted- Average Grant Date Fair Value | |||
Total restricted stock units outstanding, beginning of period (in dollars per share) | $22.82 | $23.11 | $22.06 |
Granted (in dollars per share) | $36.53 | $30.67 | |
Vested (in dollars per share) | $29.19 | $22.94 | $11.09 |
Forfeited and cancelled (in dollars per share) | $32.91 | $27.20 | $26.23 |
Total restricted stock units outstanding, end of period (in dollars per share) | $29.27 | $22.82 | $23.11 |
Long-Term Performance Based Plans | |||
Restricted stock unit activity | |||
Total restricted stock units outstanding, end of period (in shares) | 1,863,165 | 1,076,748 | 1,179,709 |
Weighted- Average Grant Date Fair Value | |||
Total restricted stock units outstanding, end of period (in dollars per share) | $29.27 | $22.82 | $23.11 |
StockBased_Compensation_Detail7
Stock-Based Compensation (Details 8) (USD $) | 12 Months Ended | 3 Months Ended | |||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2005 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2010 |
Recognized non-cash stock-based compensation expense | |||||||
Non-cash stock-based compensation expense recognized | $29,647 | $38,573 | $31,163 | ||||
Long-Term Performance Based Plans | |||||||
Recognized non-cash stock-based compensation expense | |||||||
Non-cash stock-based compensation expense recognized | 14,901 | 16,496 | 19,088 | ||||
LTIP 2005 | |||||||
2005 LTIP Terms | |||||||
Awards vesting period | 7 years | ||||||
Percentage awards vesting per annum during first four years | 10.00% | ||||||
Percentage awards vesting per annum after first four years | 20.00% | ||||||
Share-based expense | |||||||
Unrecognized compensation expense relating to long-term performance based incentive awards | 37,826 | ||||||
Unrecognized non-cash stock-based compensation expense on vested portion | 36,621 | ||||||
LTIP 2008 | |||||||
Share-based compensation additional disclosures | |||||||
Portion vested (as a percent) | 100.00% | ||||||
Recognized non-cash stock-based compensation expense | |||||||
Non-cash stock-based compensation expense recognized | 2,719 | 9,025 | 18,944 | ||||
2013 LTIP | |||||||
Share-based compensation additional disclosures | |||||||
Percentage of performance goals probable of achievement | 20.00% | ||||||
Recognized non-cash stock-based compensation expense | |||||||
Non-cash stock-based compensation expense recognized | 8,137 | ||||||
Other Employee Performance Awards | |||||||
Recognized non-cash stock-based compensation expense | |||||||
Non-cash stock-based compensation expense recognized | 4,045 | 7,471 | 144 | ||||
DISH Network Awards | 2013 LTIP | |||||||
Estimated Remaining Non-Cash, Stock-Based Compensation Expense | |||||||
Remaining expense estimated to be recognized during 2014 | 5,460 | ||||||
Estimated contingent expense subsequent to 2014 | 52,311 | ||||||
Total estimated remaining expense over the term of plan | 57,771 | ||||||
DISH Network Awards | Other Employee Performance Awards | |||||||
Estimated Remaining Non-Cash, Stock-Based Compensation Expense | |||||||
Remaining expense estimated to be recognized during 2014 | 432 | ||||||
Estimated contingent expense subsequent to 2014 | 38,817 | ||||||
Total estimated remaining expense over the term of plan | 39,249 | ||||||
DISH Network Awards | Held by DISH DBS employees | LTIP 2005 | |||||||
Share-based expense | |||||||
Unrecognized compensation expense relating to long-term performance based incentive awards | 32,251 | ||||||
Unrecognized non-cash stock-based compensation expense on vested portion | 31,124 | ||||||
EchoStar awards | Held by DISH DBS employees | LTIP 2005 | |||||||
Share-based expense | |||||||
Unrecognized compensation expense relating to long-term performance based incentive awards | 5,575 | ||||||
Unrecognized non-cash stock-based compensation expense on vested portion | $5,497 | ||||||
Stock Options | DISH Network Awards | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 11,938,090 | 13,018,490 | 17,640,074 | 18,447,004 | |||
Weighted-Average Exercise Price (in dollars per share) | $22.49 | $18.99 | $20.38 | $17.76 | |||
Stock Options | DISH Network Awards | Long-Term Performance Based Plans | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 6,468,500 | 6,400,700 | 8,022,975 | ||||
Weighted-Average Exercise Price (in dollars per share) | $24.92 | $18.71 | $18.89 | ||||
Stock Options | DISH Network Awards | LTIP 2005 | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 1,878,500 | ||||||
Weighted-Average Exercise Price (in dollars per share) | $20.83 | ||||||
Stock Options | DISH Network Awards | 2013 LTIP | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 1,920,000 | ||||||
Weighted-Average Exercise Price (in dollars per share) | $36.53 | ||||||
Stock Options | DISH Network Awards | Other Employee Performance Awards | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 2,670,000 | ||||||
Weighted-Average Exercise Price (in dollars per share) | $19.46 | ||||||
Stock Options | DISH Network Awards | Held by DISH DBS employees | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 11,938,090 | ||||||
Stock Options | EchoStar awards | Held by DISH DBS employees | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 542,048 | ||||||
Restricted Stock Units | DISH Network Awards | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Restricted Performance Units (in shares) | 1,863,165 | 1,076,748 | 1,179,709 | 1,271,984 | |||
Restricted Stock Units | DISH Network Awards | Long-Term Performance Based Plans | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Restricted Performance Units (in shares) | 1,863,165 | 1,076,748 | 1,179,709 | ||||
Restricted Stock Units | DISH Network Awards | LTIP 2005 | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Restricted Performance Units (in shares) | 208,165 | ||||||
Restricted Stock Units | DISH Network Awards | 2013 LTIP | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Restricted Performance Units (in shares) | 960,000 | ||||||
Restricted Stock Units | DISH Network Awards | Other Employee Performance Awards | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Restricted Performance Units (in shares) | 695,000 | ||||||
Restricted Stock Units | DISH Network Awards | Held by DISH DBS employees | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 1,863,165 | ||||||
Restricted Stock Units | EchoStar awards | Held by DISH DBS employees | |||||||
Outstanding awards pursuant to performance-based stock incentive plans | |||||||
Performance Based Stock Options (in shares) | 41,622 |
StockBased_Compensation_Detail8
Stock-Based Compensation (Details 9) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Stock-Based Compensation | |||
Non-cash, stock-based compensation | $29,647,000 | $38,573,000 | $31,163,000 |
Non-Performance Based Stock Awards | |||
Stock-Based Compensation | |||
Unrecognized compensation expense | 12,000,000 | ||
Future forfeiture rate (as a percent) | 3.70% | ||
Weighted average period for recognition of compensation cost | 2 years | ||
Stock option adjustment 2011 | |||
Stock-Based Compensation | |||
Non-cash, stock-based compensation | 13,000,000 | ||
Stock option adjustment 2012 | |||
Stock-Based Compensation | |||
Non-cash, stock-based compensation | 4,000,000 | ||
Subscriber-related | |||
Stock-Based Compensation | |||
Non-cash, stock-based compensation | 1,947,000 | 1,607,000 | 1,914,000 |
General and administrative | |||
Stock-Based Compensation | |||
Non-cash, stock-based compensation | $27,700,000 | $36,966,000 | $29,249,000 |
StockBased_Compensation_Detail9
Stock-Based Compensation (Details 10) (USD $) | 0 Months Ended | 12 Months Ended | |||
Dec. 28, 2012 | Dec. 02, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Class A common stock | DISH Network Awards | |||||
Black-Scholes option valuation model, assumptions | |||||
Dividend in cash per share (in dollars per share) | $1 | $2 | |||
Class B common stock | DISH Network Awards | |||||
Black-Scholes option valuation model, assumptions | |||||
Dividend in cash per share (in dollars per share) | $1 | $2 | |||
Stock Options | |||||
Black-Scholes option valuation model, assumptions | |||||
Risk-free interest rate, low end of range (as a percent) | 0.91% | 0.41% | 0.36% | ||
Risk-free interest rate, high end of range (as a percent) | 2.66% | 1.29% | 3.18% | ||
Volatility factor, low end of range (as a percent) | 32.37% | 33.15% | 31.74% | ||
Volatility factor, high end of range (as a percent) | 39.87% | 39.50% | 45.56% | ||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | ||
Stock Options | Maximum | |||||
Black-Scholes option valuation model, assumptions | |||||
Expected term of options | 10 years | 5 years 10 months 24 days | 10 years | ||
Weighted-average fair value of options granted (in dollars per share) | 21.09 | 13.79 | 14.77 | ||
Stock Options | Minimum | |||||
Black-Scholes option valuation model, assumptions | |||||
Expected term of options | 5 years 7 months 6 days | 3 years 1 month 6 days | 3 years 7 months 6 days | ||
Weighted-average fair value of options granted (in dollars per share) | 14.49 | 6.72 | 8.73 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Commitment and Contingencies | |
Total | $23,264,157 |
2014 | 3,994,594 |
2015 | 2,235,622 |
2016 | 2,774,378 |
2017 | 1,942,598 |
2018 | 2,139,735 |
Thereafter | 10,177,230 |
Long-term debt obligations | |
Commitment and Contingencies | |
Total | 13,409,313 |
2014 | 1,005,778 |
2015 | 756,159 |
2016 | 1,504,669 |
2017 | 904,903 |
2018 | 1,205,197 |
Thereafter | 8,032,607 |
Capital lease obligations | |
Commitment and Contingencies | |
Total | 219,902 |
2014 | 26,829 |
2015 | 27,372 |
2016 | 30,058 |
2017 | 32,994 |
2018 | 36,175 |
Thereafter | 66,474 |
Interest expense on long-term debt and capital lease obligations | |
Commitment and Contingencies | |
Total | 4,718,745 |
2014 | 838,801 |
2015 | 741,005 |
2016 | 655,467 |
2017 | 599,028 |
2018 | 528,620 |
Thereafter | 1,355,824 |
Satellite-related obligations | |
Commitment and Contingencies | |
Total | 1,717,153 |
2014 | 250,741 |
2015 | 230,225 |
2016 | 230,138 |
2017 | 225,464 |
2018 | 225,246 |
Thereafter | 555,339 |
Operating lease obligations | |
Commitment and Contingencies | |
Total | 179,355 |
2014 | 45,868 |
2015 | 36,204 |
2016 | 31,793 |
2017 | 15,150 |
2018 | 8,438 |
Thereafter | 41,902 |
Purchase obligations | |
Commitment and Contingencies | |
Total | 3,019,689 |
2014 | 1,826,577 |
2015 | 444,657 |
2016 | 322,253 |
2017 | 165,059 |
2018 | 136,059 |
Thereafter | $125,084 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 0 Months Ended | |
Feb. 20, 2014 | Dec. 31, 2013 | |
item | ||
Operating lease obligations | ||
2014 | $3,994,594,000 | |
2015 | 2,235,622,000 | |
2016 | 2,774,378,000 | |
2017 | 1,942,598,000 | |
2018 | 2,139,735,000 | |
Thereafter | 10,177,230,000 | |
Transferred Satellites-related obligations | Subsequent event | ||
Operating lease obligations | ||
2014 | 148,000,000 | |
2015 | 175,000,000 | |
2016 | 123,000,000 | |
2017 | 102,000,000 | |
2018 | 102,000,000 | |
Thereafter | 329,000,000 | |
Long-term debt obligations | ||
Operating lease obligations | ||
2014 | 1,005,778,000 | |
2015 | 756,159,000 | |
2016 | 1,504,669,000 | |
2017 | 904,903,000 | |
2018 | 1,205,197,000 | |
Thereafter | 8,032,607,000 | |
Long-term debt obligations | Subsequent event | ||
Reduction in contractual obligation | ||
2014 | 5,000,000 | |
2015 | 5,000,000 | |
2016 | 4,000,000 | |
2017 | 4,000,000 | |
2018 | 4,000,000 | |
Thereafter | 22,000,000 | |
Interest expense on long-term debt and capital lease obligations | ||
Operating lease obligations | ||
2014 | 838,801,000 | |
2015 | 741,005,000 | |
2016 | 655,467,000 | |
2017 | 599,028,000 | |
2018 | 528,620,000 | |
Thereafter | 1,355,824,000 | |
Interest expense on long-term debt and capital lease obligations | Subsequent event | ||
Reduction in contractual obligation | ||
2014 | 3,000,000 | |
2015 | 2,000,000 | |
2016 | 2,000,000 | |
2017 | 2,000,000 | |
2018 | 1,000,000 | |
Thereafter | 5,000,000 | |
Satellite and Tracking Stock Transaction | EchoStar and HSSC | ||
Commitments | ||
Number of owned satellites transferred and leased back | 5 | |
Obligations and interest payments transferred | 59,000,000 | |
Cash in exchange for shares of series of preferred tracking stock issued | 11,000,000 | |
Satellite and Tracking Stock Transaction | EchoStar and HSSC | Subsequent event | ||
Commitments | ||
Number of owned satellites transferred and leased back | 5 | |
Obligations and interest payments transferred | 59,000,000 | |
Cash in exchange for shares of series of preferred tracking stock issued | $11,000,000 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details 3) (USD $) | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||
Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 20, 2013 | Mar. 28, 2014 | Oct. 29, 2013 | Dec. 31, 2008 | Dec. 17, 2013 | 31-May-14 | Mar. 09, 2012 | Dec. 31, 2010 | Feb. 27, 2014 | |
Spectrum Investments | |||||||||||||
Unrecognized tax benefits | $145,884,000 | $185,669,000 | $190,935,000 | $170,226,000 | |||||||||
Accelerated period to meet Final Build-Out Requirement on failure to meet Interim Build-Out Requirement | 1 year | ||||||||||||
Dividend paid to DOC | 650,000,000 | 907,230,000 | 3,500,000,000 | ||||||||||
Wireless Spectrum | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate reserve price of H Block wireless spectrum | 1,564,000,000 | ||||||||||||
Dish Network | |||||||||||||
Spectrum Investments | |||||||||||||
Payment to acquire certain 700 MHz wireless licenses | 712,000,000 | ||||||||||||
700 MHz Interim Build-Out Requirement (as a percent) | 35.00% | 35.00% | |||||||||||
700 MHz Final Build-Out Requirement (as a percent) | 70.00% | 70.00% | |||||||||||
Modified 700 MHz Interim Build-Out Requirement (as a percent) | 40.00% | ||||||||||||
Modified 700 MHz Final Build-Out Requirement (as a percent) | 70.00% | ||||||||||||
Accelerated period to meet Modified 700 MHz Build-Out Requirement on failure to meet Modified 700 MHz Interim Build-Out Requirement | 1 year | 1 year | |||||||||||
Dividend paid to DOC | 650,000,000 | ||||||||||||
Dish Network | Subsequent event | |||||||||||||
Spectrum Investments | |||||||||||||
Dividend paid to DOC | 650,000,000 | ||||||||||||
Dish Network | Wireless Spectrum | |||||||||||||
Spectrum Investments | |||||||||||||
Extension term of AWS-4 Final Build-Out Requirement | 1 year | 1 year | |||||||||||
Accelerated period to meet Final Build-Out Requirement on failure to meet Interim Build-Out Requirement | 1 year | ||||||||||||
Aggregate bid price | 1,564,000,000 | ||||||||||||
Payment to meet H Block auction requirements | 328,000,000 | ||||||||||||
Remaining balance amount due of H Block spectrum licenses | 1,236,000,000 | ||||||||||||
Maximum period of payment for clearance cost from issuance of the H Block licenses | 30 days | ||||||||||||
H Block Interim Build-Out Requirement (as a percent) | 40.00% | 40.00% | |||||||||||
Accelerated period to meet Interim Build-Out Requirement | 4 years | ||||||||||||
Accelerated period to meet Final Build-Out Requirement | 10 years | ||||||||||||
H Block Final Build-Out Requirement (as a percent) | 75.00% | 75.00% | |||||||||||
Accelerated period to meet Build-Out Requirement on failure | 2 years | 2 years | |||||||||||
Accelerated period to meet final Build-Out Requirement on failure | 8 years | ||||||||||||
Dish Network | Wireless Spectrum | UTAM, Inc. | |||||||||||||
Spectrum Investments | |||||||||||||
Payment for clearance costs associated with the lower H Block spectrum | 13,000,000 | 13,000,000 | |||||||||||
Dish Network | Wireless Spectrum | Sprint | |||||||||||||
Spectrum Investments | |||||||||||||
Payment for clearance costs associated with the upper H Block spectrum | 95,000,000 | 95,000,000 | |||||||||||
Dish Network | Wireless Spectrum | Subsequent event | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate bid price | 1,564,000,000 | ||||||||||||
Dish Network | DBSD North America and TerreStar Transactions | Wireless Spectrum | |||||||||||||
Spectrum Investments | |||||||||||||
Purchase price | $2,860,000,000 | ||||||||||||
AWS-4 Interim Build-Out Requirement (as a percent) | 40.00% | 40.00% | |||||||||||
AWS-4 Final Build-Out Requirement (as a percent) | 70.00% | 70.00% | |||||||||||
Dish Network | Networks Inc. Terrestal | |||||||||||||
Spectrum Investments | |||||||||||||
Percentage of equity acquired | 100.00% |
Commitments_and_Contingencies_4
Commitments and Contingencies (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Commitments | |||
Total rent expense for operating leases | $303 | $252 | $267 |
Minimum | |||
Commitments | |||
Term of programming contracts | 1 year | ||
Maximum | |||
Commitments | |||
Term of programming contracts | 10 years |
Commitments_and_Contingencies_5
Commitments and Contingencies (Details 5) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 09, 2013 | Oct. 23, 2012 | Jan. 31, 2008 | Dec. 31, 2007 | Oct. 11, 2012 | Apr. 30, 2009 | Mar. 31, 2013 | Dec. 31, 2008 | Jul. 31, 2009 | 31-May-12 | Dec. 23, 2013 | Jul. 08, 2014 | Jun. 21, 2011 | Dec. 31, 2010 | Mar. 15, 2010 | |
item | Patent | item | ||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
General and administrative expenses | $189,961,000 | $172,100,000 | $547,926,000 | $502,974,000 | $617,898,000 | $616,339,000 | $570,699,000 | |||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Litigation expense | 730,457,000 | -316,949,000 | ||||||||||||||||||||
Garnet Digital | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of companies against whom similar complaints brought | 15 | |||||||||||||||||||||
LightSquared transaction shareholder derivative actions | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of shareholders who filed lawsuits | 5 | 5 | ||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of plaintiffs seeking a preliminary injunction | 0 | |||||||||||||||||||||
Voom Settlement Agreement | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 2,500,000,000 | |||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Cash paid under settlement agreement | 700,000,000 | |||||||||||||||||||||
Payments under the multi-year affiliation agreement allocated to the fair value of the Voom Settlement Agreement | 54,000,000 | |||||||||||||||||||||
Fair value of MVDDS Licenses | 24,000,000 | |||||||||||||||||||||
Litigation expense | 730,000,000 | |||||||||||||||||||||
Katz Communications-Patent infringement | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of patents the suit alleges infringement of | 19 | |||||||||||||||||||||
Number of patents remain in the lawsuit | 4 | 4 | 4 | |||||||||||||||||||
Number of reexamination petitions pending before patent and trademark office | 2 | 2 | ||||||||||||||||||||
Satellite lease guarantees | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Guarantees for payments | 10,000,000 | 10,000,000 | 50,000,000 | |||||||||||||||||||
Guarantee term | P5M | P14M | ||||||||||||||||||||
Satellite transponder guarantees | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Guarantees for payments | 327,000,000 | 327,000,000 | 375,000,000 | |||||||||||||||||||
ESPN-Affiliation agreements | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 30,000,000 | 35,000,000 | ||||||||||||||||||||
Court ruling | 66,000,000 | 66,000,000 | ||||||||||||||||||||
Litigation accrual | 71,000,000 | 42,000,000 | ||||||||||||||||||||
Attorneys' fees | 24,000,000 | 5,000,000 | 71,000,000 | |||||||||||||||||||
General and administrative expenses | 5,000,000 | |||||||||||||||||||||
Payment of accrued interest | 12,000,000 | |||||||||||||||||||||
Technology Development Licensing | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of reexamination petitions pending before patent and trademark office | 2 | |||||||||||||||||||||
Pragmatus | Minimum | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of plaintiffs seeking a preliminary injunction | 40 | |||||||||||||||||||||
Hopper litigation | Maximum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of days to store HD primetime programs recordings | 8 days | |||||||||||||||||||||
Norman IP Holdings | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Minimum number of autonomous streamlined signal processors | 1 | 1 | ||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||
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 | ||||||||||||||||||||
Do Not Call Litigation | DISH Network L.L.C. | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 270,000,000 | |||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Business days allowed to terminate existing agreements | 3 days | 3 days | ||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | Minimum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | $500,000,000 |
Valuation_and_Qualifying_Accou2
Valuation and Qualifying Accounts (Details) (Allowance for doubtful accounts, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for doubtful accounts | |||
Activity in Valuation and Qualifying Accounts | |||
Balance at Beginning of Year | $13,834 | $11,916 | $29,650 |
Charged to Cost and Expenses | 125,664 | 116,742 | 94,678 |
Deductions | -123,517 | -114,824 | -112,412 |
Balance at End of Year | $15,981 | $13,834 | $11,916 |
Quarterly_Financial_Data_Unaud2
Quarterly Financial Data (Unaudited) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Quarterly Financial Data (Unaudited) | ||||||||||||||
Total revenue | $3,585,372 | $3,465,572 | $3,448,860 | $3,444,922 | $3,336,258 | $3,294,876 | $3,291,877 | $3,317,621 | $3,247,226 | $10,694,147 | $10,230,040 | $13,695,612 | $13,151,600 | $13,060,046 |
Operating income (loss) | 420,459 | 518,178 | 494,094 | 601,161 | 514,113 | 539,061 | -222,334 | 502,238 | 573,970 | 1,425,925 | 1,609,368 | 2,127,546 | 1,392,935 | 2,950,400 |
Net income (loss) attributable to DISH DBS | $198,382 | $186,527 | $233,882 | $206,231 | $225,585 | ($240,719) | $221,910 | $277,490 | $824,722 | $484,266 | $1,525,683 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 28, 2014 | Dec. 27, 2012 | Dec. 02, 2012 | Oct. 02, 2012 | Nov. 30, 2011 | Nov. 01, 2011 | Aug. 10, 2011 | Apr. 19, 2011 | Oct. 14, 2014 | |
Related Party Transactions | ||||||||||||||||
Net satellite broadband assets distributed to DISH Network | $8,628,000 | |||||||||||||||
Aggregate dividend declared | 915,858,000 | 3,500,000,000 | ||||||||||||||
Dividend paid to DOC | 650,000,000 | 907,230,000 | 3,500,000,000 | |||||||||||||
Subscriber-related revenue | 3,553,828,000 | 3,408,510,000 | 10,582,989,000 | 10,131,098,000 | 13,559,511,000 | 13,038,611,000 | 12,959,025,000 | |||||||||
Subscriber-related expenses | 2,072,891,000 | 1,938,142,000 | 6,131,068,000 | 5,718,781,000 | 7,677,111,000 | 7,246,104,000 | 6,841,760,000 | |||||||||
Expenses associated with services | 3,000,000 | 3,000,000 | 8,000,000 | 7,000,000 | 10,000,000 | 11,000,000 | 2,000,000 | |||||||||
Dish Network | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Distribution to DOC of the assets and liabilities associated with satellite broadband business | 66,000,000 | |||||||||||||||
Net satellite broadband assets distributed to DISH Network | 9,000,000 | |||||||||||||||
Deemed dividend | 57,000,000 | |||||||||||||||
Aggregate dividend declared | 453,000,000 | 893,000,000 | ||||||||||||||
Dividend paid to DOC | 650,000,000 | 850,000,000 | 1,300,000,000 | 700,000,000 | 1,500,000,000 | |||||||||||
Subscriber-related revenue | 5,000,000 | 5,000,000 | 14,000,000 | 11,000,000 | 15,000,000 | |||||||||||
Dish Network | Subsequent event | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Dividend paid to DOC | 650,000,000 | 1,500,000,000 | ||||||||||||||
Dish Network | Class A common stock | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Dividend declared (in dollars per share) | $1 | $2 | ||||||||||||||
Dish Network | Class B common stock | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Dividend declared (in dollars per share) | $1 | $2 | ||||||||||||||
Blockbuster, Inc. | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Subscriber-related expenses | $3,000,000 | $11,000,000 | $11,000,000 | $21,000,000 | $4,000,000 |
Related_Party_Transactions_Det1
Related Party Transactions (Details 2) (EchoStar) | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | Jan. 02, 2014 | Jan. 02, 2013 | Dec. 31, 2012 | 31-May-13 | |
item | ||||||
Remanufactured Receiver Agreement | Minimum | ||||||
Related Party Transactions | ||||||
Minimum required notice period for termination of agreement by related party | 60 days | 60 days | ||||
Professional Services Agreement | Dish Network | ||||||
Related Party Transactions | ||||||
Agreement term | 1 year | |||||
Automatic renewal period | 1 year | 1 year | ||||
Minimum notice period for termination of agreement | 60 days | 60 days | ||||
Minimum notice period for termination of a specific service | 30 days | 30 days | ||||
Management Services Agreement | Dish Network | ||||||
Related Party Transactions | ||||||
Automatic renewal period | 1 year | |||||
El Paso Lease Agreement | Dish Network | ||||||
Related Party Transactions | ||||||
Number of consecutive three year renewal options | 4 | |||||
Term of renewal option | 3 years | |||||
EchoStar XV | ||||||
Related Party Transactions | ||||||
Notice period for termination of agreement | 30 days |
Related_Party_Transactions_Det2
Related Party Transactions (Details 3) (USD $) | 9 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | 31-May-10 | Mar. 02, 2014 | 31-May-13 | Dec. 21, 2012 | Dec. 31, 2009 | Sep. 30, 2012 | Dec. 31, 2008 | 31-May-12 | Sep. 30, 2013 | Jan. 02, 2012 |
transponder | transponder | |||||||||||
EchoStar XVI | ||||||||||||
Related Party Transactions | ||||||||||||
Notice period to exercise option to extend agreement | 6 years | 6 years | ||||||||||
EchoStar | Certain Sports Related Programming Broadcast Agreement | ||||||||||||
Related Party Transactions | ||||||||||||
Agreement term | 10 years | |||||||||||
EchoStar | EchoStar VIII | ||||||||||||
Related Party Transactions | ||||||||||||
Notice period for termination of agreement | 30 days | 30 days | ||||||||||
EchoStar | EchoStar XVI | ||||||||||||
Related Party Transactions | ||||||||||||
Agreement term from commencement of service date | 4 years | 10 years | ||||||||||
Notice period to exercise option to extend agreement | 6 years | 6 years | ||||||||||
Additional term of renewal option | 5 years | 5 years | ||||||||||
EchoStar | DISH Nimiq 5 Agreement | ||||||||||||
Related Party Transactions | ||||||||||||
Agreement term | 10 years | |||||||||||
Agreement term with third party | 15 years | |||||||||||
Number of DBS transponders available to receive services | 32 | |||||||||||
Number of DBS transponders currently used | 32 | |||||||||||
EchoStar | QuetzSat-1 Lease Agreement | ||||||||||||
Related Party Transactions | ||||||||||||
Agreement term with third party | 10 years | |||||||||||
Number of DBS transponders currently used | 32 | |||||||||||
Number of DBS transponders expected to receive services | 24 | |||||||||||
Number of transponders subleased | 5 | |||||||||||
EchoStar | 103 degree orbital location member | ||||||||||||
Related Party Transactions | ||||||||||||
Agreement term | 10 years | |||||||||||
Payments to the related party | $23 | |||||||||||
Net book value of asset | 20 | |||||||||||
Capital distribution | $3 | |||||||||||
Agreement term from commencement of service date | 10 years | |||||||||||
EchoStar | TT&C Agreement | ||||||||||||
Related Party Transactions | ||||||||||||
Required notice period for termination by the reporting entity | 60 days | 60 days | ||||||||||
EchoStar | Prior Broadcast Agreement | Minimum | ||||||||||||
Related Party Transactions | ||||||||||||
Required notice period for termination by the reporting entity | 60 days | |||||||||||
EchoStar | Prior TT&C Agreement | ||||||||||||
Related Party Transactions | ||||||||||||
Required notice period for termination by the reporting entity | 60 days |
Related_Party_Transactions_Det3
Related Party Transactions (Details 4) (EchoStar) | 9 Months Ended | 12 Months Ended | 0 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | Jan. 02, 2010 | Feb. 23, 2010 | |
Product Support Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 60 days | 60 days | ||
Inverness Lease Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 6 months | 6 months | ||
Gilbert Lease Agreement | ||||
Related Party Transactions | ||||
Minimum notice period for termination of agreement | 30 days | |||
DISH Online.com Services Agreement | ||||
Related Party Transactions | ||||
Number of successive one year renewal options | 3 | |||
Term of renewal option exercised | 1 year | 1 year | ||
Agreement term | 2 years | |||
DISH Online.com Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | 120 days | ||
DISH Remote Access Services Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Agreement term | 5 years | |||
Automatic renewal period | 1 year | 1 year | ||
DISH Remote Access Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Sling Service Services Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Agreement term | 5 years | |||
Automatic renewal period | 1 year | 1 year | ||
Sling Service Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Application Development Agreement | ||||
Related Party Transactions | ||||
Minimum notice period for termination of agreement | 90 days | 90 days | ||
Automatic renewal period | 1 year | 1 year | ||
XiP Encryption Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 180 days | |||
Notice period to exercise option to extend agreement | 1 year | 1 year | ||
Minimum notice period for termination of agreement | 30 days | 30 days | ||
Notice period required to extend the agreement term | 180 days | 180 days | ||
XiP Encryption Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 180 days | |||
Santa Fe Lease Agreement | ||||
Related Party Transactions | ||||
Notice period to exercise option to extend agreement | 1 year | 1 year |
Related_Party_Transactions_Det4
Related Party Transactions (Details 5) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Nov. 03, 2011 | Apr. 29, 2011 | Jan. 31, 2012 | Sep. 30, 2010 | Dec. 31, 2011 | Dec. 31, 2010 | |
item | |||||||||||||
Related Party Transactions | |||||||||||||
Cost of sales - equipment, services and other | $24,240,000 | $24,073,000 | $80,451,000 | $64,789,000 | $85,627,000 | $96,240,000 | $79,563,000 | ||||||
Tivo Inc | |||||||||||||
Related Party Transactions | |||||||||||||
Aggregate of six annual installment amounts between 2012 and 2017, net of contribution from related party | 517,000,000 | ||||||||||||
Reversal of litigation accrual | 335,000,000 | 335,000,000 | |||||||||||
Settlement payment | 290,000,000 | ||||||||||||
Portion of litigation payment related to periods periods prior to 2011 | 182,000,000 | ||||||||||||
Portion of litigation payment related to future period prepayments | 108,000,000 | 108,000,000 | |||||||||||
Dish Network's share of remaining litigation payments | 190,000,000 | ||||||||||||
Litigation settlement gross amount related to future periods | 298,000,000 | 298,000,000 | |||||||||||
Reduction in litigation expense | 6,000,000 | ||||||||||||
Sprint Settlement Agreement | Dish Network | |||||||||||||
Related Party Transactions | |||||||||||||
Net payment for agreement settlement | 114,000,000 | ||||||||||||
EchoStar | TiVo v. Dish Network and EchoStar Corporation | |||||||||||||
Related Party Transactions | |||||||||||||
Settlement amount | 500,000,000 | ||||||||||||
Initial settlement amount paid | 300,000,000 | ||||||||||||
Aggregate of six annual installment amounts between 2012 and 2017, net of contribution from related party | 200,000,000 | ||||||||||||
Litigation settlement number of annual installments | 6 | ||||||||||||
Contribution from related party | 10,000,000 | ||||||||||||
Percentage of litigation settlement amount to be made by related party annually | 95.00% | ||||||||||||
Amount paid for related party transaction | 5,000,000 | ||||||||||||
EchoStar | Receiver Agreement | |||||||||||||
Related Party Transactions | |||||||||||||
Notice period to exercise option to extend agreement | 1 year | 1 year | |||||||||||
Notice period required to extend the agreement term | 180 days | ||||||||||||
Purchased set-top boxes and other equipment from EchoStar | 293,000,000 | 341,000,000 | 883,000,000 | 947,000,000 | 1,242,000,000 | 1,005,000,000 | 1,158,000,000 | ||||||
EchoStar | Tax Sharing Agreement | Dish Network | |||||||||||||
Related Party Transactions | |||||||||||||
Net amount of the allocated tax attributes payable | 83,000,000 | 83,000,000 | |||||||||||
EchoStar | RUS Implementation Agreement | |||||||||||||
Related Party Transactions | |||||||||||||
Required notice period for termination by the reporting entity | 45 days | ||||||||||||
Maximum grants receivable | 14,000,000 | ||||||||||||
Cost of sales - equipment, services and other | 3,000,000 | 3,000,000 | 7,000,000 | ||||||||||
EchoStar | Patent Cross-License Agreements | Dish Network | Maximum | |||||||||||||
Related Party Transactions | |||||||||||||
Payments to third party by related party | 10,000,000 | ||||||||||||
Payments to third party by related party under extension option | $3,000,000 | $3,000,000 | $3,000,000 | ||||||||||
EchoStar | Prior Receiver Agreement | Minimum | |||||||||||||
Related Party Transactions | |||||||||||||
Required notice period for termination by the reporting entity | 60 days |
Related_Party_Transactions_Det5
Related Party Transactions (Details 6) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Related Party Transactions | |||||||
Purchases from NagraStar | $3,000 | $3,000 | $8,000 | $7,000 | $10,000 | $11,000 | $2,000 |
Amounts payable to NagraStar | 288,736 | 288,736 | 338,788 | 262,843 | |||
NagraStar | |||||||
Related Party Transactions | |||||||
Purchases from NagraStar | 20,914 | 22,563 | 60,964 | 69,129 | 91,712 | 72,549 | 77,705 |
Amounts payable to NagraStar | $23,417 | $21,930 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | 9 Months Ended | |
Feb. 20, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Operating lease obligations | |||
2014 | $3,994,594,000 | ||
2015 | 2,235,622,000 | ||
2016 | 2,774,378,000 | ||
2017 | 1,942,598,000 | ||
2018 | 2,139,735,000 | ||
Thereafter | 10,177,230,000 | ||
Long-term debt obligations | |||
Operating lease obligations | |||
2014 | 1,005,778,000 | ||
2015 | 756,159,000 | ||
2016 | 1,504,669,000 | ||
2017 | 904,903,000 | ||
2018 | 1,205,197,000 | ||
Thereafter | 8,032,607,000 | ||
Interest expense on long-term debt and capital lease obligations | |||
Operating lease obligations | |||
2014 | 838,801,000 | ||
2015 | 741,005,000 | ||
2016 | 655,467,000 | ||
2017 | 599,028,000 | ||
2018 | 528,620,000 | ||
Thereafter | 1,355,824,000 | ||
Transaction Agreement | DISH Investors | |||
Reduction in contractual obligation | |||
Percentage of economic interest in the Hughes Retail Group | 80.00% | ||
Transaction Agreement | EchoStar and HSSC | |||
Subsequent events | |||
Number of owned satellites transferred and leased back | 5 | ||
Obligations and interest payments transferred | 59,000,000 | ||
Cash in exchange for shares of series of preferred tracking stock issued | 11,000,000 | ||
Transaction Agreement | EchoStar | |||
Subsequent events | |||
Obligations and interest payments transferred | 44,540,000 | ||
Transaction Agreement | EchoStar | DISH Investors | |||
Reduction in contractual obligation | |||
Preferred tracking stock issued by related party | 6,290,499 | ||
Transaction Agreement | HSSC | DISH Investors | |||
Reduction in contractual obligation | |||
Preferred tracking stock issued by related party | 81.128 | ||
Investor Rights Agreement | EchoStar and HSSC | DISH Investors | |||
Reduction in contractual obligation | |||
Tracking stock prohibited transfer period | 1 year | ||
Subsequent event | Transferred Satellites-related obligations | |||
Operating lease obligations | |||
2014 | 148,000,000 | ||
2015 | 175,000,000 | ||
2016 | 123,000,000 | ||
2017 | 102,000,000 | ||
2018 | 102,000,000 | ||
Thereafter | 329,000,000 | ||
Subsequent event | Long-term debt obligations | |||
Reduction in contractual obligation | |||
2014 | 5,000,000 | ||
2015 | 5,000,000 | ||
2016 | 4,000,000 | ||
2017 | 4,000,000 | ||
2018 | 4,000,000 | ||
Thereafter | 22,000,000 | ||
Subsequent event | Interest expense on long-term debt and capital lease obligations | |||
Reduction in contractual obligation | |||
2014 | 3,000,000 | ||
2015 | 2,000,000 | ||
2016 | 2,000,000 | ||
2017 | 2,000,000 | ||
2018 | 1,000,000 | ||
Thereafter | 5,000,000 | ||
Subsequent event | Transaction Agreement | DISH Investors | |||
Reduction in contractual obligation | |||
Percentage of economic interest in the Hughes Retail Group | 80.00% | ||
Subsequent event | Transaction Agreement | EchoStar and HSSC | |||
Subsequent events | |||
Number of owned satellites transferred and leased back | 5 | ||
Obligations and interest payments transferred | 59,000,000 | ||
Cash in exchange for shares of series of preferred tracking stock issued | 11,000,000 | ||
Subsequent event | Transaction Agreement | EchoStar | DISH Investors | |||
Reduction in contractual obligation | |||
Preferred tracking stock issued by related party | 6,290,499 | ||
Subsequent event | Transaction Agreement | HSSC | DISH Investors | |||
Reduction in contractual obligation | |||
Preferred tracking stock issued by related party | 81.128 | ||
Subsequent event | Investor Rights Agreement | EchoStar and HSSC | DISH Investors | |||
Reduction in contractual obligation | |||
Tracking stock prohibited transfer period | 1 year |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $4,473,600 | $4,294,475 |
Marketable investment securities (Note 4) | 3,748,839 | 4,117,326 |
Trade accounts receivable - other, net of allowance for doubtful accounts of $20,010 and $15,981, respectively | 929,850 | 859,986 |
Trade accounts receivable - EchoStar, net of allowance for doubtful accounts of zero | 41,749 | 52,602 |
Inventory | 527,816 | 512,646 |
Deferred tax assets | 65,399 | 65,457 |
Other current assets | 141,690 | 143,564 |
Total current assets | 9,928,943 | 10,046,056 |
Noncurrent Assets: | ||
Restricted cash and marketable investment securities | 80,684 | 82,780 |
Property and equipment, net (Note 6) | 2,481,313 | 2,979,323 |
FCC authorizations | 635,794 | 635,794 |
Other noncurrent assets, net (Note 4) | 580,448 | 239,556 |
Total noncurrent assets | 3,778,239 | 3,937,453 |
Total assets | 13,707,182 | 13,983,509 |
Current Liabilities: | ||
Trade accounts payable - other | 222,303 | 257,950 |
Trade accounts payable - EchoStar | 288,736 | 338,788 |
Deferred revenue and other | 873,526 | 824,478 |
Accrued programming | 1,497,796 | 1,238,610 |
Accrued interest | 203,958 | 232,732 |
Other accrued expenses | 417,500 | 457,775 |
Current portion of long-term debt and capital lease obligations | 1,578,838 | 1,032,607 |
Total current liabilities | 5,082,657 | 4,382,940 |
Long-Term Obligations, Net of Current Portion: | ||
Long-term debt and capital lease obligations, net of current portion | 11,771,780 | 12,577,410 |
Deferred tax liabilities | 1,121,478 | 1,247,375 |
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities | 234,574 | 159,684 |
Total long-term obligations, net of current portion | 13,127,832 | 13,984,469 |
Total liabilities | 18,210,489 | 18,367,409 |
Commitments and Contingencies (Note 8) | ||
Redeemable noncontrolling interest (Note 2) | 21,408 | |
Stockholder's Equity (Deficit): | ||
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding | ||
Additional paid-in capital | 1,259,311 | 1,300,101 |
Accumulated other comprehensive income (loss) | 25,438 | 11,189 |
Accumulated earnings (deficit) | -5,812,093 | -5,697,772 |
Total DISH DBS stockholder's equity (deficit) | -4,527,344 | -4,386,482 |
Noncontrolling interest | 2,629 | 2,582 |
Total stockholder's equity (deficit) | -4,524,715 | -4,383,900 |
Total liabilities and stockholder's equity (deficit) | $13,707,182 | $13,983,509 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | |||
Current Assets: | |||
Allowance for doubtful accounts on trade accounts receivable - other | $20,010 | $15,981 | $13,834 |
Allowance for doubtful accounts on trade accounts receivable - EchoStar | $0 | $0 | $0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 |
Common stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Common stock, shares issued | 1,015 | 1,015 | 1,015 |
Common stock, shares outstanding | 1,015 | 1,015 | 1,015 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue: | ||||
Subscriber-related revenue | $3,553,828 | $3,408,510 | $10,582,989 | $10,131,098 |
Equipment sales and other revenue | 16,312 | 24,834 | 63,819 | 73,402 |
Equipment sales, services and other revenue - EchoStar | 15,232 | 15,516 | 47,339 | 25,540 |
Total revenue | 3,585,372 | 3,448,860 | 10,694,147 | 10,230,040 |
Costs and Expenses (exclusive of depreciation shown separately below - Note 6): | ||||
Subscriber-related expenses | 2,072,891 | 1,938,142 | 6,131,068 | 5,718,781 |
Satellite and transmission expenses | 179,401 | 139,945 | 506,188 | 394,748 |
Cost of sales - equipment, services and other | 24,240 | 24,073 | 80,451 | 64,789 |
Subscriber acquisition costs: | ||||
Cost of sales - subscriber promotion subsidies | 52,755 | 61,853 | 170,149 | 192,567 |
Other subscriber acquisition costs | 246,918 | 280,677 | 709,308 | 746,324 |
Subscriber acquisition advertising | 152,607 | 108,227 | 403,644 | 337,079 |
Total subscriber acquisition costs | 452,280 | 450,757 | 1,283,101 | 1,275,970 |
General and administrative expenses | 189,961 | 172,100 | 547,926 | 502,974 |
Depreciation and amortization (Note 6) | 246,140 | 229,749 | 719,488 | 663,410 |
Total costs and expenses | 3,164,913 | 2,954,766 | 9,268,222 | 8,620,672 |
Operating income (loss) | 420,459 | 494,094 | 1,425,925 | 1,609,368 |
Other Income (Expense): | ||||
Interest income | 8,654 | 10,255 | 27,518 | 27,205 |
Interest expense, net of amounts capitalized | -207,149 | -220,596 | -631,405 | -663,823 |
Other, net | -7,156 | 75 | -6,411 | 268 |
Total other income (expense) | -205,651 | -210,266 | -610,298 | -636,350 |
Income (loss) before income taxes | 214,808 | 283,828 | 815,627 | 973,018 |
Income tax (provision) benefit, net (Note 8) | -62,109 | -97,151 | -287,523 | -346,228 |
Net income (loss) | 152,699 | 186,677 | 528,104 | 626,790 |
Less: Net income (loss) attributable to noncontrolling interest, net of tax | -2,342 | 150 | -7,575 | 150 |
Net income (loss) attributable to DISH DBS | 155,041 | 186,527 | 535,679 | 626,640 |
Comprehensive Income (Loss): | ||||
Net income (loss) | 152,699 | 186,677 | 528,104 | 626,790 |
Other comprehensive income (loss): | ||||
Unrealized holding gains (losses) on available-for-sale securities | 5,352 | 12,730 | 19,547 | 7,728 |
Deferred income tax (expense) benefit, net | 66 | -3,620 | -5,298 | -3,104 |
Total other comprehensive income (loss), net of tax | 5,418 | 9,110 | 14,249 | 4,624 |
Comprehensive income (loss) | 158,117 | 195,787 | 542,353 | 631,414 |
Less: Comprehensive income (loss) attributable to noncontrolling interest, net of tax | -2,342 | 150 | -7,575 | 150 |
Comprehensive income (loss) attributable to DISH DBS | $160,459 | $195,637 | $549,928 | $631,264 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows From Operating Activities: | ||
Net income (loss) | $528,104 | $626,790 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 719,488 | 663,410 |
Non-cash, stock-based compensation | 24,830 | 25,328 |
Deferred tax expense (benefit) | -87,889 | 62,826 |
Other, net | 71,441 | -78,700 |
Changes in current assets and current liabilities, net | 14,778 | 40,513 |
Net cash flows from operating activities | 1,270,752 | 1,340,167 |
Cash Flows From Investing Activities: | ||
(Purchases) Sales and maturities of marketable investment securities, net | 388,035 | -1,704,083 |
Purchases of property and equipment | -629,869 | -688,007 |
Change in restricted cash and marketable investment securities | 2,096 | 38,881 |
Other, net | -6,426 | -10,521 |
Net cash flows from investing activities | -246,164 | -2,363,730 |
Cash Flows From Financing Activities: | ||
Proceeds from issuance of long-term debt | 2,300,000 | |
Proceeds from issuance of restricted debt | 2,600,000 | |
Redemption of restricted debt | -2,600,000 | |
Funding of restricted debt escrow | -2,596,750 | |
Release of restricted debt escrow | 2,596,771 | |
Repurchases of long-term debt | -199,999 | -48,552 |
Dividend to DISH Orbital Corporation | -650,000 | |
Repayment of long-term debt and capital lease obligations | -22,259 | -27,633 |
Other | 26,795 | 8,614 |
Net cash flows from financing activities | -845,463 | 2,232,450 |
Net increase (decrease) in cash and cash equivalents | 179,125 | 1,208,887 |
Cash and cash equivalents, beginning of period | 4,294,475 | 3,424,387 |
Cash and cash equivalents, end of period | $4,473,600 | $4,633,274 |
Organization_and_Business_Acti1
Organization and Business Activities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Organization and Business Activities | ||
Organization and Business Activities | 1. Organization and Business Activities | 1. Organization and Business Activities |
Principal Business | Principal Business | |
DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. We operate the DISH® branded pay-TV service (“DISH”), which had 14.041 million subscribers in the United States as of September 30, 2014. The DISH branded pay-TV service consists of, among other things, Federal Communications Commission (“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations. | DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our,” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. We operate the DISH® branded direct broadcast satellite (“DBS”) pay-TV service in the United States. The DISH branded pay-TV service consists of Federal Communications Commission (“FCC”) licenses authorizing us to use DBS and Fixed Satellite Service (“FSS”) spectrum, our satellites, receiver systems, third-party broadcast operations, customer service facilities, a leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations. |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Summary of Significant Accounting Policies | ||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | ||
Basis of Presentation | Principles of Consolidation and 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, 2013. Certain prior period amounts have been reclassified to conform to the current period presentation. | 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 interest. Non-majority owned 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. Certain prior period amounts have been reclassified to conform to the current period presentation. | |||
Principles of Consolidation | Use of Estimates | |||
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 interest or redeemable non-controlling interest. See below for further discussion. Non-majority owned 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. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Weak economic conditions have increased 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 the Consolidated Financial Statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. | |||
Redeemable Noncontrolling Interests. DISH Digital Holding L.L.C. (“DISH Digital”) has been consolidated into our financial statements since May 2, 2014. Effective August 1, 2014, EchoStar Corporation (“EchoStar”) and DISH Digital entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, among other things, DISH Digital distributed certain assets to EchoStar and EchoStar reduced its interest in DISH Digital to a ten percent non-voting interest. EchoStar’s ten percent non-voting interest is redeemable, subject to certain conditions, at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interest” in the mezzanine section of our Condensed Consolidated Balance Sheets. Since any redemption of EchoStar’s ten percent non-voting interest would occur at fair value, the “Redeemable noncontrolling interest” was initially accounted for at fair value, which established a minimum threshold value for this interest. Redemption of the interest is contingent on a certain performance goal being achieved by DISH Digital, which is not yet probable of being achieved. At such time that we determine the performance goal to be probable, the value of the “Redeemable noncontrolling interest” will be adjusted for any change in redemption value above the minimum threshold, with the offset recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. In addition, the operating results of DISH Digital attributable to EchoStar are recorded as “Redeemable noncontrolling interest” in our Condensed Consolidated Balance Sheets effective August 1, 2014. See Note 10 for further discussion on DISH Digital and the Exchange Agreement. | Cash and Cash Equivalents | |||
Use of Estimates | We consider all liquid investments purchased with a remaining maturity of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents as of December 31, 2013 and 2012 may consist of money market funds, government bonds, corporate notes and commercial paper. The cost of these investments approximates their fair value. | |||
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Sustained economic weakness has increased 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 | |||
Fair Value Measurements | We currently classify all marketable investment securities as available-for-sale. We adjust the carrying value 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. Declines in the fair value of a marketable investment security which are determined to be “other-than-temporary” are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss), thus establishing a new cost basis for such investment. | |||
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: | We evaluate our marketable investment securities portfolio on a quarterly basis to determine whether declines in the fair value of these securities are other-than-temporary. This quarterly evaluation consists of reviewing, among other things: | |||
· Level 1, defined as observable inputs being quoted prices in active markets for identical assets, including U.S. treasury notes; | · the fair value of our marketable investment securities compared to the carrying amount, | |||
· the historical volatility of the price of each security, and | ||||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and | · any market and company specific factors related to each security. | |||
· 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. | Declines in the fair value of debt and equity investments below cost basis are generally accounted for as follows: | |||
As of September 30, 2014 and December 31, 2013, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | Length of Time Investment | Treatment of the Decline in Value | ||
Has Been In a Continuous | (absent specific factors to the contrary) | |||
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | Loss Position | |||
Less than six months | Generally, considered temporary. | |||
New Accounting Pronouncements | Six to nine months | Evaluated on a case by case basis to determine whether any company or market-specific factors exist indicating that such decline is other-than-temporary. | ||
Greater than nine months | Generally, considered other-than-temporary. The decline in value is recorded as a charge to earnings. | |||
Revenue from Contracts with Customers. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. This converged standard on revenue recognition was issued jointly with the International Accounting Standards Board (“IASB”) to improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards (“IFRS”). ASU 2014-09 provides a framework for revenue recognition that replaces most existing GAAP revenue recognition guidance when it becomes effective. ASU 2014-09 will become effective for us on January 1, 2017. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. | ||||
Additionally, in situations where the fair value of a debt security is below its carrying amount, we consider the decline to be other-than-temporary and record a charge to earnings if any of the following factors apply: | ||||
· we have the intent to sell the security, | ||||
· it is more likely than not that we will be required to sell the security before maturity or recovery, or | ||||
· we do not expect to recover the security’s entire amortized cost basis, even if there is no intent to sell the security. | ||||
In general, we use the first in, first out method to determine the cost basis on sales of marketable investment securities. | ||||
Trade Accounts Receivable | ||||
Management estimates the amount of required allowances for the potential non-collectability of accounts receivable based upon past collection experience and consideration of other relevant factors. However, past experience may not be indicative of future collections and therefore additional charges could be incurred in the future to reflect differences between estimated and actual collections. | ||||
Inventory | ||||
Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The cost of manufactured inventory includes the cost of materials, labor, freight-in, royalties and manufacturing overhead. | ||||
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. | ||||
Impairment of Long-Lived Assets | ||||
We review our long-lived assets and identifiable finite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For assets which are held and used in operations, the asset would be impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash flows. Once an impairment is determined, the actual impairment recognized is the difference between the carrying value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash flow, estimated future operating results, trends and other available information in assessing whether the carrying value of assets are recoverable. | ||||
DBS Satellites. We currently evaluate our DBS satellite fleet for impairment as one asset group whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. We do not believe any triggering event has occurred which would indicate impairment as of December 31, 2013. | ||||
Indefinite Lived Intangible Assets | ||||
We do not amortize indefinite lived intangible assets, but test these assets for impairment annually during the fourth quarter or more often if indicators of impairment arise. Intangible assets that have finite lives are amortized over their estimated useful lives and tested for impairment as described above for long-lived assets. Our intangible assets with indefinite lives primarily consist of FCC licenses. Generally, we have determined that our FCC licenses have indefinite useful lives due to the following: | ||||
· FCC licenses are a non-depleting asset; | ||||
· existing FCC licenses are integral to our business segments and will contribute to cash flows indefinitely; | ||||
· replacement satellite applications are generally authorized by the FCC subject to certain conditions, without substantial cost under a stable regulatory, legislative and legal environment; | ||||
· maintenance expenditures to obtain future cash flows are not significant; | ||||
· FCC licenses are not technologically dependent; and | ||||
· we intend to use these assets indefinitely. | ||||
DBS FCC Licenses. We combine all of our indefinite lived DBS FCC licenses that we currently utilize or plan to utilize in the future into a single unit of accounting. The analysis encompasses future cash flows from satellites transmitting from such licensed orbital locations, including revenue attributable to programming offerings from such satellites, the direct operating and subscriber acquisition costs related to such programming, and future capital costs for replacement satellites. Projected revenue and cost amounts include projected subscribers. In conducting our annual impairment test in 2013, we determined that the estimated fair value of the DBS FCC licenses, calculated using a discounted cash flow analysis, exceeded their carrying amounts. | ||||
Long-Term Deferred Revenue, Distribution and Carriage Payments | ||||
Certain programmers provide us up-front payments. Such amounts are deferred and recognized as reductions to “Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (generally up to ten years). The current and long-term portions of these deferred credits are recorded in our Consolidated Balance Sheets in “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and other long-term liabilities,” respectively. | ||||
Sales Taxes | ||||
We account for sales taxes imposed on our goods and services on a net basis in our Consolidated Statements of Operations and Comprehensive Income (Loss). Since we primarily act as an agent for the governmental authorities, the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity. | ||||
Income Taxes | ||||
We establish a provision for income taxes currently payable or receivable and for income tax amounts deferred to future periods. Deferred tax assets and liabilities are recorded for the estimated future tax effects of differences that exist between the book and tax basis of assets and liabilities. Deferred tax assets are offset by valuation allowances when we believe it is more likely than not that such net deferred tax assets will not be realized. | ||||
Accounting for Uncertainty in Income Taxes | ||||
From time to time, we engage in transactions where the tax consequences may be subject to uncertainty. We record a liability when, in management’s judgment, a tax filing position does not meet the more likely than not threshold. For tax positions that meet the more likely than not threshold, we may record a liability depending on management’s assessment of how the tax position will ultimately be settled. We adjust our estimates periodically for ongoing examinations by and settlements with various taxing authorities, as well as changes in tax laws, regulations and precedent. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of “Interest expense, net of amounts capitalized” and “Other, net,” respectively, on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
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, including U.S. treasury notes; | ||||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; 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 December 31, 2013 and 2012, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | ||||
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | ||||
Deferred Debt Issuance Costs | ||||
Costs of issuing debt are generally deferred and amortized to interest expense ratably over the terms of the respective notes. See Note 7. | ||||
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 service is recognized when programming is broadcast to subscribers. Payments received from our Pay-TV subscribers in advance of the broadcast or service period are recorded as “Deferred revenue and other” in our Consolidated Balance Sheets until earned. | ||||
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 18 months to five years. Revenue from advertising sales is recognized when the related services are performed. | ||||
Subscriber fees for pay-TV equipment rental and other hardware related fees, including fees for DVRs, equipment upgrade fees and additional outlet fees from subscribers with receivers with multiple tuners, advertising services and fees earned from our in-home service operations are recognized as revenue as earned. Generally, revenue from equipment sales and equipment upgrades is 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 web-site. 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. | ||||
Subscriber-Related Expenses | ||||
The cost of television programming distribution rights is generally incurred on a per subscriber basis and various upfront carriage payments are recognized when the related programming is distributed to subscribers. Long-term flat rate programming contracts are charged to expense using the straight-line method over the term of the agreement. The cost of television programming rights to distribute live sporting events for a season or tournament is charged to expense using the straight-line method over the course of the season or tournament. “Subscriber-related expenses” in the Consolidated Statements of Operations and Comprehensive Income (Loss) principally include programming expenses, costs for pay-TV services incurred in connection with our in-home service and call center operations, billing costs, refurbishment and repair costs related to receiver systems, subscriber retention and other variable subscriber expenses. These costs are recognized as the services are performed or as incurred. | ||||
Subscriber Acquisition Costs | ||||
Subscriber acquisition costs in our Consolidated Statements of Operations and Comprehensive Income (Loss) consist of costs incurred to acquire new Pay-TV subscribers through third parties and our direct sales distribution channel. Subscriber acquisition costs include the following line items from our Consolidated Statements of Operations and Comprehensive Income (Loss): | ||||
· “Cost of sales — subscriber promotion subsidies - EchoStar” includes the cost of our receiver systems sold to retailers and other distributors of our equipment and receiver systems sold directly by us to subscribers. | ||||
· “Other subscriber acquisition costs” includes net costs related to promotional incentives and costs related to installation and other promotional subsidies and advertising and marketing expenses related to the acquisition of new Pay-TV subscribers. | ||||
We characterize amounts paid to our independent retailers as consideration for equipment installation services and for equipment buydowns (incentives and rebates) as a reduction of revenue. We expense payments for equipment installation services as “Other subscriber acquisition costs.” Our payments for equipment buydowns represent a partial or complete return of the retailer’s purchase price and are, therefore, netted against the proceeds received from the retailer. We report the net cost from our various sales promotions through our independent retailer network as a component of “Other subscriber acquisition costs.” Net proceeds from the sale of subscriber related equipment pursuant to our subscriber acquisition promotions are not recognized as revenue. | ||||
Advertising Costs | ||||
Our advertising costs associated with acquiring new Pay-TV subscribers are expensed as incurred. During the years ended December 31, 2013, 2012 and 2011, we recorded advertising costs of $448 million, $429 million and $329 million, respectively, within “Other subscriber acquisition costs” and “General and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Deferred Cost of Sales | ||||
On May 22, 2013, we launched a promotion whereby qualifying new Pay-TV subscribers may choose either an Apple® iPad® 2 or programming credits when they, among other things, commit to a two-year contract. The costs of the iPad 2 are recorded as short-term or long-term deferred cost of sales expense within “Other current assets” and “Other noncurrent assets, net,” respectively, on our Consolidated Balance Sheets and are amortized on a straight-line basis over the related contract term to “Cost of sales — equipment, services and other” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||
Equipment Lease Programs | ||||
Pay-TV subscribers have the choice of leasing or purchasing the satellite receiver and other equipment necessary to receive our pay-TV service. Most of our new Pay-TV subscribers choose to lease equipment and thus we retain title to such equipment. Equipment leased to new and existing Pay-TV subscribers is capitalized and depreciated over their estimated useful lives. |
Supplemental_Data_Statements_o
Supplemental Data - Statements of Cash Flows | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Supplemental Data - Statements of Cash Flows | 3. Supplemental Data — Statements of Cash Flows | 3. Statements of Cash Flow Data | |||||||||||||||||
The following table presents our supplemental cash flow and other non-cash data. | The following presents our supplemental cash flow statement disclosure. | ||||||||||||||||||
For the Nine Months | For the Years Ended December 31, | ||||||||||||||||||
Ended September 30, | 2013 | 2012 | 2011 | ||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||
(In thousands) | Cash paid for interest | $ | 875,006 | $ | 537,512 | $ | 545,406 | ||||||||||||
Supplemental Disclosure of Cash Flow Information: | Cash received for interest | 36,242 | 22,431 | 11,468 | |||||||||||||||
Cash paid for interest | $ | 652,150 | $ | 662,264 | Cash paid for income taxes | 1,351 | 20,624 | 14,661 | |||||||||||
Cash received for interest | 26,242 | 26,771 | Cash paid for income taxes to DISH Network | 433,120 | 272,599 | 384,462 | |||||||||||||
Cash paid for income taxes | 4,355 | 751 | Satellites and other assets financed under capital lease obligations | 1,070 | 5,857 | 10,548 | |||||||||||||
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | Receipt of marketable investment securities with no cash consideration | — | 13,237 | — | |||||||||||||
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | Net satellite broadband assets distributed to DISH Network | — | 8,628 | — | |||||||||||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 432,080 | — | |||||||||||||||||
Investment in EchoStar and HSSC preferred tracking stock - cost method | 316,204 | — | 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 Consolidated Balance Sheets is a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s 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 year presented on our Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities. | ||||||||||||||||
Transfer of liabilities and other | 44,540 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $31,274 | 51,466 | — | |||||||||||||||||
DISH Digital Exchange Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 8,978 | — | |||||||||||||||||
Transfer of investments and intangibles, net | 25,097 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $3,542 | 5,845 | — | |||||||||||||||||
Deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest, net of deferred taxes of $8,491 | 14,009 | — | |||||||||||||||||
Marketable_Investment_Securiti6
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 4. Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities | 4. Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||
Our marketable investment securities, restricted cash and cash equivalents, and other investment securities consisted of the following: | Our marketable investment securities and restricted cash and cash equivalents consisted of the following: | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Marketable investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable investment securities: | Current marketable investment securities - VRDNs | $ | 105,854 | $ | 124,007 | |||||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - VRDNs | $ | 20,538 | $ | 105,854 | Current marketable investment securities - other | 4,011,472 | 2,145,663 | |||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - other | 3,728,301 | 4,011,472 | Total current marketable investment securities | 4,117,326 | 2,269,670 | |||||||||||||||||||||||||||||||||||||||||||||||
Total current marketable investment securities | 3,748,839 | 4,117,326 | Restricted marketable investment securities (1) | 63,902 | 49,044 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted marketable investment securities (1) | 74,194 | 63,902 | Total marketable investment securities | 4,181,228 | 2,318,714 | |||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities | 3,823,033 | 4,181,228 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 18,878 | 72,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 6,490 | 18,878 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,200,106 | $ | 2,391,331 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in EchoStar preferred tracking stock - cost method (2) | 228,795 | — | (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Consolidated Balance Sheets. | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in HSSC preferred tracking stock - cost method (2) | 87,409 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities - cost method (2) | 13,546 | 5,396 | Marketable Investment Securities | |||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,159,273 | $ | 4,205,502 | ||||||||||||||||||||||||||||||||||||||||||||||||
Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale. See Note 2 for further discussion. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Condensed Consolidated Balance Sheets. | Current Marketable Investment Securities — VRDNs | |||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Other investment securities are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised mainly of investments in municipalities, which are backed by financial institutions or other highly rated obligors that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities — Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Our current marketable investment securities portfolio includes investments in various debt and equity instruments including corporate and government bonds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities - VRDNs | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable rate demand notes (“VRDNs”) are long-term floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. Our VRDN portfolio is comprised mainly of investments in municipalities, which are backed by financial institutions or other highly rated obligors that serve as the pledged liquidity source. While they are classified as marketable investment securities, the put option allows VRDNs to be liquidated generally on a same day or on a five business day settlement basis. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit or surety bonds and for litigation. During the first quarter 2013, we released $42 million of restricted cash related to litigation. See Note 11 for further information. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Marketable Investment Securities — Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gains (Losses) on Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Our current marketable investment securities portfolio includes investments in various debt and equity instruments including corporate and government bonds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, we had accumulated net unrealized gains of $15 million and $7 million, respectively. These amounts, net of related tax effect, were $11 million and $6 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Marketable Investment Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, our restricted marketable investment securities, together with our restricted cash, included amounts required as collateral for our letters of credit. | 2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other Investment Securities | Investment | Unrealized | Investment | Unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | |||||||||||||||||||||||||||||||||||||||||||||
We have strategic investments in certain debt and equity securities that are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or available-for-sale methods of accounting. | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | VRDNs | $ | 105,854 | $ | — | $ | — | $ | — | $ | 124,007 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||
Other (including restricted) | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 2,181,064 | 7,335 | (1,144 | ) | 6,191 | ||||||||||||||||||||||||||||||||||||||||||
Investment in Tracking Stock | Equity securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | 26,523 | 13,286 | — | 13,286 | 13,643 | 406 | — | 406 | ||||||||||||||||||||||||||||||||||||||||||||
To improve our position in the growing consumer satellite broadband market, among other reasons, on February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV (collectively the “Transferred Satellites”), including related in-orbit incentive obligations and cash interest payments of approximately $59 million), and approximately $11 million in cash in exchange for an aggregate of 6,290,499 shares of a series of preferred tracking stock issued by EchoStar and an aggregate of 81.128 shares of a series of preferred tracking stock issued by HSSC (collectively, the “Tracking Stock”); and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites (collectively, the “Satellite and Tracking Stock Transaction”). The Tracking Stock generally tracks the residential retail satellite broadband business of Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of HSSC, including without limitation the operations, assets and liabilities attributed to the Hughes residential retail satellite broadband business (collectively, the “Hughes Retail Group”). The shares of the Tracking Stock issued to us represent an aggregate 80% economic interest in the Hughes Retail Group. | Total | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | $ | 2,318,714 | $ | 7,741 | $ | (1,144 | ) | $ | 6,597 | |||||||||||||||||||||||||||||||||
Since the Satellite and Tracking Stock Transaction is among entities under common control, we recorded the Tracking Stock at EchoStar and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. Although our investment in the Tracking Stock represents an aggregate 80% economic interest in the Hughes Retail Group, we have no operational control or significant influence over the Hughes Retail Group business, and currently there is no public market for the Tracking Stock. As such, the Tracking Stock is accounted for under the cost method of accounting. | (1) In connection with certain commercial arrangements that we entered into during the third quarter 2012, among other things, we received shares of common stock from a single issuer for no cash consideration. | |||||||||||||||||||||||||||||||||||||||||||||||||||
On February 20, 2014, DISH Operating L.L.C. (“DOLLC”) and DISH Network L.L.C. (“DNLLC”), each indirect wholly-owned subsidiaries of us, entered into an Investor Rights Agreement with EchoStar and HSSC with respect to the Tracking Stock (the “Investor Rights Agreement”). The Investor Rights Agreement provides, among other things, certain information and consultation rights for us; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate with respect to our interest should we no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. | As of December 31, 2013, restricted and non-restricted marketable investment securities included debt securities of $3.819 billion with contractual maturities within one year, $314 million with contractual maturities extending longer than one year through and including five years, $1 million with contractual maturities extending longer than five years through and including ten years and $21 million with contractual maturities longer than ten years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gains (Losses) on Marketable Investment Securities | Marketable Investment Securities in a Loss Position | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, we had accumulated net unrealized gains of $35 million and $15 million, respectively. These amounts, net of related tax effect, were $25 million and $11 million, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below. | The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of December 31, 2013 and 2012, the unrealized losses on our investments in debt securities primarily represented investments in corporate bonds. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations. | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of December 31, 2013 | As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment | Unrealized | Investment | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | Value | Loss | Value | Loss | |||||||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | — | $ | — | $ | 105,854 | $ | — | $ | — | $ | — | Less than 12 months | $ | 2,002,239 | $ | (2,820 | ) | $ | 724,739 | $ | (865 | ) | |||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | 6,767 | (1,263 | ) | 5,504 | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 12 months or more | 38,043 | (535 | ) | 29,045 | (279 | ) | |||||||||||||||||||||||||||||||||||
Equity securities: | Total | $ | 2,040,282 | $ | (3,355 | ) | $ | 753,784 | $ | (1,144 | ) | |||||||||||||||||||||||||||||||||||||||||
Other | 42,658 | 29,421 | — | 29,421 | 26,523 | 13,286 | — | 13,286 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 36,188 | $ | (1,263 | ) | $ | 34,925 | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | Fair Value Measurements | |||||||||||||||||||||||||||||||||
As of September 30, 2014, restricted and non-restricted marketable investment securities included debt securities of $2.487 billion with contractual maturities within one year, $1.270 billion with contractual maturities extending longer than one year through and including five years and $23 million with contractual maturities longer than ten years. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity. | Our investments measured at fair value on a recurring basis were as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities in a Loss Position | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||
The following table reflects the length of time that the individual securities, accounted for as available-for-sale, have been in an unrealized loss position, aggregated by investment category. As of September 30, 2014, the unrealized losses on our investments in debt securities primarily represented investments in corporate bonds. We have the ability to hold and do not intend to sell our investments in these debt securities before they recover or mature, and it is more likely than not that we will hold these investments until that time. In addition, we are not aware of any specific factors indicating that the underlying issuers of these debt securities would not be able to pay interest as it becomes due or repay the principal at maturity. Therefore, we believe that these changes in the estimated fair values of these marketable investment securities are related to temporary market fluctuations. | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | Cash equivalents (including restricted) | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | $ | 3,014,946 | $ | 59,386 | $ | 2,955,560 | $ | — | |||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Value | Loss | Value | Loss | VRDNs | $ | 105,854 | $ | — | $ | 105,854 | $ | — | $ | 124,007 | $ | — | $ | 124,007 | $ | — | ||||||||||||||||||||||||||||||||
(In thousands) | Other (including restricted) | 4,048,851 | — | 4,048,851 | — | 2,181,064 | — | 2,181,064 | — | |||||||||||||||||||||||||||||||||||||||||||
Debt Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | $ | 1,858,459 | $ | (1,243 | ) | $ | 2,002,239 | $ | (2,820 | ) | Equity securities | 26,523 | 26,523 | — | — | 13,643 | 13,643 | — | — | |||||||||||||||||||||||||||||||||
12 months or more | 168,734 | (20 | ) | 38,043 | (535 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,027,193 | $ | (1,263 | ) | $ | 2,040,282 | $ | (3,355 | ) | Total | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | $ | 2,318,714 | $ | 13,643 | $ | 2,305,071 | $ | — | |||||||||||||||||||||||||
Fair Value Measurements | During the year ended December 31, 2013, we had no transfers in or out of Level 1 and Level 2 fair value measurements. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Our investments measured at fair value on a recurring basis were as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | ||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents (including restricted) | $ | 4,183,698 | $ | 67,535 | $ | 4,116,163 | $ | — | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | ||||||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | 20,538 | $ | — | $ | 105,854 | $ | — | $ | 105,854 | $ | — | ||||||||||||||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | — | 3,759,837 | — | 4,048,851 | — | 4,048,851 | — | ||||||||||||||||||||||||||||||||||||||||||||
Equity securities | 42,658 | 42,658 | — | — | 26,523 | 26,523 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 42,658 | $ | 3,780,375 | $ | — | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | ||||||||||||||||||||||||||||||||||||
During the nine months ended September 30, 2014, we had no transfers in or out of Level 1 and Level 2 fair value measurements. |
Inventory1
Inventory | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||
Inventory | ||||||||||||||||
Inventory | 5. Inventory | 5. Inventory | ||||||||||||||
Inventory consisted of the following: | Inventory consisted of the following: | |||||||||||||||
As of | As of December 31, | |||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||
(In thousands) | Finished goods | $ | 299,975 | $ | 259,274 | |||||||||||
Finished goods | $ | 280,369 | $ | 299,975 | Raw materials | 102,563 | 122,758 | |||||||||
Raw materials | 159,210 | 102,563 | Work-in-process | 110,108 | 82,361 | |||||||||||
Work-in-process | 88,237 | 110,108 | Total (1) | $ | 512,646 | $ | 464,393 | |||||||||
Total | $ | 527,816 | $ | 512,646 | ||||||||||||
(1) The increase in inventory as of December 31, 2013 primarily related to an increase in Hopper® and Joey® set-top boxes and broadband equipment. |
Property_and_Equipment_and_FCC
Property and Equipment and FCC Authorizations | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
Property and Equipment and FCC Authorizations | 6. Property and Equipment and FCC Authorizations | 6. Property and Equipment | |||||||||||||||||||||||
Property and Equipment | Property and equipment consisted of the following: | ||||||||||||||||||||||||
Property and equipment consisted of the following: | Depreciable | ||||||||||||||||||||||||
Life | As of December 31, | ||||||||||||||||||||||||
Depreciable | As of | (In Years) | 2013 | 2012 | |||||||||||||||||||||
Life | September 30, | December 31, | (In thousands) | ||||||||||||||||||||||
(In Years) | 2014 | 2013 | Equipment leased to customers | 5-Feb | $ | 3,496,994 | $ | 3,424,911 | |||||||||||||||||
(In thousands) | EchoStar I | 12 | 201,607 | 201,607 | |||||||||||||||||||||
Equipment leased to customers | 5-Feb | $ | 3,526,090 | $ | 3,496,994 | EchoStar VII | 15 | 177,000 | 177,000 | ||||||||||||||||
EchoStar I (1) | 12 | — | 201,607 | EchoStar X | 15 | 177,192 | 177,192 | ||||||||||||||||||
EchoStar VII (1) | 15 | — | 177,000 | EchoStar XI | 15 | 200,198 | 200,198 | ||||||||||||||||||
EchoStar X (1) | 15 | — | 177,192 | EchoStar XIV | 15 | 316,541 | 316,541 | ||||||||||||||||||
EchoStar XI (1) | 15 | — | 200,198 | EchoStar XV | 15 | 277,658 | 277,658 | ||||||||||||||||||
EchoStar XIV (1) | 15 | — | 316,541 | Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | ||||||||||||||||||
EchoStar XV | 15 | 277,658 | 277,658 | Furniture, fixtures, equipment and other | 10-Jan | 600,439 | 580,588 | ||||||||||||||||||
Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | Buildings and improvements | Jan-40 | 80,439 | 74,398 | ||||||||||||||||||
Furniture, fixtures, equipment and other | 10-Jan | 661,321 | 600,439 | Land | - | 5,504 | 5,207 | ||||||||||||||||||
Buildings and improvements | Jan-40 | 83,258 | 80,439 | Construction in progress | - | 39,043 | 20,469 | ||||||||||||||||||
Land | — | 5,504 | 5,504 | Total property and equipment | 6,072,434 | 5,955,588 | |||||||||||||||||||
Construction in progress | — | 19,006 | 39,043 | Accumulated depreciation | (3,093,111 | ) | (2,948,204 | ) | |||||||||||||||||
Total property and equipment | 5,072,656 | 6,072,434 | Property and equipment, net | $ | 2,979,323 | $ | 3,007,384 | ||||||||||||||||||
Accumulated depreciation (1) | (2,591,343 | ) | (3,093,111 | ) | |||||||||||||||||||||
Property and equipment, net | $ | 2,481,313 | $ | 2,979,323 | Construction in progress consisted of the following: | ||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||
(1) Property and equipment and accumulated depreciation decreased $1.073 billion and $633 million, respectively, as a result of the Satellite and Tracking Stock Transaction. See Note 4 and Note 10 for further discussion. | 2013 | 2012 | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Depreciation and amortization expense consisted of the following: | Computer hardware projects | $ | 20,216 | $ | 2,115 | ||||||||||||||||||||
Software projects | 15,017 | 6,088 | |||||||||||||||||||||||
For the Three Months | For the Nine Months | Other | 3,810 | 12,266 | |||||||||||||||||||||
Ended September 30, | Ended September 30, | Construction in progress | $ | 39,043 | $ | 20,469 | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
(In thousands) | Depreciation and amortization expense consisted of the following: | ||||||||||||||||||||||||
Equipment leased to customers | $ | 208,208 | $ | 188,524 | $ | 607,584 | $ | 538,457 | |||||||||||||||||
Satellites | 15,261 | 27,171 | 53,723 | 81,512 | For the Years Ended December 31, | ||||||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 22,671 | 14,054 | 58,181 | 43,441 | 2013 | 2012 | 2011 | ||||||||||||||||||
Total depreciation and amortization | $ | 246,140 | $ | 229,749 | $ | 719,488 | $ | 663,410 | (In thousands) | ||||||||||||||||
Equipment leased to customers | $ | 739,266 | $ | 649,394 | $ | 725,904 | |||||||||||||||||||
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. | Satellites | 108,682 | 123,431 | 128,352 | |||||||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 58,039 | 58,081 | 50,699 | ||||||||||||||||||||||
Pay-TV Satellites. We currently utilize 14 owned and leased satellites in geostationary orbit approximately 22,300 miles above the equator, one of which we own and depreciate over the useful life of the satellite. We currently utilize capacity on 11 satellites that we lease from EchoStar, 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 of the satellite or the term of the satellite agreement. | 148 degree orbital location (1) | — | 67,776 | — | |||||||||||||||||||||
Total depreciation and amortization | $ | 905,987 | $ | 898,682 | $ | 904,955 | |||||||||||||||||||
As of September 30, 2014, our pay-TV satellite fleet consisted of the following: | |||||||||||||||||||||||||
(1) See “FCC Authorizations” below. | |||||||||||||||||||||||||
Degree | Estimated | ||||||||||||||||||||||||
Launch | Orbital | Useful Life | Cost of sales and operating expense categories included in our accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers. | ||||||||||||||||||||||
Satellites | Date | Location | (Years) | ||||||||||||||||||||||
Owned: | We did not record any capitalized interest during the years ended December 31, 2013, 2012 or 2011. | ||||||||||||||||||||||||
EchoStar XV (1) | July 2010 | 45 | 15 | ||||||||||||||||||||||
Satellites | |||||||||||||||||||||||||
Leased from EchoStar (1): | |||||||||||||||||||||||||
EchoStar I (2)(3) | December 1995 | 77 | NA | DBS Satellites. As of December 31, 2013, we utilized 14 satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we owned and depreciated over the useful life of each satellite. As of December 31, 2013, we utilized capacity on six satellites from EchoStar, which were accounted for as operating leases. As of December 31, 2013, we also leased two satellites from third parties, which were accounted for as capital leases and were depreciated over the shorter of the economic life or the term of the satellite agreement. | |||||||||||||||||||||
EchoStar VII (2)(3) | February 2002 | 119 | NA | ||||||||||||||||||||||
EchoStar VIII | August 2002 | 77 | NA | Degree | Estimated | ||||||||||||||||||||
EchoStar IX | August 2003 | 121 | NA | Launch | Orbital | Useful Life | |||||||||||||||||||
EchoStar X (2)(3) | February 2006 | 110 | NA | Satellites | Date | Location | (Years) | ||||||||||||||||||
EchoStar XI (2)(3) | July 2008 | 110 | NA | Owned: | |||||||||||||||||||||
EchoStar XII (2) | July 2003 | 61.5 | NA | EchoStar I (1)(5) | December 1995 | 77 | 12 | ||||||||||||||||||
EchoStar XIV (2)(3) | March 2010 | 119 | NA | EchoStar VII (2)(5) | February 2002 | 119 | 15 | ||||||||||||||||||
EchoStar XVI | November 2012 | 61.5 | NA | EchoStar X (2)(5) | February 2006 | 110 | 15 | ||||||||||||||||||
Nimiq 5 | September 2009 | 72.7 | NA | EchoStar XI (2)(5) | July 2008 | 110 | 15 | ||||||||||||||||||
QuetzSat-1 | September 2011 | 77 | NA | EchoStar XIV (5) | March 2010 | 119 | 15 | ||||||||||||||||||
EchoStar XV | July 2010 | 45 | 15 | ||||||||||||||||||||||
Leased from Other Third Party: | |||||||||||||||||||||||||
Anik F3 | April 2007 | 118.7 | NA | Leased from EchoStar: | |||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | EchoStar VIII (1)(3)(4) | August 2002 | 77 | NA | ||||||||||||||||||
EchoStar IX (1)(3) | August 2003 | 121 | NA | ||||||||||||||||||||||
Under Construction: | EchoStar XII (1)(4) | July 2003 | 61.5 | NA | |||||||||||||||||||||
EchoStar XVIII | 2015 | 110 | 15 | Nimiq 5 (1)(3) | September 2009 | 72.7 | NA | ||||||||||||||||||
EchoStar XVI (1) | November 2012 | 61.5 | NA | ||||||||||||||||||||||
QuetzSat-1 (1)(3) | September 2011 | 77 | NA | ||||||||||||||||||||||
(1) See Note 10 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | Leased from Other Third Party: | ||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 4 for further discussion. | Anik F3 | April 2007 | 118.7 | NA | |||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | ||||||||||||||||||||||
FCC Authorizations | |||||||||||||||||||||||||
Under Construction: | |||||||||||||||||||||||||
MVDDS Licenses. We have multichannel video distribution and data service (“MVDDS”) licenses in 82 out of 214 geographical license areas, including Los Angeles, New York City, Chicago and several other major metropolitan areas. By August 2014, we were required to meet certain FCC build-out requirements related to our MVDDS licenses, and we are subject to certain FCC service rules applicable to these licenses. We have filed an application with the FCC seeking an extension of the build-out requirements related to our MVDDS licenses and requested an additional four-year license term. That application remains pending, and we cannot predict the timing or outcome of our application. Part or all of our MVDDS licenses may be terminated if our application for an extension is not granted. If the FCC decides to terminate part or all of these licenses, we may be required to write-off up to the $24 million carrying value. | EchoStar XVIII | 2015 | 110 | 15 | |||||||||||||||||||||
(1) See Note 15 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) During the fourth quarter 2012, the estimated useful life of these satellites was extended from 12 years to 15 years on a prospective basis based on management’s assessment of, among other things, these satellites’ useful lives, technological obsolescence risk, estimated remaining fuel life and estimated useful lives of our other DBS satellites. This increase in the estimated useful life of these satellites had an immaterial effect on our results of operations. | |||||||||||||||||||||||||
(3) We lease a portion of the capacity on these satellites. | |||||||||||||||||||||||||
(4) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | |||||||||||||||||||||||||
(5) On February 20, 2014, we entered into agreements with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 16 for further discussion of our Subsequent Events. | |||||||||||||||||||||||||
Recent Developments | |||||||||||||||||||||||||
Recent developments with respect to certain of our satellites are discussed below. In addition, see Note 16 for further discussion of our Subsequent Events. | |||||||||||||||||||||||||
Satellites Under Construction | |||||||||||||||||||||||||
EchoStar XVIII. On September 7, 2012, DISH Network entered into a contract with Space Systems/Loral, Inc. (“SS/L”) for the construction of EchoStar XVIII, a DBS satellite with spot beam technology designed for, among other things, HD programming. During October 2013, DISH Network entered into an agreement with ArianeSpace S.A. for launch services for this satellite, which is expected to be launched during 2015. | |||||||||||||||||||||||||
Satellite Anomalies | |||||||||||||||||||||||||
Operation of our DISH branded pay-TV service requires that we have adequate satellite transmission capacity for the programming we offer. Moreover, current competitive conditions require that we continue to expand our offering of new programming. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited. | |||||||||||||||||||||||||
In the event of a failure or loss of any of our satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations. | |||||||||||||||||||||||||
Prior to 2013, certain of our satellites have experienced anomalies, some of which have had a significant adverse impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies will not impact the remaining useful life and/or commercial operation of any of the satellites in our fleet. See Note 2 “Impairment of Long-Lived Assets” for further discussion of evaluation of impairment. There can be no assurance that we can recover critical transmission capacity in the event one or more of our in-orbit satellites were to fail. We generally do not carry commercial insurance for any of the in-orbit satellites that we use, other than certain satellites leased from third parties, and therefore, we will bear the risk associated with any uninsured in-orbit satellite failures. Recent developments with respect to certain of our satellites are discussed below. | |||||||||||||||||||||||||
Leased Satellites | |||||||||||||||||||||||||
EchoStar XII. Prior to 2010, EchoStar XII experienced anomalies resulting in the loss of electrical power available from its solar arrays, which reduced the number of transponders that could be operated. In September 2012, November 2012, and January 2013, EchoStar XII experienced additional solar array anomalies, which further reduced the electrical power available. During the third quarter 2013, EchoStar informed us that EchoStar XII will likely experience further loss of available electrical power that will impact its operational capability, and EchoStar reduced the remaining estimated useful life of the satellite to 18 months. Pursuant to our satellite lease agreement with EchoStar, we are entitled to a reduction in our monthly recurring lease payments in the event of a partial loss of satellite capacity or complete failure of the satellite. Since the number of useable transponders on EchoStar XII depends on, among other things, whether EchoStar XII is operated in CONUS which provides service to the continental United States, spot beam, or hybrid CONUS/spot beam mode, we are unable to determine at this time the actual number of transponders that will be available at any given time or how many transponders can be used during the remaining estimated life of the satellite. This satellite is currently not in service and serves as an in-orbit spare. | |||||||||||||||||||||||||
FCC Authorizations. On May 31, 2012, the International Bureau of the FCC announced the termination of our license for use of the 148 degree orbital location. We had not had a satellite positioned at the 148 degree orbital location since the retirement of EchoStar V in August 2009. Our license for use of the 148 degree orbital location had a $68 million carrying value. This amount was recorded as “Depreciation and amortization” expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) in the second quarter 2012 due to the termination of this license by the FCC. |
LongTerm_Debt1
Long-Term Debt | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||
Long-Term Debt | 7. Long-Term Debt | 7. Long-Term Debt | ||||||||||||||||||||||||||
Fair Value of our Long-Term Debt | 7% Senior Notes due 2013 | |||||||||||||||||||||||||||
The following table summarizes the carrying and fair values of our debt facilities as of September 30, 2014 and December 31, 2013: | During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | |||||||||||||||||||||||||||
As of | 6 5/8% Senior Notes due 2014 | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||
Carrying | Carrying | The 6 5/8% Senior Notes mature October 1, 2014. Interest accrues at an annual rate of 6 5/8% and is payable semi-annually in cash, in arrears on April 1 and October 1 of each year. | ||||||||||||||||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||||||||||||||
(In thousands) | The 6 5/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of their principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | |||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (1) | $ | 900,000 | $ | 900,000 | $ | 1,000,000 | $ | 1,040,200 | ||||||||||||||||||||
7 3/4% Senior Notes due 2015 (2) | 650,001 | 673,564 | 750,000 | 813,750 | The 6 5/8% Senior Notes are: | |||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,591,875 | 1,500,000 | 1,657,500 | ||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 918,099 | 900,000 | 946,962 | · general unsecured senior obligations of DISH DBS; | |||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,207,200 | 1,200,000 | 1,221,792 | · ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | |||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,589,000 | 1,400,000 | 1,603,000 | · ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | |||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,127,500 | 1,100,000 | 1,104,950 | ||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,146,260 | 2,000,000 | 2,122,500 | The indenture related to the 6 5/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | |||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 2,040,000 | 2,000,000 | 1,997,500 | ||||||||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,447,500 | 1,500,000 | 1,458,090 | · incur additional indebtedness or enter into sale and leaseback transactions; | |||||||||||||||||||||||
Mortgages and other notes payable (3) | 14,892 | 14,892 | 59,313 | 59,313 | · pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | |||||||||||||||||||||||
Subtotal | 13,164,893 | $ | 13,655,890 | 13,409,313 | $ | 14,025,557 | · make certain investments; | |||||||||||||||||||||
Unamortized discounts, net | (16,142 | ) | (19,198 | ) | · create liens; | |||||||||||||||||||||||
Capital lease obligations (4) | 201,867 | NA | 219,902 | NA | · enter into transactions with affiliates; | |||||||||||||||||||||||
Total long-term debt and capital lease obligations (including current portion) | $ | 13,350,618 | $ | 13,610,017 | · merge or consolidate with another company; and | |||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
(1) During the nine months ended September 30, 2014, we repurchased $100 million of our 6 5/8% Senior Notes due 2014 in open market trades. The remaining balance of $900 million was redeemed on October 1, 2014 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 6 5/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | |||||||||||||||||||||||||||
(2) During the nine months ended September 30, 2014, we repurchased $100 million of our 7 3/4% Senior Notes due 2015 in open market trades. The remaining balance of $650 million matures on May 31, 2015 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | ||||||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction, which resulted in a decrease in “Mortgages and other notes payable” of $44 million related to the in-orbit incentive obligations associated with the Transferred Satellites. See Note 4 and Note 10 for further discussion. | 7 3/4% Senior Notes due 2015 | |||||||||||||||||||||||||||
(4) Disclosure regarding fair value of capital leases is not required. | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes mature May 31, 2015. Interest accrues at an annual rate of 7 3/4% and is payable semi-annually in cash, in arrears on May 31 and November 30 of each year. | ||||||||||||||||||||||||||||
We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2). | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 3/4% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 7 3/4% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 3/4% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes mature February 1, 2016. Interest accrues at an annual rate of 7 1/8% and is payable semi-annually in cash, in arrears on February 1 and August 1 of each year. | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 1/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 7 1/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 1/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5% Senior Notes due 2017 | ||||||||||||||||||||||||||||
On May 28, 2013, we issued $1.25 billion aggregate principal amount of our four-year, 5% Senior Notes due May 15, 2017 at an issue price of 100%. The net proceeds from the 5% Senior Notes due 2017 were placed into escrow to finance a portion of the cash consideration for DISH Network’s proposed merger with Sprint Corporation (“Sprint”). On June 21, 2013, DISH Network abandoned its efforts to acquire Sprint and, on June 24, 2013, we redeemed all of the 5% Senior Notes due 2017 at a redemption price equal to 100% of the aggregate principal amount of the 5% Senior Notes due 2017, plus accrued and unpaid interest. | ||||||||||||||||||||||||||||
During the second quarter 2013, we recorded $7 million in interest expense and deferred financing costs related to the issuance and redemption of our 5% Senior Notes due 2017 as “Interest expense, net of amounts capitalized” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | ||||||||||||||||||||||||||||
On May 16, 2012, we issued $900 million aggregate principal amount of our five-year, 4 5/8% Senior Notes due July 15, 2017 at an issue price of 100.0%. Interest accrues at an annual rate of 4 5/8% and is payable semi-annually in cash, in arrears on January 15 and July 15 of each year. | ||||||||||||||||||||||||||||
The 4 5/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to July 15, 2015, we may also redeem up to 35.0% of each of the 4 5/8% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 4 5/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 4 5/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 4 5/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | ||||||||||||||||||||||||||||
On April 5, 2013, we issued $1.2 billion aggregate principal amount of our five-year, 4 1/4% Senior Notes due April 1, 2018 at an issue price of 100%. Interest accrues at an annual rate of 4 1/4% and is payable semi-annually in cash in arrears on April 1 and October 1 of each year. | ||||||||||||||||||||||||||||
The 4 1/4% Senior Notes due 2018 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to April 1, 2016, we may also redeem up to 35.0% of the 4 1/4% Senior Notes due 2018 at a specified premium with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 4 1/4% Senior Notes due 2018 are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 4 1/4% Senior Notes due 2018 contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 4 1/4% Senior Notes due 2018 at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes mature September 1, 2019. Interest accrues at an annual rate of 7 7/8% and is payable semi-annually in cash, in arrears on March 1 and September 1 of each year. | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. | ||||||||||||||||||||||||||||
The 7 7/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The Indenture related to the 7 7/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 7/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | ||||||||||||||||||||||||||||
On April 5, 2013, we issued $1.1 billion aggregate principal amount of our seven-year, 5 1/8% Senior Notes due May 1, 2020 at an issue price of 100%. Interest accrues at an annual rate of 5 1/8% and is payable semi-annually in cash in arrears on May 1 and November 1 of each year. | ||||||||||||||||||||||||||||
The 5 1/8% Senior Notes due 2020 are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to May 1, 2016, we may also redeem up to 35.0% of the 5 1/8% Senior Notes due 2020 at a specified premium with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 1/8% Senior Notes due 2020 are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 1/8% Senior Notes due 2020 contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 1/8% Senior Notes due 2020 at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | ||||||||||||||||||||||||||||
On May 5, 2011, we issued $2.0 billion aggregate principal amount of our ten-year, 6 3/4% Senior Notes due June 1, 2021 at an issue price of 99.093%. Interest accrues at an annual rate of 6 3/4% and is payable semi-annually in cash, in arrears on June 1 and December 1 of each year. | ||||||||||||||||||||||||||||
The 6 3/4% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to June 1, 2014, we may also redeem up to 35% of each of the 6 3/4% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 6 3/4% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 6 3/4% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 6 3/4% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | ||||||||||||||||||||||||||||
On May 16, 2012, we issued $1.0 billion aggregate principal amount of our ten-year, 5 7/8% Senior Notes due July 15, 2022 at an issue price of 100.0%. Interest accrues at an annual rate of 5 7/8% and is payable semi-annually in cash, in arrears on January 15 and July 15 of each year. | ||||||||||||||||||||||||||||
On July 26, 2012, we issued an additional $1.0 billion aggregate principal amount of our ten-year, 5 7/8% Senior Notes due July 15, 2022 at an issue price of 100.75% plus accrued interest from May 16, 2012. These notes were issued as additional notes under the related indenture, pursuant to which we issued on May 16, 2012 $1.0 billion in aggregate principal amount of our 5 7/8% Senior Notes due 2022 discussed above. These notes and the notes previously issued under the related indenture will be treated as a single class of debt securities under the related indenture. | ||||||||||||||||||||||||||||
The 5 7/8% Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to July 15, 2015, we may also redeem up to 35.0% of each of the 5 7/8% Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 7/8% Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 7/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 7/8% Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
6 1/4% Senior Notes due 2023 | ||||||||||||||||||||||||||||
On May 28, 2013, we issued $1.35 billion aggregate principal amount of our ten-year, 6 1/4% Senior Notes due May 15, 2023 at an issue price of 100%. The net proceeds from the 6 1/4% Senior Notes due 2023 were placed into escrow to finance a portion of the cash consideration for DISH Network’s proposed merger with Sprint. On June 21, 2013, DISH Network abandoned its efforts to acquire Sprint and, on June 24, 2013, we redeemed all of the 6 1/4% Senior Notes due 2023 at a redemption price equal to 101% of the aggregate principal amount of the 6 1/4% Senior Notes due 2023, plus accrued and unpaid interest. | ||||||||||||||||||||||||||||
During the second quarter 2013, we recorded $23 million in premiums, interest expense and deferred financing costs related to the issuance and redemption of our 6 1/4% Senior Notes due 2023 as “Interest expense, net of amounts capitalized” on our Consolidated Statements of Operations and Comprehensive Income (Loss). | ||||||||||||||||||||||||||||
5 % Senior Notes due 2023 | ||||||||||||||||||||||||||||
On December 27, 2012, we issued $1.5 billion aggregate principal amount of our 5 % Senior Notes due March 15, 2023 at an issue price of 100.0%. Interest accrues at an annual rate of 5 % and is payable semi-annually in cash, in arrears on March 15 and September 15 of each year. | ||||||||||||||||||||||||||||
The 5 % Senior Notes are redeemable, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. Prior to March 15, 2016, we may also redeem up to 35.0% of each of the 5 % Senior Notes at specified premiums with the net cash proceeds from certain equity offerings or capital contributions. | ||||||||||||||||||||||||||||
The 5 % Senior Notes are: | ||||||||||||||||||||||||||||
· general unsecured senior obligations of DISH DBS; | ||||||||||||||||||||||||||||
· ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and | ||||||||||||||||||||||||||||
· ranked effectively junior to DISH DBS’ and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness. | ||||||||||||||||||||||||||||
The indenture related to the 5 % Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to: | ||||||||||||||||||||||||||||
· incur additional debt; | ||||||||||||||||||||||||||||
· pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; | ||||||||||||||||||||||||||||
· make certain investments; | ||||||||||||||||||||||||||||
· create liens or enter into sale and leaseback transactions; | ||||||||||||||||||||||||||||
· enter into transactions with affiliates; | ||||||||||||||||||||||||||||
· merge or consolidate with another company; and | ||||||||||||||||||||||||||||
· transfer or sell assets. | ||||||||||||||||||||||||||||
In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 5 % Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase. | ||||||||||||||||||||||||||||
Interest on Long-Term Debt | ||||||||||||||||||||||||||||
Annual | ||||||||||||||||||||||||||||
Semi-Annual | Debt Service | |||||||||||||||||||||||||||
Payment Dates | Requirements | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 | April 1 and October 1 | $ | 66,250 | |||||||||||||||||||||||||
7 3/4% Senior Notes due 2015 | May 31 and November 30 | $ | 58,125 | |||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | February 1 and August 1 | $ | 106,875 | |||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | January 15 and July 15 | $ | 41,625 | |||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | April 1 and October 1 | $ | 51,000 | |||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | March 1 and September 1 | $ | 110,250 | |||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | May 1 and November 1 | $ | 56,375 | |||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | June 1 and December 1 | $ | 135,000 | |||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | January 15 and July 15 | $ | 117,500 | |||||||||||||||||||||||||
5% Senior Notes due 2023 | March 15 and September 15 | $ | 75,000 | |||||||||||||||||||||||||
Our ability to meet our debt service requirements will depend on, among other factors, the successful execution of our business strategy, which is subject to uncertainties and contingencies beyond our control. | ||||||||||||||||||||||||||||
Fair Value of our Long-Term Debt | ||||||||||||||||||||||||||||
The following table summarizes the carrying and fair values of our debt facilities as of December 31, 2013 and 2012: | ||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||||||
Value | Value | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
7 % Senior Notes due 2013 (1) | — | — | 500,000 | 521,875 | ||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (2) | 1,000,000 | 1,040,200 | 1,000,000 | 1,078,500 | ||||||||||||||||||||||||
7 3/4% Senior Notes due 2015 | 750,000 | 813,750 | 750,000 | 844,725 | ||||||||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,657,500 | 1,500,000 | 1,683,750 | ||||||||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 946,962 | 900,000 | 940,500 | ||||||||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,221,792 | — | — | ||||||||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,603,000 | 1,400,000 | 1,669,500 | ||||||||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,104,950 | — | — | ||||||||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,122,500 | 2,000,000 | 2,280,000 | ||||||||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 1,997,500 | 2,000,000 | 2,150,000 | ||||||||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,458,090 | 1,500,000 | 1,548,750 | ||||||||||||||||||||||||
Mortgages and other notes payable | 59,313 | 59,313 | 65,427 | 65,427 | ||||||||||||||||||||||||
Subtotal | 13,409,313 | $ | 14,025,557 | 11,615,427 | $ | 12,783,027 | ||||||||||||||||||||||
Capital lease obligations (3) | 219,902 | NA | 248,304 | NA | ||||||||||||||||||||||||
Total long-term debt and capital | ||||||||||||||||||||||||||||
lease obligations (including current portion) | $ | 13,629,215 | $ | 11,863,731 | ||||||||||||||||||||||||
(1) During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | ||||||||||||||||||||||||||||
(2) Our 6 5/8% Senior Notes with an aggregate principal balance of $1.0 billion mature on October 1, 2014 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Consolidated Balance Sheets as of December 31, 2013. | ||||||||||||||||||||||||||||
(3) Disclosure regarding fair value of capital leases is not required. | ||||||||||||||||||||||||||||
Other Long-Term Debt and Capital Lease Obligations | ||||||||||||||||||||||||||||
Other long-term debt and capital lease obligations consisted of the following: | ||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Satellites and other capital lease obligations | $ | 219,902 | $ | 248,304 | ||||||||||||||||||||||||
Notes payable related to satellite vendor financing and other debt payable in installments through 2025 with interest rates ranging from approximately 6% to 13% | 59,313 | 65,427 | ||||||||||||||||||||||||||
Total | 279,215 | 313,731 | ||||||||||||||||||||||||||
Less current portion | (32,607 | ) | (34,787 | ) | ||||||||||||||||||||||||
Other long-term debt and capital lease obligations, net of current portion | $ | 246,608 | $ | 278,944 | ||||||||||||||||||||||||
Capital Lease Obligations | ||||||||||||||||||||||||||||
Anik F3. Anik F3, an FSS satellite, was launched and commenced commercial operation during April 2007. This satellite is accounted for as a capital lease and depreciated over the term of the satellite service agreement. We have leased 100% of the Ku-band capacity on Anik F3 for a period of 15 years. | ||||||||||||||||||||||||||||
Ciel II. Ciel II, a Canadian DBS satellite, was launched in December 2008 and commenced commercial operation during February 2009. This satellite is accounted for as a capital lease and depreciated over the term of the satellite service agreement. We have leased 100% of the capacity on Ciel II for an initial 10 year term. | ||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, we had $500 million capitalized for the estimated fair value of satellites acquired under capital leases included in “Property and equipment, net,” with related accumulated depreciation of $236 million and $194 million, respectively. In our Consolidated Statements of Operations and Comprehensive Income (Loss), we recognized $43 million, $43 million and $43 million in depreciation expense on satellites acquired under capital lease agreements during the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||||||
Future minimum lease payments under the capital lease obligations, together with the present value of the net minimum lease payments as of December 31, 2013 are as follows (in thousands): | ||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||
2014 | $ | 77,944 | ||||||||||||||||||||||||||
2015 | 76,007 | |||||||||||||||||||||||||||
2016 | 76,007 | |||||||||||||||||||||||||||
2017 | 76,007 | |||||||||||||||||||||||||||
2018 | 75,982 | |||||||||||||||||||||||||||
Thereafter | 162,331 | |||||||||||||||||||||||||||
Total minimum lease payments | 544,278 | |||||||||||||||||||||||||||
Less: Amount representing lease of the orbital location and estimated executory costs (primarily insurance and maintenance) including profit thereon, included in total minimum lease payments | (254,832 | ) | ||||||||||||||||||||||||||
Net minimum lease payments | 289,446 | |||||||||||||||||||||||||||
Less: Amount representing interest | (69,544 | ) | ||||||||||||||||||||||||||
Present value of net minimum lease payments | 219,902 | |||||||||||||||||||||||||||
Less: Current portion | (26,829 | ) | ||||||||||||||||||||||||||
Long-term portion of capital lease obligations | $ | 193,073 | ||||||||||||||||||||||||||
The summary of future maturities of our outstanding long-term debt as of December 31, 2013 is included in the commitments table in Note 11. In addition, see Note 16 for further discussion of our Subsequent Events. |
Commitments_and_Contingencies1
Commitments and Contingencies | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||||||
Commitments and Contingencies | 8. Commitments and Contingencies | 11. Commitments and Contingencies | ||||||||||||||||||||||
Commitments | Commitments | |||||||||||||||||||||||
Wireless Spectrum | As of December 31, 2013, future maturities of our long-term debt, capital lease and contractual obligations are summarized as follows: | |||||||||||||||||||||||
DISH Network has made substantial investments to acquire certain wireless spectrum licenses and related assets in recent years. | Payments due by period | |||||||||||||||||||||||
Total | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | ||||||||||||||||||
700 MHz Licenses. In 2008, DISH Network paid $712 million to acquire certain 700 MHz E Block (“700 MHz”) wireless spectrum licenses, which were granted to DISH Network by the FCC in February 2009. At the time they were granted, these licenses were subject to certain interim and final build-out requirements. By June 2013, DISH Network was required to provide signal coverage and offer service to at least 35% of the geographic area in each area covered by each individual license (the “700 MHz Interim Build-Out Requirement”). By June 2019, DISH Network was required to provide signal coverage and offer service to at least 70% of the geographic area in each area covered by each individual license (the “700 MHz Final Build-Out Requirement”). As discussed below, these requirements have since been modified by the FCC. | (In thousands) | |||||||||||||||||||||||
Long-term debt obligations | $ | 13,409,313 | $ | 1,005,778 | $ | 756,159 | $ | 1,504,669 | $ | 904,903 | $ | 1,205,197 | $ | 8,032,607 | ||||||||||
On September 9, 2013, DISH Network filed a letter with the FCC in support of a voluntary industry solution to resolve certain interoperability issues affecting the lower 700 MHz spectrum band (the “Interoperability Solution”). On October 29, 2013, the FCC issued an order approving the Interoperability Solution (the “Interoperability Solution Order”), which requires DISH Network to reduce power emissions on its 700 MHz licenses. As part of the Interoperability Solution Order, the FCC, among other things, approved DISH Network’s request to modify the 700 MHz Interim Build-Out Requirement so that by March 2017 DISH Network must provide signal coverage and offer service to at least 40% of its total E Block population (the “Modified 700 MHz Interim Build-Out Requirement”). The FCC also approved DISH Network’s request to modify the 700 MHz Final Build-Out Requirement so that by March 2021 DISH Network must provide signal coverage and offer service to at least 70% of the population in each of its E Block license areas (the “Modified 700 MHz Final Build-Out Requirement”). These requirements replaced the previous build-out requirements associated with DISH Network’s 700 MHz licenses. While the modifications to DISH Network’s 700 MHz licenses provide DISH Network additional time to complete the build-out requirements, the reduction in power emissions could have an adverse impact on DISH Network’s ability to fully utilize its 700 MHz licenses. If DISH Network fails to meet the Modified 700 MHz Interim Build-Out Requirement, the Modified 700 MHz Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020, and DISH Network could face the reduction of license area(s). If DISH Network fails to meet the Modified 700 MHz Final Build-Out Requirement, DISH Network’s authorization may terminate for the geographic portion of each license in which DISH Network is not providing service. | Capital lease obligations | 219,902 | 26,829 | 27,372 | 30,058 | 32,994 | 36,175 | 66,474 | ||||||||||||||||
Interest expense on long-term debt and capital lease obligations | 4,718,745 | 838,801 | 741,005 | 655,467 | 599,028 | 528,620 | 1,355,824 | |||||||||||||||||
AWS-4 Licenses. On March 2, 2012, the FCC approved the transfer of 40 MHz of wireless spectrum licenses held by DBSD North America, Inc. (“DBSD North America”) and TerreStar Networks, Inc. (“TerreStar”) to DISH Network. On March 9, 2012, DISH Network completed the acquisition of 100% of the equity of reorganized DBSD North America (the “DBSD Transaction”) and substantially all of the assets of TerreStar (the “TerreStar Transaction”), pursuant to which DISH Network acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion. | Satellite-related obligations | 1,717,153 | 250,741 | 230,225 | 230,138 | 225,464 | 225,246 | 555,339 | ||||||||||||||||
Operating lease obligations | 179,355 | 45,868 | 36,204 | 31,793 | 15,150 | 8,438 | 41,902 | |||||||||||||||||
DISH Network’s consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar were accompanied by requests for waiver of the FCC’s Mobile Satellite Service (“MSS”) “integrated service” and spare satellite requirements and various technical provisions. On March 21, 2012, the FCC released a Notice of Proposed Rule Making proposing the elimination of the integrated service, spare satellite and various technical requirements associated with these licenses. On December 11, 2012, the FCC approved rules that eliminated these requirements and gave notice of its proposed modification of DISH Network’s authorizations to, among other things, allow DISH Network to offer single-mode terrestrial terminals to customers who do not desire satellite functionality. On February 15, 2013, the FCC issued an order, which became effective on March 7, 2013, modifying DISH Network’s licenses to expand its terrestrial operating authority with AWS-4 authority (“AWS-4”). That order imposed certain limitations on the use of a portion of this spectrum, including interference protections for other spectrum users and power and emission limits that DISH Network presently believes could render 5 MHz of its uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial services and limit its ability to fully utilize the remaining 15 MHz of its uplink spectrum (2005-2020 MHz) for terrestrial services. These limitations could, among other things, impact the ongoing development of technical standards associated with DISH Network’s wireless business, and may have a material adverse effect on DISH Network’s ability to commercialize its AWS-4 licenses. That order also mandated certain interim and final build-out requirements for the licenses. By March 2017, DISH Network must provide terrestrial signal coverage and offer terrestrial service to at least 40% of the aggregate population represented by all of the areas covered by the licenses (the “AWS-4 Interim Build-Out Requirement”). By March 2020, DISH Network was required to provide terrestrial signal coverage and offer terrestrial service to at least 70% of the population in each area covered by an individual license (the “AWS-4 Final Build-Out Requirement”). | Purchase obligations | 3,019,689 | 1,826,577 | 444,657 | 322,253 | 165,059 | 136,059 | 125,084 | ||||||||||||||||
Total | $ | 23,264,157 | $ | 3,994,594 | $ | 2,235,622 | $ | 2,774,378 | $ | 1,942,598 | $ | 2,139,735 | $ | 10,177,230 | ||||||||||
On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If DISH Network fails to meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020. If DISH Network fails to meet the Modified AWS-4 Final Build-Out Requirement, DISH Network’s terrestrial authorization for each license area in which it fails to meet the requirement may terminate. The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for DISH Network’s AWS-4 licenses to allow DISH Network to repurpose all 20 MHz of its uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4 Downlink Waiver”). If DISH Network fails to notify the FCC that it intends to use its uplink spectrum for downlink by June 20, 2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will revert back to the AWS-4 Final Build-Out Requirement. | ||||||||||||||||||||||||
In certain circumstances the dates on which we are obligated to make these payments could be delayed. These amounts will increase to the extent we procure insurance for our satellites or contract for the construction, launch or lease of additional satellites. | ||||||||||||||||||||||||
H Block Licenses. The auction of wireless spectrum known as the H Block commenced on January 22, 2014 and concluded on February 27, 2014. DISH Network was the winning bidder for all 176 H Block wireless spectrum licenses (“H Block”) in the H Block auction with an aggregate bid of $1.564 billion. On December 17, 2013, DISH Network paid approximately $328 million to the FCC as a deposit for the H Block auction. DISH Network paid the remaining balance of its winning bid of approximately $1.236 billion for the H Block licenses on March 28, 2014. On April 29, 2014, the FCC issued an order granting DISH Network’s application to acquire these H Block licenses. As a result, during May 2014, DISH Network also paid approximately $13 million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95 million to Sprint for clearance costs associated with the upper H Block spectrum in connection with the issuance of the H Block licenses. The H Block licenses are subject to certain interim and final build-out requirements. By April 2018, DISH Network must provide reliable signal coverage and offer service to at least 40% of the population in each area covered by an individual H Block license (the “H Block Interim Build-Out Requirement”). By April 2024, DISH Network must provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an individual H Block license (the “H Block Final Build-Out Requirement”). If DISH Network fails to meet the H Block Interim Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated by two years (from April 2024 to April 2022) for each H Block license area in which it fails to meet the requirement. If DISH Network fails to meet the H Block Final Build-Out Requirement, its authorization for each H Block license area in which it fails to meet the requirement may terminate. The FCC has adopted rules for the H Block spectrum band that is adjacent to DISH Network’s AWS-4 licenses. Depending on the outcome of the standard-setting process for the H Block and DISH Network’s ultimate decision regarding the AWS-4 Downlink Waiver, the rules that the FCC adopted for the H Block could further impact 15 MHz of DISH Network’s AWS-4 uplink spectrum (2005-2020 MHz), which may have a material adverse effect on DISH Network’s ability to commercialize the AWS-4 licenses. | ||||||||||||||||||||||||
On February 20, 2014, we entered into agreements with EchoStar to implement a transaction pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and Hughes Satellite Systems Corporation (“HSSC”), a wholly-owned subsidiary of EchoStar, five satellites (EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV, including related in-orbit incentive obligations and interest payments of approximately $59 million) and approximately $11 million in cash in exchange for shares of a series of preferred tracking stock issued by EchoStar and shares of a series of preferred tracking stock issued by HSSC; and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on these five satellites (collectively, the “Satellite and Tracking Stock Transaction”). The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will result in operating lease obligations of $148 million due 2014, $175 million due 2015, $123 million due 2016, $102 million due 2017, $102 million due 2018 and $329 million due thereafter. These obligations are not included in the table above. The Satellite and Tracking Stock Transaction with EchoStar for EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV will also result in a reduction of our long-term debt obligations associated with our in-orbit incentive payments of $5 million due 2014, $5 million due 2015, $4 million due 2016, $4 million due 2017, $4 million due 2018 and $22 million due thereafter and a reduction in our interest expense associated with our in-orbit incentive payments of $3 million due 2014, $2 million due 2015, $2 million due 2016, $2 million due 2017, $1 million due 2018 and $5 million due thereafter. See Note 16 for further discussion of our Subsequent Events. | ||||||||||||||||||||||||
AWS-3 Auction. DISH Network has filed an application with the FCC to participate as a potential bidder in the upcoming AWS-3 wireless spectrum auction. On October 30, 2014, the FCC announced that DISH Network and 69 other applicants were qualified to participate in the AWS-3 auction. The auction is scheduled to commence on November 13, 2014. The FCC has set an aggregate reserve price of: (i) approximately $580 million for licenses in the 1695-1710 MHz band, and (ii) approximately $10.066 billion for paired licenses in the 1755-1780/2155-2180 MHz bands, to conclude the auction of spectrum in each respective band. The FCC determined that bidding in this auction will be “anonymous,” which means that prior to and during the course of the auction, the FCC will not make public any information about a specific applicant’s upfront deposit or its bids. In addition, FCC rules restrict information that bidders may disclose about their participation in the auction. | ||||||||||||||||||||||||
In addition, the table above does not include $146 million of liabilities associated with unrecognized tax benefits that were accrued, as discussed in Note 8, and are included on our Consolidated Balance Sheets as of December 31, 2013. We do not expect any portion of this amount to be paid or settled within the next twelve months. | ||||||||||||||||||||||||
Commercialization of Wireless Spectrum Licenses and Related Assets. 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. DISH Network will need to make significant additional investments or partner with others to, among other things, commercialize, build-out, and integrate its licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to its licenses. Depending on the nature and scope of such commercialization, build-out, and integration efforts, and regulatory compliance, any such investment or partnership could vary significantly. In connection with the development of DISH Network’s wireless business, including without limitation the efforts described above, we have made cash distributions to DISH Network 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. On March 28, 2014, we paid a dividend of $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 wireless spectrum licenses in the H Block auction. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on its wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by its wireless spectrum licenses. | ||||||||||||||||||||||||
Wireless Spectrum | ||||||||||||||||||||||||
Guarantees | ||||||||||||||||||||||||
On March 2, 2012, the FCC approved the transfer of 40 MHz of AWS-4 wireless spectrum licenses held by DBSD North America, Inc. (“DBSD North America”) and TerreStar Networks, Inc. (“TerreStar”) to DISH Network. On March 9, 2012, DISH Network completed the acquisitions of 100% of the equity of reorganized DBSD North America (the “DBSD Transaction”) and substantially all of the assets of TerreStar (the “TerreStar Transaction”), pursuant to which DISH Network acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar. The total consideration to acquire the DBSD North America and TerreStar assets was approximately $2.860 billion. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
DISH Network’s consolidated FCC applications for approval of the license transfers from DBSD North America and TerreStar were accompanied by requests for waiver of the FCC’s Mobile Satellite Service (“MSS”) “integrated service” and spare satellite requirements and various technical provisions. On March 21, 2012, the FCC released a Notice of Proposed Rule Making proposing the elimination of the integrated service, spare satellite and various technical requirements associated with the AWS-4 licenses. On December 11, 2012, the FCC approved rules that eliminated these requirements and gave notice of its proposed modification of DISH Network’s AWS-4 authorizations to, among other things, allow DISH Network to offer single-mode terrestrial terminals to customers who do not desire satellite functionality. On February 15, 2013, the FCC issued an order, which became effective on March 7, 2013, modifying its AWS-4 licenses to expand DISH Network’s terrestrial operating authority. That order imposed certain limitations on the use of a portion of this spectrum, including interference protections for other spectrum users and power and emission limits that DISH Network presently believes could render 5 MHz of its uplink spectrum (2000-2005 MHz) effectively unusable for terrestrial services and limit its ability to fully utilize the remaining 15 MHz of its uplink spectrum (2005-2020 MHz) for terrestrial services. These limitations could, among other things, impact the ongoing development of technical standards associated with DISH Network’s wireless business, and may have a material adverse effect on DISH Network’s ability to commercialize these licenses. That order also mandated certain interim and final build-out requirements for the licenses. By March 2017, DISH Network must provide terrestrial signal coverage and offer terrestrial service to at least 40% of the aggregate population represented by all of the areas covered by the licenses (the “AWS-4 Interim Build-Out Requirement”). By March 2020, DISH Network was required to provide terrestrial signal coverage and offer terrestrial service to at least 70% of the population in each area covered by an individual license (the “AWS-4 Final Build-Out Requirement”). On December 20, 2013, the FCC issued a further order that, among other things, extended the AWS-4 Final Build-Out Requirement by one year to March 2021 (the “Modified AWS-4 Final Build-Out Requirement”). If DISH Network fails to meet the AWS-4 Interim Build-Out Requirement, the Modified AWS-4 Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020. If DISH Network fails to meet the Modified AWS-4 Final Build-Out Requirement, its terrestrial authorization for each license area in which it fails to meet the requirement may terminate. | ||||||||||||||||||||||||
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the guarantor under those capital leases for payments totaling approximately $10 million over approximately the next five months. | ||||||||||||||||||||||||
The FCC’s December 20, 2013 order also conditionally waived certain FCC rules for DISH Network’s AWS-4 spectrum licenses to allow DISH Network to repurpose 20 MHz of its uplink spectrum (2000-2020 MHz) for downlink (the “AWS-4 Downlink Waiver”). The AWS-4 Downlink Waiver and the Modified AWS-4 Final Build-Out Requirement were conditioned upon DISH Network bidding at least a net clearing price equal to the aggregate reserve price of $1.564 billion in the auction of wireless spectrum known as the “H Block.” If DISH Network failed to meet this bidding condition, or if DISH Network fails to notify the FCC whether it intends to use its uplink spectrum for downlink by June 20, 2016, the AWS-4 Downlink Waiver will terminate, and the Modified AWS-4 Final Build-Out Requirement will revert back to the AWS-4 Final Build-Out Requirement. The H Block auction commenced January 22, 2014 and concluded on February 27, 2014. DISH Network was the winning bidder of all 176 H Block wireless spectrum licenses in the H Block auction with an aggregate bid of $1.564 billion, and, on March 14, 2014, DISH Network filed an application with the FCC to acquire these H Block spectrum licenses. The FCC has not issued any of the H Block spectrum licenses to DISH Network, as such issuance depends upon, among other things, the FCC’s review and approval of DISH Network’s application. DISH Network cannot predict the timing or the outcome of the FCC’s review of its application. On December 17, 2013, DISH Network paid approximately $328 million to the FCC as a deposit for the H Block auction. The remaining balance of DISH Network’s winning bid of approximately $1.236 billion for the H Block spectrum licenses is due March 28, 2014. In the event the FCC ultimately issues the H Block licenses to DISH Network, the FCC will also require that DISH Network pay approximately $13 million to UTAM, Inc. for clearance costs associated with the lower H Block spectrum and approximately $95 million to Sprint for clearance costs associated with the upper H Block spectrum within 30 days of the issuance of the H Block licenses. The H Block spectrum licenses are subject to certain interim and final build-out requirements. Within four years after the FCC issues the H Block spectrum licenses, the licensee must provide reliable signal coverage and offer service to at least 40% of the population in each area covered by an individual H Block spectrum license (the “H Block Interim Build-Out Requirement”). Within ten years after the FCC issues the H Block spectrum licenses, the licensee must provide reliable signal coverage and offer service to at least 75% of the population in each area covered by an individual H Block spectrum license (the “H Block Final Build-Out Requirement”). If the licensee fails to meet the H Block Interim Build-Out Requirement, the H Block license term and the H Block Final Build-Out Requirement may be accelerated by two years (from ten years to eight years) for each H Block license area in which it fails to meet the requirement. If the licensee fails to meet the H Block Final Build-Out Requirement, its authorization for each H Block spectrum license area in which it fails to meet the requirement may terminate. The FCC has adopted rules for the H Block spectrum band that is adjacent to DISH Network’s AWS-4 spectrum licenses. Depending on the outcome of the standard-setting process for the H Block and DISH Network’s ultimate decision regarding the AWS-4 Downlink Waiver, the rules that the FCC adopted for the H Block could further impact the remaining 15 MHz of DISH Network’s uplink spectrum (2005-2020 MHz), which may have a material adverse effect on DISH Network’s ability to commercialize the AWS-4 licenses. | ||||||||||||||||||||||||
During the third quarter 2009, EchoStar entered into a new 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, 2014, the remaining obligation of DISH Network’s guarantee was $327 million. | ||||||||||||||||||||||||
In 2008, DISH Network paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to DISH Network by the FCC in February 2009. At the time they were granted, these licenses were subject to certain interim and final build-out requirements. By June 2013, DISH Network was required to provide signal coverage and offer service to at least 35% of the geographic area in each area covered by each individual license (the “700 MHz Interim Build-Out Requirement”). By June 2019, DISH Network was required to provide signal coverage and offer service to at least 70% of the geographic area in each area covered by each individual license (the “700 MHz Final Build-Out Requirement”). As discussed below, these requirements have since been modified by the FCC. | ||||||||||||||||||||||||
As of September 30, 2014, we have not recorded a liability on the balance sheet for any of these guarantees. | ||||||||||||||||||||||||
On September 9, 2013, DISH Network filed a letter with the FCC in support of a voluntary industry solution to resolve certain interoperability issues affecting the lower 700 MHz spectrum band (the “Interoperability Solution”). On October 29, 2013, the FCC issued an order approving the Interoperability Solution (the “Interoperability Solution Order”), which requires DISH Network to reduce power emissions on its 700 MHz licenses. As part of the Interoperability Solution Order, the FCC, among other things, approved DISH Network’s request to modify the 700 MHz Interim Build-Out Requirement so that by March 2017 (rather than the previous deadline of June 2013), DISH Network must provide signal coverage and offer service to at least 40% of its total E Block population (the “Modified 700 MHz Interim Build-Out Requirement”). The FCC also approved DISH Network’s request to modify the 700 MHz Final Build-Out Requirement so that by March 2021 (rather than the previous deadline of June 2019), DISH Network must provide signal coverage and offer service to at least 70% of the population in each of its E Block license areas (the “Modified 700 MHz Final Build-Out Requirement”). These requirements replaced the previous build-out requirements associated with DISH Network’s 700 MHz licenses. While the modifications to DISH Network’s 700 MHz licenses would provide DISH Network additional time to complete the build-out requirements, the reduction in power emissions could have an adverse impact on DISH Network’s ability to fully utilize DISH Network’s 700 MHz licenses. If DISH Network fails to meet the Modified 700 MHz Interim Build-Out Requirement, the Modified 700 MHz Final Build-Out Requirement may be accelerated by one year, from March 2021 to March 2020, and DISH Network could face the reduction of license area(s). If DISH Network fails to meet the Modified 700 MHz Final Build-Out Requirement, DISH Network’s authorization may terminate for the geographic portion of each license in which DISH Network is not providing service. | ||||||||||||||||||||||||
Contingencies | ||||||||||||||||||||||||
DISH Network will need to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and DISH Network’s integration efforts, including compliance with regulations applicable to the acquired licenses. Depending on the nature and scope of such commercialization, build-out, and integration efforts, any such investment or partnership could vary significantly. We have made cash distributions to DISH Network to finance the acquisition of these licenses and may make additional cash distributions to, among other things, finance the acquisition of additional licenses and the commercialization and build-out requirements of acquired licenses and DISH Network’s integration efforts including compliance with regulations applicable to acquired licenses. We expect to pay a dividend of approximately $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 H Block wireless spectrum licenses in the H Block auction. 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 spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these spectrum licenses. | ||||||||||||||||||||||||
Separation Agreement | ||||||||||||||||||||||||
Guarantees | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
In connection with the Spin-off, we distributed certain satellite lease agreements to EchoStar and remained the guarantor under those capital leases for payments totaling approximately $50 million over approximately the next 14 months. | ||||||||||||||||||||||||
Litigation | ||||||||||||||||||||||||
During the third quarter 2009, EchoStar entered into a new 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 December 31, 2013, the remaining obligation of the DISH Network guarantee was $375 million. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
As of December 31, 2013, we have not recorded a liability on the balance sheet for any of these guarantees. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Purchase Obligations | ||||||||||||||||||||||||
California Institute of Technology | ||||||||||||||||||||||||
Our 2014 purchase obligations primarily consist of binding purchase orders for receiver systems and related equipment, digital broadcast operations, engineering services and products and services related to the operation of our DISH branded pay-TV service. Our purchase obligations also include certain fixed contractual commitments to purchase programming content. Our purchase obligations can fluctuate significantly from period to period due to, among other things, management’s control of inventory levels, and can materially impact our future operating asset and liability balances, and our future working capital requirements. | ||||||||||||||||||||||||
On October 1, 2013, the California Institute of Technology (“Caltech”) filed complaints against DISH Network and its wholly-owned subsidiaries DISH Network L.L.C. and dishNET Satellite Broadband L.L.C., as well as Hughes Communications, Inc. and Hughes Network Systems, LLC, which are wholly-owned subsidiaries of EchoStar, in the United States District Court for the Central District of California. The complaint alleges infringement of United States Patent Nos. 7,116,710 (the “710 patent”); 7,421,032 (the “032 patent”); 7,916,781 (the “781 patent”) and 8,284,833 (the “833 patent”), each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech alleges that encoding data as specified by the DVB-S2 standard infringes each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claims that our Hopper set-top box, as well as the Hughes defendants’ satellite broadband products and services, infringe the asserted patents by implementing the DVB-S2 standard. | ||||||||||||||||||||||||
Programming Contracts | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
In the normal course of business, we enter into contracts to purchase programming content in which our payment obligations are generally contingent on the number of Pay-TV subscribers to whom we provide the respective content. These programming commitments are not included in the “Commitments” table above. The terms of our contracts typically range from one to ten years with annual rate increases. Our programming expenses will continue to increase to the extent we are successful in growing our Pay-TV subscriber base. In addition, our margins may face further downward pressure from price increases and the renewal of long-term pay-TV programming contracts on less favorable pricing terms. | ||||||||||||||||||||||||
ClearPlay, Inc. | ||||||||||||||||||||||||
Rent Expense | ||||||||||||||||||||||||
On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C. in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799, entitled “Multimedia Content Navigation and Playback” (the “799 patent”); 7,526,784, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “784 patent”); 7,543,318, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “318 patent”); 7,577,970, entitled “Multimedia Content Navigation and Playback” (the “970 patent”); and 8,117,282, entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums” (the “282 patent”). ClearPlay alleges that the AutoHop™ feature in our Hopper set-top box infringes the asserted patents. | ||||||||||||||||||||||||
Total rent expense for operating leases was $303 million, $252 million and $267 million in 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Patents and Intellectual Property | ||||||||||||||||||||||||
CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.) | ||||||||||||||||||||||||
Many entities, including some of our competitors, have or may in the future obtain patents and other intellectual property rights that cover or affect products or services that we offer or that we may offer in the future. We may not be aware of all intellectual property rights that our products or services may potentially infringe. Damages in patent infringement cases can be substantial, and in certain circumstances can be trebled. Further, we cannot estimate the extent to which we may be required in the future to obtain licenses with respect to patents held by others and the availability and cost of any such licenses. Various parties have asserted patent and other intellectual property rights with respect to components within our direct broadcast satellite system. We cannot be certain that these persons do not own the rights they claim, that our products do not infringe on these rights, and/or that these rights are not valid. Further, we cannot be certain that we would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we would be able to redesign our products to avoid infringement. | ||||||||||||||||||||||||
On January 17, 2014, CRFD Research, Inc. (“CRFD”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the “233 patent”). The 233 patent is entitled “System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System,” and relates to transferring an ongoing software session from one device to another. CRFD alleges that our Hopper and Joey set-top boxes infringe the 233 patent. On the same day, CRFD filed similar complaints against AT&T Inc.; Comcast Corp.; DirecTV; Time Warner Cable Inc.; Cox Communications, Inc.; Akamai Technologies, Inc.; Cablevision Systems Corp. and Limelight Networks, Inc. CRFD is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
Contingencies | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Separation Agreement | ||||||||||||||||||||||||
Custom Media Technologies LLC | ||||||||||||||||||||||||
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 August 15, 2013, Custom Media Technologies LLC (“Custom Media”) filed complaints against DISH Network; AT&T Inc.; Charter Communications, Inc.; Comcast Corp.; Cox Communications, Inc.; DirecTV; 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. 6,269,275 (the “275 patent”). The 275 patent, which is entitled “Method and System for Customizing and Distributing Presentations for User Sites,” relates to the provision of customized presentations to viewers over a network, such as “a cable television network, an Internet or other computer network, a broadcast television network, and/or a satellite system.” Custom Media alleges that our DVR devices and DVR functionality infringe the 275 patent. Custom Media is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Pursuant to a stipulation between the parties, on November 6, 2013, the Court entered an order substituting DISH Network L.L.C., our wholly-owned subsidiary, as the defendant in DISH Network’s place. A trial date is set for September 19, 2016. | ||||||||||||||||||||||||
Litigation | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On March 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois, alleging violations of the Telephone Consumer Protection Act and Telephone Sales Rules, as well as analogous state statutes and state consumer protection laws. The plaintiffs allege that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs are seeking civil penalties and damages of approximately $270 million and that the federal plaintiff is seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs are also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We have also filed a motion for summary judgment, seeking dismissal of all claims, and the Court heard oral arguments on the parties’ summary judgment motions on October 17, 2014. | ||||||||||||||||||||||||
c4cast.com, Inc. | ||||||||||||||||||||||||
We intend to vigorously defend this case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
On May 7, 2012, c4cast.com, Inc. filed a complaint against DISH Network and its wholly-owned subsidiary Blockbuster L.L.C., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent No. 7,958,204 (the “204 patent”), which is entitled “Community-Selected Content.” The 204 patent relates to systems, methods and techniques for providing resources to participants over an electronic network. On August 29, 2013, c4cast.com, Inc. dismissed the action with prejudice, pursuant to a settlement under which DISH Network made an immaterial payment in exchange for a license to DISH Network and EchoStar of certain patents and patent applications. | ||||||||||||||||||||||||
Dragon Intellectual Property, LLC | ||||||||||||||||||||||||
California Institute of Technology | ||||||||||||||||||||||||
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 October 1, 2013, the California Institute of Technology (“Caltech”) filed complaints against DISH Network and its wholly-owned subsidiaries DISH Network L.L.C. and dishNET Satellite Broadband L.L.C., as well as Hughes Communications, Inc. and Hughes Network Systems, LLC, which are wholly-owned subsidiaries of EchoStar, in the United States District Court for the Central District of California. The complaint alleges infringement of United States Patent Nos. 7,116,710 (the “710 patent”), 7,421,032 (the “032 patent”), 7,916,781 (the “781 patent”) and 8,284,833 (the “833 patent”), each of which is entitled “Serial Concatenation of Interleaved Convolutional Codes forming Turbo-Like Codes.” Caltech alleges that encoding data as specified by the DVB-S2 standard infringes each of the asserted patents. In the operative Amended Complaint, served on March 6, 2014, Caltech claims that our Hopper set-top box, as well as the Hughes defendants’ satellite broadband products and services, infringe the asserted patents by implementing the DVB-S2 standard. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
ESPN | ||||||||||||||||||||||||
ClearPlay, Inc. | ||||||||||||||||||||||||
During 2008, our wholly-owned subsidiary DISH Network L.L.C. filed a lawsuit against ESPN, Inc.; ESPN Classic, Inc.; ABC Cable Networks Group; Soapnet L.L.C. and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State Supreme Court. Our complaint alleged that ESPN failed to provide us with certain HD feeds of the Disney Channel, ESPN News, Toon and ABC Family. In October 2011, the jury returned a verdict in favor of the defendants, which the New York State Supreme Court, Appellate Division, First Department (the “First Department”) affirmed on April 2, 2013. We sought leave to further appeal, which the New York Court of Appeals denied on August 27, 2013 on jurisdictional grounds. On September 19, 2013, we appealed the trial court’s final judgment to the First Department. On March 6, 2014, pursuant to a settlement and release agreement between the parties, we dismissed our appeal. | ||||||||||||||||||||||||
On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Utah. The complaint alleges infringement of United States Patent Nos. 6,898,799 (the “799 patent”), entitled “Multimedia Content Navigation and Playback”; 7,526,784, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “784 patent”); 7,543,318, entitled “Delivery of Navigation Data for Playback of Audio and Video Content” (the “318 patent”); 7,577,970, entitled “Multimedia Content Navigation and Playback” (the “970 patent”); and 8,117,282, entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums” (the “282 patent”). ClearPlay alleges that the AutoHop feature in our Hopper set-top box infringes the asserted patents. | ||||||||||||||||||||||||
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary judgment on the counterclaim, finding that we were liable for some of the amount alleged to be owing but that the actual amount owing was disputed. On December 29, 2010, the First Department affirmed the partial grant of ESPN’s motion for summary judgment on the counterclaim. After the partial grant of ESPN’s motion for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements. On March 15, 2010, the New York State Supreme Court ruled that we owed the full amount of approximately $66 million under the applicable affiliation agreements. As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Consolidated Balance Sheets. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On June 21, 2011, the First Department affirmed the New York State Supreme Court’s ruling that we owed approximately $66 million under the applicable affiliation agreements and, on October 18, 2011, denied our motion for leave to appeal that decision to New York’s highest court, the New York Court of Appeals. We sought leave to appeal directly to the New York Court of Appeals and, on January 10, 2012, the New York Court of Appeals dismissed our motion for leave on the ground that the ruling upon which we appealed did not fully resolve all claims in the action. As a result of the First Department’s June 2011 ruling, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss) during 2011. On October 11, 2012, the New York State Supreme Court awarded ESPN $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim. As a result, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million related to this case as of December 31, 2012. During the first quarter 2013, we paid $71 million to ESPN related to the counterclaim and attorneys’ fees and $12 million for accrued interest. As a result of the parties’ settlement and release, no further appeals are possible, and this matter is now concluded. | ||||||||||||||||||||||||
CRFD Research, Inc. (a subsidiary of Marathon Patent Group, Inc.) | ||||||||||||||||||||||||
Garnet Digital, LLC | ||||||||||||||||||||||||
On January 17, 2014, CRFD Research, Inc. (“CRFD”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, EchoStar, and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 7,191,233 (the “233 patent”). The 233 patent is entitled “System for Automated, Mid-Session, User-Directed, Device-to-Device Session Transfer System,” and relates to transferring an ongoing software session from one device to another. CRFD alleges that our Hopper and Joey set-top boxes infringe the 233 patent. On the same day, CRFD filed similar complaints against AT&T Inc., Comcast Corp., DirecTV, Time Warner Cable Inc., Cox Communications, Inc., Level 3 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 September 9, 2013, Garnet Digital, LLC (“Garnet Digital”) 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, alleging infringement of United States Patent No. 5,379,421 (the “421 patent”), which is entitled “Interactive Terminal for the Access of Remote Database Information.” The 421 patent relates to methods for accessing information from a remote computerized database and related devices. On the same day, Garnet Digital filed similar complaints in the same court against 15 other defendants, including AT&T Inc.; Comcast Corp.; DirecTV; TiVo, Inc. and Verizon Communications, Inc. Garnet Digital is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On July 30, 2014, the Court dismissed the claims against us and DISH Network with prejudice. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
The Hopper Litigation | ||||||||||||||||||||||||
Custom Media Technologies LLC | ||||||||||||||||||||||||
On May 24, 2012, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit in the United States District Court for the Southern District of New York against American Broadcasting Companies, Inc.; CBS Corporation; Fox Entertainment Group, Inc.; Fox Television Holdings, Inc.; Fox Cable Network Services, L.L.C. and NBCUniversal, LLC. In the lawsuit, we are seeking a declaratory judgment that we are not infringing any defendant’s copyright, or breaching any defendant’s retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop features of our Hopper set-top box. A consumer can use the PrimeTime Anytime feature, at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature, at his or her option, to watch certain recordings the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back at a certain point after the show’s original airing. | ||||||||||||||||||||||||
On August 15, 2013, Custom Media Technologies LLC (“Custom Media”) filed complaints against DISH Network, AT&T Inc., Charter Communications, Inc., Comcast Corp., Cox Communications, Inc., DirecTV, 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. 6,269,275 (the “275 patent”). The 275 patent, which is entitled “Method and System for Customizing and Distributing Presentations for User Sites,” relates to the provision of customized presentations to viewers over a network, such as “a cable television network, an Internet or other computer network, a broadcast television network, and/or a satellite system.” Custom Media is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
Later on May 24, 2012, (i) Fox Broadcasting Company; Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as Slingbox placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC; Universal Network Television, LLC; Open 4 Business Productions LLC and NBCUniversal, LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc.; CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
As a result of certain parties’ competing venue-related motions brought in both the New York and California actions, and certain networks’ filing various counterclaims and amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox and NBC parties in California. | ||||||||||||||||||||||||
Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) | ||||||||||||||||||||||||
California Actions. The NBC plaintiffs and Fox plaintiffs filed amended complaints in their respective California actions adding copyright claims against EchoStar and EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar. In addition, the Fox plaintiffs’ amended complaint added claims challenging the Hopper Transfers™ feature of our second-generation Hopper set-top box. | ||||||||||||||||||||||||
On September 15, 2011, LVL Patent Group, LLC filed a complaint against our wholly-owned subsidiary DISH Network L.L.C., as well as EchoStar, EchoStar Technologies L.L.C., a wholly-owned subsidiary of EchoStar, and DirecTV, in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 6,044,382, which is entitled “Data Transaction Assembly Server.” DirecTV was dismissed from the case on January 4, 2012. On July 12, 2012, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed the operative second amended complaint making the same claim. On January 24, 2013, Cyberfone Systems, LLC voluntarily dismissed the action against us and the EchoStar entities without prejudice. | ||||||||||||||||||||||||
On November 7, 2012, the California court denied the Fox plaintiffs’ motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features, and the Fox plaintiffs appealed. On March 27, 2013, at the request of the parties, the Central District of California granted a stay of all proceedings in the action brought by the NBC plaintiffs, pending resolution of the appeal by the Fox plaintiffs. On July 24, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the PrimeTime Anytime and AutoHop features. On August 7, 2013, the Fox plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on January 24, 2014. The United States Supreme Court granted the Fox plaintiffs an extension until May 23, 2014 to file a petition for writ of certiorari, but they did not file. As a result, the stay of the NBC plaintiffs’ action expired. On August 6, 2014, at the request of the parties, the Central District of California granted a further stay of all proceedings in the action brought by the NBC plaintiffs, pending a final judgment on all claims in the Fox plaintiffs’ action. No trial date is currently set on the NBC claims. | ||||||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||||
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their retransmission consent agreement; and (ii) us and EchoStar Technologies L.L.C. seeking to enjoin the Slingbox placeshifting functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach of their retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’ motion. The Fox plaintiffs appealed, and on July 14, 2014, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the Hopper Transfers feature and the Slingbox placeshifting functionality in our second-generation Hopper set-top box. On October 17, 2014, the California court heard oral argument on the Fox plaintiffs’ and our respective motions for summary judgment. The Fox claims are set for trial on February 24, 2015. | ||||||||||||||||||||||||
On March 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois, alleging violations of the Telephone Consumer Protection Act and Telephone Sales Rules, as well as analogous state statutes and state consumer protection laws. The plaintiffs allege that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs are seeking civil penalties and damages of approximately $270 million and that the federal plaintiff is seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs are also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for five years, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We have also filed a motion for summary judgment, seeking dismissal of all claims. | ||||||||||||||||||||||||
New York Actions. Both the ABC and CBS parties filed counterclaims in the New York action adding copyright claims against EchoStar Technologies L.L.C., and the CBS parties have filed a counterclaim alleging that we fraudulently concealed the AutoHop feature when negotiating renewal of our CBS retransmission consent agreement. On November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion. The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, on March 4, 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit, and, on March 6, 2014, we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States District Court for the Southern District of New York. The CBS claims in the New York action are set to be trial-ready on May 29, 2015. | ||||||||||||||||||||||||
We intend to vigorously defend this case. We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately determines that we infringe the asserted copyrights, or are in breach of any of the retransmission consent agreements, we may be subject to substantial damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. In addition, as a result of this litigation, we may not be able to renew certain of our retransmission consent agreements and other programming agreements on favorable terms or at all. If we are unable to renew these agreements, there can be no assurance that we would be able to obtain substitute programming, or that such substitute programming would be comparable in quality or cost to our existing programming. Loss of access to existing programming could have a material adverse effect on our business, financial condition and results of operations, including, among other things, our gross new subscriber activations and subscriber churn rate. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Dragon Intellectual Property, LLC | ||||||||||||||||||||||||
Joao Control & Monitoring Systems 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 April 23, 2014, Joao Control & Monitoring Systems, LLC (“Joao Control”) filed a complaint against DISH Network in the United States District Court for the District of Delaware, alleging infringement of United States Patent No. 6,549,130 (the “130 patent”), which is entitled “Control Apparatus and Method for Vehicles and/or for Premises.” Joao alleges that we infringe the 130 patent by making, using, providing and/or importing remotely-accessed DVRs. On the same day, Joao Control also filed similar actions against DirecTV; Verizon Communications, Inc.; Time Warner Cable Inc.; Cox Communications, Inc.; and Cablevision Systems Corporation, among others. Joao Control is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Joao Control never served us with its complaint and on June 23, 2014, Joao Control dismissed its complaint against DISH Network without prejudice. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
LightSquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) | ||||||||||||||||||||||||
ESPN | ||||||||||||||||||||||||
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). | ||||||||||||||||||||||||
During 2008, our wholly-owned subsidiary DISH Network L.L.C. filed a lawsuit against ESPN, Inc., ESPN Classic, Inc., ABC Cable Networks Group, Soapnet L.L.C. and International Family Entertainment (collectively, “ESPN”) for breach of contract in New York State Supreme Court. Our complaint alleges that ESPN failed to provide us with certain HD feeds of the Disney Channel, ESPN News, Toon and ABC Family. In October 2011, the jury returned a verdict in favor of the defendants, which the New York State Supreme Court, Appellate Division, First Department (the “First Department”) affirmed on April 2, 2013. We sought leave to further appeal, which the New York Court of Appeals denied on August 27, 2013 on jurisdictional grounds. On September 19, 2013, we appealed the trial court’s final judgment to the First Department. On March 6, 2014, pursuant to a settlement and release agreement between the parties, we dismissed our appeal. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
ESPN had asserted a counterclaim alleging that we owed approximately $35 million under the applicable affiliation agreements. On April 15, 2009, the New York State Supreme Court granted, in part, ESPN’s motion for summary judgment on the counterclaim, finding that we are liable for some of the amount alleged to be owing but that the actual amount owing was disputed. On December 29, 2010, the First Department affirmed the partial grant of ESPN’s motion for summary judgment on the counterclaim. After the partial grant of ESPN’s motion for summary judgment, ESPN sought an additional $30 million under the applicable affiliation agreements. On March 15, 2010, the New York State Supreme Court ruled that we owe the full amount of approximately $66 million under the applicable affiliation agreements. As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Consolidated Balance Sheets. | ||||||||||||||||||||||||
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), 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 June 21, 2011, the First Department affirmed the New York State Supreme Court’s ruling that we owe approximately $66 million under the applicable affiliation agreements and, on October 18, 2011, denied our motion for leave to appeal that decision to New York’s highest court, the New York Court of Appeals. We sought leave to appeal directly to the New York Court of Appeals and, on January 10, 2012, the New York Court of Appeals dismissed our motion for leave on the ground that the ruling upon which we appealed does not fully resolve all claims in the action. As a result of the First Department’s June 2011 ruling, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss) during 2011. On October 11, 2012, the New York State Supreme Court awarded ESPN $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim. As a result, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million related to this case as of December 31, 2012. During the first quarter 2013, we paid $71 million to ESPN related to the counterclaim and attorneys’ fees and $12 million for accrued interest. As a result of the parties’ settlement and release, no further appeals are possible, and this matter is now concluded. | ||||||||||||||||||||||||
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 include, 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. | ||||||||||||||||||||||||
Garnet Digital, LLC | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On September 9, 2013, Garnet Digital, LLC (“Garnet Digital”) 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, alleging infringement of United States Patent No. 5,379,421 (the “421 patent”), which is entitled “Interactive Terminal for the Access of Remote Database Information.” The 421 patent relates to methods for accessing information from a remote computerized database and related devices. On the same day, Garnet Digital filed similar complaints in the same court against 15 other defendants, including AT&T Inc., Comcast Corp., DirecTV, TiVo, Inc., and Verizon Communications, Inc. Garnet Digital is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
LightSquared/Harbinger Capital Partners LLC (LightSquared Colorado Action) | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
On July 8, 2014, Harbinger filed suit against DISH Network, LBAC, Mr. Ergen, SPSO, and certain other parties, in the United States District Court for the District of Colorado. The complaint asserts claims for tortious interference with contract and abuse of process, as well as claims alleging violations of the federal Racketeering Influenced and Corrupt Organization Act and the Colorado Organized Crime Control Act. Harbinger seeks to rely on many of the same facts and circumstances that were at issue in the LightSquared adversary proceeding pending in the Bankruptcy Court. Harbinger argues that the defendants’ alleged conduct, among other things, is responsible for Harbinger’s losing control of LightSquared and causing breaches of Harbinger’s stockholder agreement. The complaint seeks damages in excess of $500 million, which under federal and state law may be trebled. | ||||||||||||||||||||||||
The Hopper Litigation | ||||||||||||||||||||||||
DISH Network intends to vigorously defend any claims against it in this case and cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
On May 24, 2012, our wholly-owned subsidiary, DISH Network L.L.C., filed a lawsuit in the United States District Court for the Southern District of New York against American Broadcasting Companies, Inc., CBS Corporation, Fox Entertainment Group, Inc., Fox Television Holdings, Inc., Fox Cable Network Services, L.L.C. and NBCUniversal, LLC. In the lawsuit, we are seeking a declaratory judgment that we are not infringing any defendant’s copyright, or breaching any defendant’s retransmission consent agreement, by virtue of the PrimeTime Anytime™ and AutoHop™ features of our Hopper set-top box. A consumer can use the PrimeTime Anytime feature, at his or her option, to record certain primetime programs airing on ABC, CBS, Fox, and/or NBC up to every night, and to store those recordings for up to eight days. A consumer can use the AutoHop feature, at his or her option, to watch certain recordings the subscriber made with our PrimeTime Anytime feature, commercial-free, if played back the next day after the show’s original airing. | ||||||||||||||||||||||||
LightSquared Transaction Shareholder Derivative Actions | ||||||||||||||||||||||||
Later on May 24, 2012, (i) Fox Broadcasting Company, Twentieth Century Fox Film Corp. and Fox Television Holdings, Inc. filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature, the AutoHop feature, as well as Sling placeshifting functionality infringe their copyrights and breach their retransmission consent agreements, (ii) NBC Studios LLC, Universal Network Television, LLC, Open 4 Business Productions LLC and NBCUniversal, LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights, and (iii) CBS Broadcasting Inc., CBS Studios Inc. and Survivor Productions LLC filed a lawsuit against us and DISH Network L.L.C. in the United States District Court for the Central District of California, alleging that the PrimeTime Anytime feature and the AutoHop feature infringe their copyrights. | ||||||||||||||||||||||||
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 has been 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. | ||||||||||||||||||||||||
As a result of certain parties’ competing venue-related motions brought in both the New York and California actions, and certain networks’ filing various counterclaims and amended complaints, the claims have proceeded in the following venues: (1) the copyright and contract claims regarding the ABC and CBS parties in New York; and (2) the copyright and contract claims regarding the Fox and NBC parties in California. | ||||||||||||||||||||||||
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, has been withdrawn. | ||||||||||||||||||||||||
California Actions | ||||||||||||||||||||||||
Five alleged shareholders have 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. | ||||||||||||||||||||||||
The NBC plaintiffs and Fox plaintiffs filed amended complaints in their respective California actions adding copyright claims against EchoStar and EchoStar Technologies L.L.C. (“EchoStar Technologies”), a wholly-owned subsidiary of EchoStar. In addition, the Fox plaintiffs’ amended complaint added claims challenging the Hopper Transfers™ feature of our second-generation Hopper set-top box. | ||||||||||||||||||||||||
On 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 November 7, 2012, the California court denied the Fox plaintiffs’ motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features, and the Fox plaintiffs appealed. On March 27, 2013, at the request of the parties, the Central District of California granted a stay of all proceedings in the action brought by the NBC plaintiffs, pending resolution of the appeal by the Fox plaintiffs. On July 24, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the PrimeTime Anytime and AutoHop features. On August 7, 2013, the Fox plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on January 24, 2014. | ||||||||||||||||||||||||
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 Director Defendants, other than Mr. Ergen and Mr. Clayton; and the final claim was made against Messrs. Cullen, Dodge and Kiser. | ||||||||||||||||||||||||
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their retransmission consent agreement; and (ii) us and EchoStar Technologies seeking to enjoin the Sling placeshifting functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach of their retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’ motion and on October 22, 2013, the Fox plaintiffs filed a notice of appeal. The Fox claims are set for trial on January 13, 2015. | ||||||||||||||||||||||||
DISH Network’s Board of Directors has 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. DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
New York Actions | ||||||||||||||||||||||||
Norman IP Holdings, LLC | ||||||||||||||||||||||||
Both the ABC and CBS parties filed counterclaims in the New York action adding copyright claims against EchoStar Technologies, and the CBS parties have filed a counterclaim alleging that we fraudulently concealed the AutoHop feature when negotiating renewal of our CBS retransmission consent agreement. On November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion. The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, on March 4, 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit, and, on March 6, 2014, we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States District Court for the Southern District of New York. The CBS claims in the New York action are set to be trial-ready on April 17, 2015. | ||||||||||||||||||||||||
On September 15, 2011, Norman IP Holdings, LLC (“Norman”) filed a patent infringement complaint (the “2011 Action”) against Lexmark International Corporation (“Lexmark”) and Brother International Corporation (“Brother”), in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,592,555 (the “555 patent”); 5,530,597 (the “597 patent”) and 5,502,689 (the “689 patent”) by Lexmark, and infringement of the 555 patent and the 689 patent by Brother. On January 27, 2012, Norman filed a second amended complaint in the 2011 Action that added DISH Network as a defendant, among others, in which it asserted the 555 patent and the 689 patent against us. On September 21, 2012, Norman served us with preliminary infringement contentions related to the 555 patent and the 689 patent, as well as the 597 patent, which outlined Norman’s claims with respect to certain DISH products. On February 8, 2013, Norman filed a third amended complaint in the 2011 Action, in which it added claims against us alleging infringement of the 597 patent. On April 8, 2013, Norman filed a fourth amended complaint in the 2011 Action, in which it added new claims against us alleging infringement of additional DISH products. On May 1, 2013, Norman filed a fifth amended complaint in the 2011 Action, in which it named Mercedes-Benz USA, LLC; Volkswagen Group of America, Inc.; Xerox Corporation; ZTE (USA) Inc. and ZTE Solutions, Inc. as defendants, in addition to us. On July 9, 2013, the Court ordered Norman to file a new sixth amended complaint limiting Norman’s claims against us to those specifically referenced in its September 21, 2012 preliminary infringement contentions. As a result, on July 10, 2013, Norman filed a sixth amended complaint in the 2011 Action, in which it asserted claims against our wholly-owned subsidiary DISH Network L.L.C. replacing DISH Network as defendant, alleging that the use of certain Broadcom chipsets in DISH DVR systems infringes the 689 patent. In addition, Norman withdrew all infringement claims against us regarding the 555 patent and the 597 patent. On July 12, 2013, we filed a motion to dismiss the 2011 Action, because Norman failed to comply with the Court’s July 9, 2013 order. | ||||||||||||||||||||||||
We intend to vigorously prosecute and defend our position in these cases. In the event that a court ultimately determines that we infringe the asserted copyrights, or are in breach of any of the retransmission consent agreements, we may be subject to substantial damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers. In addition, as a result of this litigation, we may not be able to renew certain of our retransmission consent agreements and other programming agreements on favorable terms or at all. If we are unable to renew these agreements, there can be no assurance that we would be able to obtain substitute programming, or that such substitute programming would be comparable in quality or cost to our existing programming. Loss of access to existing programming could have a material adverse effect on our business, financial condition and results of operations, including, among other things, our gross new subscriber activations and subscriber churn rate. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
In addition, on May 10, 2013, Norman filed a separate patent infringement complaint (the “2013 Action”) against us in the United States District Court for the Eastern District of Texas, asserting infringement of the 555, 597 and 689 patents, as well as United States Patent Nos. 5,608,873 (the “873 patent”) and 5,771,394 (the “394 patent”). The infringement claims asserted in the 2013 Action relate to different DISH products than Norman identified in the 2011 Action. | ||||||||||||||||||||||||
Lightsquared/Harbinger Capital Partners LLC (LightSquared Bankruptcy) | ||||||||||||||||||||||||
On October 18, 2013, the parties stipulated that Norman will dismiss all of its claims against DISH Network L.L.C. in the 2011 Action, and re-assert them in the 2013 Action. | ||||||||||||||||||||||||
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). | ||||||||||||||||||||||||
The 689 patent relates to a clock generator capable of shut-down mode and clock generation method, the 555 patent relates to a wireless communications privacy method and system, the 597 patent relates to an interrupt enable circuit that allows devices to exit processes without using a hardware reset, the 873 patent relates to a device and method for providing inter-processor communication in a multi-processor architecture, and the 394 patent relates to a servo loop control apparatus having a master microprocessor and at least one autonomous streamlined signal processor. Norman is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
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 May 30, 2014, Norman dismissed the 2013 Action against us with prejudice, pursuant to a settlement agreement. | ||||||||||||||||||||||||
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), 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. | ||||||||||||||||||||||||
Personalized Media Communications, Inc. | ||||||||||||||||||||||||
On October 29, 2013, the Bankruptcy Court dismissed all of the claims against LBAC and DISH Network 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 include, 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 equitable disallowance. These claims proceeded to a non-jury trial on January 9, 2014, which concluded on January 17, 2014. The parties submitted post-trial briefs and a hearing for closing arguments occurred on March 17, 2014. | ||||||||||||||||||||||||
During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against DISH Network; EchoStar and Motorola Inc., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,109,414; 4,965,825; 5,233,654; 5,335,277 and 5,887,243, which relate to satellite signal processing. PMC is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Subsequently, Motorola Inc. settled with PMC, leaving DISH Network and EchoStar as defendants. On July 18, 2012, pursuant to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide International, Inc.) and TVG-PMC, Inc. (collectively, “Gemstar”) as a party, and added a new claim against all defendants seeking a declaratory judgment as to the scope of Gemstar’s license to the patents in suit, under which DISH Network and EchoStar are sublicensees. On August 12, 2014, in response to the parties’ respective summary judgment motions related to the Gemstar license issues, the Court ruled in favor of PMC and dismissed all claims by or against Gemstar and entered partial final judgment in PMC’s favor as to those claims. On September 16, 2014, DISH Network and EchoStar filed a notice of appeal of that partial final judgment, which is pending. A trial date is set for January 12, 2015. PMC has informed DISH Network that it will not pursue at trial its claim for infringement of United States Patent No. 5,109,414. PMC’s damages expert contends that DISH Network and EchoStar are liable for damages ranging from approximately $500 million to $650 million as of March 31, 2012, which does not include pre-judgment interest and may be trebled under Federal law. | ||||||||||||||||||||||||
DISH Network and LBAC intend to vigorously defend 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. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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 Transaction Shareholder Derivative Actions | ||||||||||||||||||||||||
Phoenix Licensing, L.L.C./LPL Licensing, L.L.C. | ||||||||||||||||||||||||
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 operative amended complaint, Jacksonville PFPF 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 allege that (1) the debt purchases created an impermissible conflict of interest and (2) put at risk the LBAC Bid, which as noted above has been withdrawn. Jacksonville PFPF further claims 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. | ||||||||||||||||||||||||
On October 17, 2014, Phoenix Licensing, L.L.C. and LPL Licensing, L.L.C. (together referred to as “Phoenix”) 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, alleging infringement of United States Patent Nos. 5,987,434 entitled “Apparatus and Method for Transacting Marketing and Sales of Financial Products” (the “434 patent”); 7,890,366 entitled “Personalized Communication Documents, System and Method for Preparing Same” (the “366 patent); 8,352,317 entitled “System for Facilitating Production of Variable Offer Communications” (the “317 patent”); 8,234,184 entitled “Automated Reply Generation Direct Marketing System” (the “184 patent”); and 6,999,938 entitled “Automated Reply Generation Direct Marketing System” (the “938 patent”). Phoenix alleges that we infringe the asserted patents by making and using products and services that generate customized marketing materials. Phoenix is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
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 has been withdrawn. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Five alleged shareholders have 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. None of the plaintiffs in these actions is seeking a preliminary injunction. | ||||||||||||||||||||||||
Preservation Technologies, LLC | ||||||||||||||||||||||||
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. On December 13, 2013, City of Daytona Beach Police Officers and Firefighters Retirement System voluntarily dismissed its claims without prejudice. The United States District Court for the District of Nevada has stayed the action by Iron Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan until April 16, 2014. | ||||||||||||||||||||||||
In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against DISH Network in the United States District Court for the Central District of California. In the Operative Seventh Amended Complaint, filed on March 22, 2013, Preservation Technologies also names Netflix, Inc.; Hulu, LLC; AT&T Services, Inc.; Cox Communications, Inc.; Disney Online; American Broadcasting Companies, Inc.; Yahoo! Inc.; Wal-Mart Stores, Inc.; Vudu, Inc. and ESPN Internet Ventures as defendants. Preservation Technologies alleges that the BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services and our Hopper and Joey® set-top boxes infringe United States Patent Nos. 5,813,014; 5,832,499; 6,092,080; 6,353,831; 6,574,638; 6,199,060; 5,832,495; 6,549,911; 6,212,527 and 6,477,537. The patents relate to digital libraries, the management of multimedia assets and the cataloging of multimedia data. Preservation Technologies is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
DISH Network’s Board of Directors has established a Special Litigation Committee to review the factual allegations and legal claims in these actions. DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Effective June 18, 2014, Preservation Technologies dismissed all of its claims against DISH Network with prejudice, pursuant to a settlement agreement. | ||||||||||||||||||||||||
Norman IP Holdings, LLC | ||||||||||||||||||||||||
Qurio Holdings, Inc. | ||||||||||||||||||||||||
On September 15, 2011, Norman IP Holdings, LLC (“Norman”) filed a patent infringement complaint (the “2011 Action”) against Lexmark International Corporation (“Lexmark”) and Brother International Corporation (“Brother”), in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,592,555 (the “555 patent”), 5,530,597 (the “597 patent”) and 5,502,689 (the “689 patent”) by Lexmark, and infringement of the 555 patent and the 689 patent by Brother. On January 27, 2012, Norman filed a second amended complaint in the 2011 Action that added DISH Network as a defendant, among others, in which it asserted the 555 patent and the 689 patent against us. On September 21, 2012, Norman served us with preliminary infringement contentions related to the 555 patent and the 689 patent, as well as the 597 patent, which outlined Norman’s claims with respect to certain DISH products. On February 8, 2013, Norman filed a third amended complaint in the 2011 Action, in which it added claims against us alleging infringement of the 597 patent. On April 8, 2013, Norman filed a fourth amended complaint in the 2011 Action, in which it added new claims against us alleging infringement of additional DISH products. On May 1, 2013, Norman filed a fifth amended complaint in the 2011 Action, in which it named Mercedes-Benz USA, LLC, Volkswagen Group of America, Inc., Xerox Corporation, ZTE (USA) Inc., and ZTE Solutions, Inc. as defendants, in addition to us. On July 9, 2013, the Court ordered Norman to file a new sixth amended complaint limiting Norman’s claims against us to those specifically referenced in its September 21, 2012 preliminary infringement contentions. As a result, on July 10, 2013, Norman filed a sixth amended complaint in the 2011 Action, in which it asserted claims against our wholly-owned subsidiary DISH Network L.L.C. replacing DISH Network as defendant, alleging that the use of certain Broadcom chipsets in DISH DVR systems infringes the 689 patent. In addition, Norman withdrew all infringement claims against us regarding the 555 patent and the 597 patent. On July 12, 2013, we filed a motion to dismiss the 2011 Action, because Norman failed to comply with the Court’s July 9, 2013 order. | ||||||||||||||||||||||||
On September 26, 2014, Qurio Holdings, Inc. (“Qurio”) filed a complaint against DISH Network and 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. 8,102,863 entitled “Highspeed WAN To Wireless LAN Gateway” (the “863 Patent”) and United States Patent No. 7,787,904 entitled “Personal Area Network Having Media Player And Mobile Device Controlling The Same” (the “904 Patent”). On the same day, Qurio filed similar complaints against Comcast and DirecTV. Qurio is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
In addition, on May 10, 2013, Norman filed a separate patent infringement complaint (the “2013 Action”) against us in the United States District Court for the Eastern District of Texas, asserting infringement of the 555, 597 and 689 patents, as well as United States Patent Nos. 5,608,873 (the “873 patent”) and 5,771,394 (the “394 patent”). The infringement claims asserted in the 2013 Action relate to different DISH products than Norman identified in the 2011 Action. On June 26, 2013, we filed a motion to dismiss the 2013 Action, because Norman failed to join necessary parties. Our motion to dismiss is pending, and no trial date has been set for the 2013 Action. | ||||||||||||||||||||||||
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 cause 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. | ||||||||||||||||||||||||
On October 18, 2013, the parties stipulated that Norman will dismiss all of its claims against DISH Network L.L.C. in the 2011 Action, and re-assert them in the 2013 Action. | ||||||||||||||||||||||||
Ronald A. Katz Technology Licensing, L.P. | ||||||||||||||||||||||||
The 689 patent relates to a clock generator capable of shut-down mode and clock generation method, the 555 patent relates to a wireless communications privacy method and system, the 597 patent relates to an interrupt enable circuit that allows devices to exit processes without using a hardware reset, the 873 patent relates to a device and method for providing inter-processor communication in a multi-processor architecture, and the 394 patent relates to a servo loop control apparatus having a master microprocessor and at least one autonomous streamlined signal processor. Norman is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
During 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement action against our wholly-owned subsidiary DISH Network L.L.C., in the United States District Court for the Northern District of California. The suit originally alleged infringement of 19 patents owned by Katz. The patents relate to interactive voice response, or IVR, technology. The case has been transferred and consolidated for pretrial purposes in the United States District Court for the Central District of California by order of the Judicial Panel on Multidistrict Litigation. Only four patents remain in the case against us, of which all are expired and two are subject to granted reexamination proceedings before the United States Patent and Trademark Office. We and Katz entered into a settlement agreement effective October 8, 2014, under which Katz agreed to dismiss the action against us with prejudice. | ||||||||||||||||||||||||
We intend to vigorously defend these cases. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause us to materially modify certain features that we currently offer to consumers. We cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages. | ||||||||||||||||||||||||
Technology Development and Licensing L.L.C. | ||||||||||||||||||||||||
Olympic Developments AG, LLC | ||||||||||||||||||||||||
On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against DISH Network and EchoStar, in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. The case has been stayed since July 2009 pending two reexamination petitions before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
On January 20, 2011, Olympic Developments AG, LLC (“Olympic”) filed suit against our wholly-owned subsidiary DISH Network L.L.C., Atlantic Broadband, Inc., Bright House Networks, LLC, Cable One, Inc., Cequel Communications Holdings I, LLC, CSC Holdings, LLC, GCI Communication Corp., Insight Communications Company, Inc., Knology, Inc., Mediacom Communications Corporation and RCN Telecom Services, LLC, in the United States District Court for the Central District of California, alleging infringement of United States Patent Nos. 5,475,585 and 6,246,400. The patents relate to on-demand services. Olympic is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On June 13, 2011, the case was transferred to the Northern District of California. On November 7, 2011, the case was stayed pending reexamination by the United States Patent and Trademark Office. On March 12, 2013, Olympic voluntarily dismissed its claims against us without prejudice. | ||||||||||||||||||||||||
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 cause 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. | ||||||||||||||||||||||||
Personalized Media Communications, Inc. | ||||||||||||||||||||||||
TQ Beta LLC | ||||||||||||||||||||||||
During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against DISH Network, EchoStar and Motorola Inc., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent Nos. 5,109,414, 4,965,825, 5,233,654, 5,335,277 and 5,887,243, which relate to satellite signal processing. PMC is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. Subsequently, Motorola Inc. settled with PMC, leaving DISH Network and EchoStar as defendants. On July 18, 2012, pursuant to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide International, Inc.) and TVG-PMC, Inc. (collectively, “Gemstar”) as a party, and added a new claim against all defendants seeking a declaratory judgment as to the scope of Gemstar’s license to the patents in suit, under which DISH Network and EchoStar are sublicensees. No trial date is currently set. | ||||||||||||||||||||||||
On June 30, 2014, TQ Beta LLC (“TQ Beta”) filed a complaint against us; our wholly-owned subsidiary DISH Network L.L.C; DISH Network; EchoStar; and EchoStar’s subsidiaries EchoStar Technologies L.L.C., Hughes Satellite Systems Corporation, and Sling Media Inc., in the United States District Court for the District of Delaware. The Complaint alleges infringement of United States Patent No. 7,203,456 (the “456 patent”), which is entitled “Method and Apparatus for Time and Space Domain Shifting of Broadcast Signals.” TQ Beta alleges that our Hopper set-top boxes, ViP 722 and ViP 722k DVR devices, as well as our DISH Anywhere service and DISH Anywhere mobile application, infringe the 456 patent. TQ Beta is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
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. | ||||||||||||||||||||||||
Pragmatus Telecom, LLC | ||||||||||||||||||||||||
Waste Disposal Inquiry | ||||||||||||||||||||||||
On December 5, 2012, Pragmatus Telecom, LLC (“Pragmatus”) filed a patent infringement lawsuit against DISH Network in the United States District Court for the District of Delaware, alleging infringement of United States Patent Nos. 6,311,231, 6,668,286, and 7,159,043. Pragmatus alleges that the click-to-chat and click-to-call customer support features of the DISH website and call center management systems infringe these patents. Pragmatus has brought similar complaints against more than 40 other companies, including Comcast Corporation, AT&T Inc., Sprint Spectrum LP dba Sprint PCS, Frontier Communications Corp., Bright House Networks L.L.C., United Parcel Services Inc., FedEx Corporation, General Motors Company and Ford Motor Company. Pragmatus is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On March 5, 2013, Pragmatus voluntarily dismissed with prejudice all claims in the action relating to allegedly infringing features provided by certain of our vendors. Pragmatus also voluntarily dismissed without prejudice all remaining claims in the action. | ||||||||||||||||||||||||
The California Attorney General and the Alameda County (California) District Attorney are investigating whether certain of our waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe that the outcome will have a material effect on our results of operations, financial condition or cash flows. | ||||||||||||||||||||||||
Premier International Associates, LLC | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
On August 3, 2012, Premier International Associates, LLC (“Premier International”) filed a complaint against us, our wholly-owned subsidiary DISH Network L.L.C., DISH Network, and EchoStar and its wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. 6,243,725 (the “725 patent”), which is entitled “List Building System.” The 725 patent relates to a system for building an inventory of audio/visual works. Premier International is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On March 27, 2013, Premier International dismissed the action against us and the EchoStar entities with prejudice, pursuant to a settlement under which we and the EchoStar entities made an immaterial payment in exchange for a license to certain patents and patent applications. | ||||||||||||||||||||||||
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the ordinary course of business, including, among other things, disputes with programmers regarding fees. In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. | ||||||||||||||||||||||||
Preservation Technologies, LLC | ||||||||||||||||||||||||
In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against DISH Network in the United States District Court for the Central District of California. In the Operative Seventh Amended Complaint, filed on March 22, 2013, Preservation Technologies also names Netflix, Inc., Hulu, LLC, AT&T Services, Inc., Cox Communications, Inc., Disney Online, American Broadcasting Companies, Inc., Yahoo! Inc., Wal-Mart Stores, Inc., Vudu, Inc. and ESPN Internet Ventures as defendants. Preservation Technologies alleges that the BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services and our Hopper and Joey set-top boxes infringe United States Patent Nos. 5,813,014, 5,832,499, 6,092,080, 6,353,831, 6,574,638, 6,199,060, 5,832,495, 6,549,911, 6,212,527 and 6,477,537. The patents relate to digital libraries, the management of multimedia assets and the cataloging of multimedia data. Preservation Technologies is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
Ronald A. Katz Technology Licensing, L.P. | ||||||||||||||||||||||||
During 2007, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a patent infringement action against our wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Northern District of California. The suit originally alleged infringement of 19 patents owned by Katz. The patents relate to interactive voice response, or IVR, technology. The case has been transferred and consolidated for pretrial purposes in the United States District Court for the Central District of California by order of the Judicial Panel on Multidistrict Litigation. Only four patents remain in the case against us, of which all are expired and two are subject to granted reexamination proceedings before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe any of the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
Technology Development and Licensing L.L.C. | ||||||||||||||||||||||||
On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against DISH Network and EchoStar, in the United States District Court for the Northern District of Illinois, alleging infringement of United States Patent No. Re. 35,952, which relates to certain favorite channel features. TDL is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. In July 2009, the Court granted DISH Network’s motion to stay the case pending two reexamination petitions before the United States Patent and Trademark Office. | ||||||||||||||||||||||||
We intend to vigorously defend this case. In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could cause 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. | ||||||||||||||||||||||||
TQP Development, LLC | ||||||||||||||||||||||||
On April 4, 2012, TQP Development, LLC (“TQP”) filed suit against our wholly-owned subsidiary DISH Network L.L.C., in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent No. 5,412,730, which is entitled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.” TQP is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein. On August 9, 2013, all claims in the action were dismissed with prejudice. | ||||||||||||||||||||||||
Voom HD Holdings | ||||||||||||||||||||||||
In January 2008, Voom HD Holdings LLC (“Voom”) filed a lawsuit against our wholly-owned subsidiary DISH Network L.L.C., in New York Supreme Court, alleging breach of contract and other claims arising from our termination of the affiliation agreement governing carriage of certain Voom HD channels on the DISH branded pay-TV service and seeking over $2.5 billion in damages. | ||||||||||||||||||||||||
On October 21, 2012, we entered into a confidential settlement agreement and release (the “Voom Settlement Agreement”) with Voom and CSC Holdings, LLC (“Cablevision”), and for certain limited purposes, MSG Holdings, L.P., The Madison Square Garden Company and EchoStar. The Voom Settlement Agreement resolved the litigation between the parties relating to the Voom programming services. Pursuant to the terms of the Voom Settlement Agreement, among other things: (i) the litigation between the parties relating to the Voom programming services was dismissed with prejudice and the parties released each other for all claims against each other related thereto; (ii) we agreed to pay $700 million in cash to Voom; (iii) DISH Media Holdings Corporation, a wholly-owned subsidiary of DISH Network, agreed to enter into an agreement to transfer its ownership interest in Voom to Rainbow Programming Holdings, LLC, an affiliate of Voom; and (iv) an affiliate of Cablevision agreed to enter into an agreement to transfer certain of its wireless multichannel video distribution and data service licenses (the “MVDDS Licenses”) to us. On October 23, 2012, we paid Voom $700 million. | ||||||||||||||||||||||||
Separately, we entered into a multi-year affiliation agreement with AMC Network Entertainment LLC, WE: Women’s Entertainment LLC, The Independent Film Channel, The Sundance Channel L.L.C, each of which are subsidiaries of AMC Networks Inc., and Fuse Channel LLC, a subsidiary of The Madison Square Garden Company, for the carriage of AMC, WE, IFC, Sundance Channel and the Fuse channel. | ||||||||||||||||||||||||
Since the Voom Settlement Agreement and the multi-year affiliation agreement were entered into contemporaneously, we accounted for all components of both agreements at fair value in the context of the Voom Settlement Agreement. We determined the fair value of the multi-year affiliation agreement and the MVDDS Licenses using a market-based approach and a probability-weighted discounted cash flow analysis, respectively. Based on market data and similar agreements we have with other content providers, we allocated $54 million of the payments under the multi-year affiliation agreement to the fair value of the Voom Settlement Agreement. The resulting liability was recorded on our Consolidated Balance Sheets as “Accrued Programming” and is being amortized as contra “Subscriber-related expenses” on a straight-line basis over the term of the agreement. Evaluating all potential uses for the MVDDS Licenses, we assessed their fair value at $24 million and recorded these on our Consolidated Balance Sheets as “FCC Authorizations.” The fair value of the Voom Settlement Agreement was assessed at $730 million and was recorded as “Litigation expense” on our Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2012. | ||||||||||||||||||||||||
Waste Disposal Inquiry | ||||||||||||||||||||||||
The California Attorney General and the Alameda County (California) District Attorney are investigating whether certain of our waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe that the outcome will have a material effect on our results of operations, financial condition or cash flows. | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
In addition to the above actions, we are subject to various other legal proceedings and claims which arise in the ordinary course of business, including, among other things, disputes with programmers regarding fees. In our opinion, the amount of ultimate liability with respect to any of these actions is unlikely to materially affect our financial condition, results of operations or liquidity, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. |
Financial_Information_for_Subs1
Financial Information for Subsidiary Guarantors | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Financial Information for Subsidiary Guarantors | ||
Financial Information for Subsidiary Guarantors | 9. Financial Information for Subsidiary Guarantors | 12. Financial Information for Subsidiary Guarantors |
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. | 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. | |
There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the guarantor subsidiaries, except those imposed by applicable law. |
Related_Party_Transactions1
Related Party Transactions | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Related Party Transactions | |||||||||||||||||||||||||
Related Party Transactions | 10. Related Party Transactions | 15. Related Party Transactions | |||||||||||||||||||||||
Related Party Transactions with DISH Network | Related Party Transactions with DISH Network | ||||||||||||||||||||||||
On October 14, 2014, we paid a dividend of $1.5 billion to DOC in connection with, among other things, DISH Network’s general corporate purposes. | On April 19, 2011, we paid a dividend of $1.5 billion to DOC in connection with, among other things, the funding of DISH Network’s investments in DBSD North America and DISH Network’s acquisition of most of the assets of Blockbuster, Inc. | ||||||||||||||||||||||||
On May 2, 2014, DISH Network contributed its equity interest in DISH Digital to us. We recorded all of the assets and liabilities at historical cost and the difference was recorded as a deemed distribution in “Stockholder’s equity (deficit)” on our Condensed Consolidated Balance Sheets. As a result, all operating activities of DISH Digital are included in our financial results beginning May 2, 2014. | On August 10, 2011, we paid a dividend of $700 million to DOC in connection with, among other things, the funding of the TerreStar Transaction. | ||||||||||||||||||||||||
On March 28, 2014, we paid a dividend of $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 wireless spectrum licenses in the recent H Block auction. See Note 8 for further information. | On November 1, 2011, the board of directors of DISH Network declared a dividend of $2.00 per share on its outstanding Class A and Class B common stock, or $893 million in the aggregate. On November 30, 2011, we paid a dividend of $1.3 billion to DOC to fund the payment of DISH Network’s dividend and other potential DISH Network cash needs. | ||||||||||||||||||||||||
Blockbuster. On April 26, 2011, DISH Network completed the acquisition of most of the assets of Blockbuster, Inc. During the three and nine months ended September 30, 2013, we recorded $3 million and $11 million, respectively, of “Subscriber-related expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for Blockbuster services provided to our subscribers related to certain of our promotions. As of December 31, 2013, Blockbuster had ceased material operations. As a result, during the three and nine months ended September 30, 2014, we did not record any expense related to these services. | On October 1, 2012, we made a distribution to DOC of the assets and liabilities associated with the satellite broadband business with a fair value of $66 million. This distribution resulted in a reduction in our historical net assets of $9 million and a deemed dividend of $57 million. | ||||||||||||||||||||||||
Advertising Sales. We provide advertising services to DISH Network’s broadband business. During the three months ended September 30, 2014 and 2013, we recorded revenue associated with these services of $5 million and $5 million, respectively, in “Subscriber-related revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we recorded revenue associated with these services of $14 million and $11 million, respectively. | On December 2, 2012, the board of directors of DISH Network declared a dividend of $1.00 per share on its outstanding Class A and Class B common stock, or $453 million in the aggregate. On December 27, 2012, we paid a dividend of $850 million to DOC to fund the payment of DISH Network’s dividend and other potential DISH Network cash needs. | ||||||||||||||||||||||||
Blockbuster, Broadband, Wireless and Other Operations. We provide certain administrative support such as legal, information systems, marketing, human resources, accounting and finance services to DISH Network’s Blockbuster, Broadband, Wireless and other operations. In addition, we provide call center, installation and other services to DISH Network for its Broadband business. During the three months ended September 30, 2014 and 2013, the costs associated with these services were $3 million and $3 million, respectively. During the nine months ended September 30, 2014 and 2013, the costs associated with these services were $8 million and $7 million, respectively. | We expect to pay a dividend of approximately $650 million to DOC in connection with, among other things, the funding of certain payments by DISH Network related to its winning bid for all 176 H Block wireless spectrum licenses in the H Block auction. See Note 11 for further information. | ||||||||||||||||||||||||
Related Party Transactions with EchoStar | Blockbuster. On April 26, 2011, our parent, DISH Network, completed the acquisition of most of the assets of Blockbuster, Inc. During the year ended December 31, 2013, 2012 and 2011, we recorded $11 million, $21 million and $4 million, respectively, of “Subscriber-related expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss) for Blockbuster services provided to our subscribers related to certain of our promotions. | ||||||||||||||||||||||||
Following the Spin-off, DISH Network and EchoStar have operated as separate publicly-traded companies, and, except for the Satellite and Tracking Stock Transaction described in Note 4 and below, neither entity has any ownership interest in the other. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. | Advertising Sales. We provide advertising services to DISH Network’s broadband business. During the year ended December 31, 2013, we received revenue associated with these services of $15 million in “Subscriber-related revenue” on our Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2012 and 2011, we did not receive revenue associated with these services. | ||||||||||||||||||||||||
EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a supplier of a majority of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. | Blockbuster, Broadband, Wireless and Other Operations. We provide certain administrative support such as legal, information systems, marketing, human resources, accounting and finance services to DISH Network’s Blockbuster, Broadband, Wireless and other operations. In addition, we provide call center, installation and other services to DISH Network for its Broadband business. During the years ended December 31, 2013, 2012 and 2011, the costs associated with these services were $10 million, $11 million and $2 million, respectively. | ||||||||||||||||||||||||
In connection with and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. | Related Party Transactions with EchoStar | ||||||||||||||||||||||||
“Equipment sales, services and other revenue — EchoStar” | Following the Spin-off, EchoStar has operated as a separate public company, and we have no continued ownership interest in EchoStar. However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, and by certain trusts established by Mr. Ergen for the benefit of his family. | ||||||||||||||||||||||||
Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2014, we and EchoStar extended this agreement until December 31, 2015. EchoStar may terminate the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate this agreement if certain entities acquire us. | EchoStar is our primary supplier of set-top boxes and digital broadcast operations and a key supplier of a majority of our transponder capacity. Generally, the amounts we pay EchoStar for products and services are based on pricing equal to EchoStar’s cost plus a fixed margin (unless noted differently below), which will vary depending on the nature of the products and services provided. | ||||||||||||||||||||||||
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 automatically renewed on January 1, 2014 for an additional one-year period until January 1, 2015 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 and following the Spin-off, we and EchoStar have entered into certain agreements pursuant to which we obtain certain products, services and rights from EchoStar, EchoStar obtains certain products, services and rights from us, and we and EchoStar have indemnified each other against certain liabilities arising from our respective businesses. We also may enter into additional agreements with EchoStar in the future. The following is a summary of the terms of our principal agreements with EchoStar that may have an impact on our financial condition and results of operations. | ||||||||||||||||||||||||
Management Services Agreement. In connection with the Spin-off, DISH Network entered into a Management Services Agreement with EchoStar pursuant to which DISH Network has made certain of its officers available to provide services (which were primarily legal and accounting services) to EchoStar. Effective June 15, 2013, the Management Services Agreement was terminated by EchoStar. EchoStar made payments to DISH Network based upon an allocable portion of the personnel costs and expenses incurred by DISH Network with respect to any such officers (taking into account wages and fringe benefits). These allocations were based upon the estimated percentages of time spent by DISH Network’s executive officers performing services for EchoStar under the Management Services Agreement. EchoStar also reimbursed DISH Network for direct out-of-pocket costs incurred by DISH Network for management services provided to EchoStar. DISH Network and EchoStar evaluated all charges for reasonableness at least annually and made any adjustments to these charges as DISH Network and EchoStar mutually agreed upon. | “Equipment sales, services and other revenue — EchoStar” | ||||||||||||||||||||||||
Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased on the applicable satellite and the length of the lease. The term of each lease is set forth below: | Remanufactured Receiver Agreement. We entered into a remanufactured receiver agreement with EchoStar pursuant to which EchoStar has the right, but not the obligation, to purchase remanufactured receivers and accessories from us at cost plus a fixed margin, which varies depending on the nature of the equipment purchased. In November 2013, we and EchoStar extended this agreement until December 31, 2014. EchoStar may terminate the remanufactured receiver agreement for any reason upon at least 60 days notice to us. We may also terminate this agreement if certain entities acquire us. | ||||||||||||||||||||||||
· EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. Upon termination, EchoStar is responsible, among other things, for relocating this satellite from the 45 degree orbital location back to the 61.5 degree orbital location. | 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 automatically renewed on January 1, 2014 for an additional one-year period until January 1, 2015 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. | ||||||||||||||||||||||||
Real Estate Lease Agreements. Since the Spin-off, DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: | Management Services Agreement. In connection with the Spin-off, DISH Network entered into a Management Services Agreement with EchoStar pursuant to which DISH Network has made certain of its officers available to provide services (which were primarily legal and accounting services) to EchoStar. Specifically, Paul W. Orban remains employed by DISH Network, but also served as EchoStar’s Senior Vice President and Controller through April 2012. In addition, R. Stanton Dodge remains employed by us, but also served as EchoStar’s Executive Vice President, General Counsel and Secretary through November 2011. The Management Services Agreement automatically renewed on January 1, 2013 for an additional one-year period until January 1, 2014. Effective June 15, 2013, the Management Services Agreement was terminated by EchoStar. EchoStar made payments to DISH Network based upon an allocable portion of the personnel costs and expenses incurred by DISH Network with respect to any such officers (taking into account wages and fringe benefits). These allocations were based upon the estimated percentages of time spent by DISH Network’s executive officers performing services for EchoStar under the Management Services Agreement. EchoStar also reimbursed DISH Network for direct out-of-pocket costs incurred by DISH Network for management services provided to EchoStar. DISH Network and EchoStar evaluated all charges for reasonableness at least annually and made any adjustments to these charges as DISH Network and EchoStar mutually agreed upon. | ||||||||||||||||||||||||
· El Paso Lease Agreement. During 2012, DISH Network leased certain space at 1285 Joe Battle Blvd. El Paso, Texas to EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. | Satellite Capacity Leased to EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which EchoStar leases certain satellite capacity on certain satellites owned by us. The fees for the services provided under these satellite capacity agreements depend, among other things, upon the orbital location of the applicable satellite and the length of the lease. The term of each lease is set forth below: | ||||||||||||||||||||||||
· American Fork Occupancy License Agreement. During 2013, DISH Network subleased certain space at 796 East Utah Valley Drive, American Fork, Utah to EchoStar for a period ending on July 31, 2017. | EchoStar I. During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leased certain satellite capacity from us on EchoStar I. We and EchoStar mutually agreed to terminate this satellite capacity agreement effective as of July 1, 2012. | ||||||||||||||||||||||||
“Satellite and transmission expenses” | EchoStar XV. During May 2013, we began leasing satellite capacity to EchoStar on EchoStar XV and relocated the satellite for testing at EchoStar’s Brazilian authorization at the 45 degree orbital location. Effective March 1, 2014, this lease was converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. Upon termination, EchoStar is responsible, among other things, for relocating this satellite from the 45 degree orbital location back to the 61.5 degree orbital location. | ||||||||||||||||||||||||
During the three months ended September 30, 2014 and 2013, we incurred $169 million and $130 million, respectively, for satellite and transmission expenses from EchoStar. These amounts are recorded in “Satellite and transmission expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we incurred $476 million and $365 million, respectively, for these satellite and transmission expenses. The agreements pertaining to these expenses are discussed below. | Real Estate Lease Agreements. Since the Spin-off, DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to EchoStar. The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below: | ||||||||||||||||||||||||
Broadcast Agreement. Effective January 1, 2012, we and EchoStar entered into a broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us, including teleport services such as transmission and downlinking, channel origination services, and channel management services, for the period from January 1, 2012 to December 31, 2016. The fees for services provided under the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. We have the ability to terminate channel origination services and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar. If we terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. | El Paso Lease Agreement. During 2012, DISH Network leased certain space at 1285 Joe Battle Blvd. El Paso, Texas to EchoStar for a period ending on August 1, 2015, which also provides EchoStar with renewal options for four consecutive three-year terms. | ||||||||||||||||||||||||
Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services. | American Fork Occupancy License Agreement. During 2013, DISH Network subleased certain space at 796 East Utah Valley Drive, American Fork, Utah to EchoStar for a period ending on July 31, 2017. | ||||||||||||||||||||||||
Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain satellite 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. The term of each lease is set forth below: | “Satellite and transmission expenses — EchoStar” | ||||||||||||||||||||||||
· EchoStar I, VII, X, XI and XIV. On March 1, 2014, we began leasing certain capacity from EchoStar on the EchoStar I, VII, X, XI and XIV satellites. The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement on a year-to-year basis through the end of the respective satellite’s life. There can be no assurance that any options to renew such agreements will be exercised. | Broadcast Agreement. In connection with the Spin-off, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provided certain broadcast services to us, including teleport services such as transmission and downlinking, channel origination services, and channel management services for a period ending on January 1, 2012 (the “Prior Broadcast Agreement”). We had the ability to terminate channel origination services and channel management services for any reason and without any liability upon at least 60 days notice to EchoStar. If we terminated teleport services for a reason other than EchoStar’s breach, we were obligated to pay EchoStar the aggregate amount of the remainder of the expected cost of providing the teleport services. The fees for the services provided under the Prior Broadcast Agreement were calculated at cost plus a fixed margin, which varied depending on the nature of the products and services provided. | ||||||||||||||||||||||||
· EchoStar VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this lease converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. | Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar provides broadcast services to us for the period from January 1, 2012 to December 31, 2016. The material terms of the 2012 Broadcast Agreement are substantially the same as the material terms of the Prior Broadcast Agreement, except that: (i) the fees for services provided under the 2012 Broadcast Agreement are calculated at either: (a) EchoStar’s cost of providing the relevant service plus a fixed dollar fee, which is subject to certain adjustments; or (b) EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided; and (ii) if we terminate the teleport services provided under the 2012 Broadcast Agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. | ||||||||||||||||||||||||
· 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. | Broadcast Agreement for Certain Sports Related Programming. During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming. The term of this agreement is for ten years. If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate. The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services. | ||||||||||||||||||||||||
· EchoStar XII. The lease for EchoStar XII generally terminates upon the earlier of: (i) the end-of-life or replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal options. We generally have the option to renew the lease on a year-to-year basis through the end of the satellite’s life. There can be no assurance that any options to renew this agreement will be exercised. | Satellite Capacity Leased from EchoStar. Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain satellite 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 and the length of the lease. See Note 16 for further information regarding certain satellite capacity leased from EchoStar. The term of each lease is set forth below: | ||||||||||||||||||||||||
· EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Under the original transponder service agreement, the initial term generally expired upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the transponder(s) on which service was being provided under the agreement failed; or (iv) ten years following the actual service commencement date. Prior to expiration of the initial term, we also had the option to renew on a year-to-year basis through the end-of-life of the satellite. 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. Prior to expiration of the initial term, we have the option to renew for an additional six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions, to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year renewal options, then we have the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that any options to renew this agreement will be exercised. | EchoStar VI, VIII and XII. The leases for EchoStar VI, VIII and XII generally terminate upon the earlier of: (i) the end of life or replacement of the satellite (unless we determine to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponders on which service is being provided fails; or (iv) a certain date, which depends upon, among other things, the estimated useful life of the satellite, whether the replacement satellite fails at launch or in orbit prior to being placed into service and the exercise of certain renewal options. We generally have the option to renew each lease 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. Beginning in the first quarter 2013, the leases for the EchoStar VI and VIII satellites expired in accordance with their terms and we no longer leased capacity from EchoStar on EchoStar VI and VIII. During May 2013, we began leasing capacity from EchoStar on EchoStar VIII as an in-orbit spare. Effective March 1, 2014, this lease was converted to a month-to-month lease. Both parties have the right to terminate this lease with 30 days notice. | ||||||||||||||||||||||||
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. | 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. | ||||||||||||||||||||||||
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. | EchoStar XVI. During December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched during November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Under the original transponder service agreement, the initial term generally expired upon the earlier of: (i) the end-of-life or replacement of the satellite; (ii) the date the satellite failed; (iii) the date the transponder(s) on which service was being provided under the agreement failed; or (iv) ten years following the actual service commencement date. Prior to expiration of the initial term, we also had the option to renew on a year-to-year basis through the end-of-life of the satellite. 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. Prior to expiration of the initial term, we have the option to renew for an additional six-year period. Prior to expiration of the initial term, EchoStar also has the right, upon certain conditions, to renew for an additional six-year period. If either we or EchoStar exercise our respective six-year renewal options, then we have the option to renew for an additional five-year period prior to expiration of the then-current term. There can be no assurance that any options to renew this agreement will be exercised. | ||||||||||||||||||||||||
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 third quarter 2012, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. | 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 11. | ||||||||||||||||||||||||
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. | 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. | ||||||||||||||||||||||||
103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. Unless earlier terminated under the terms and conditions of the DISH 103 Spectrum Development Agreement, the term generally will continue for the duration of the 103 Spectrum Rights. | 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 third quarter 2012, we and EchoStar entered into an agreement pursuant to which we sublease five DBS transponders back to EchoStar. During January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. | ||||||||||||||||||||||||
In connection with the 103 Spectrum Development Agreement, during May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). During June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date. Upon in-orbit failure or end-of-life of the SES-3 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that we will exercise our option to receive service on a replacement satellite. | 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. | ||||||||||||||||||||||||
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 a period ending on December 31, 2016 (the “2012 TT&C Agreement”). 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. | 103 Degree Orbital Location/SES-3. During May 2012, EchoStar entered into a spectrum development agreement (the “103 Spectrum Development Agreement”) with Ciel Satellite Holdings Inc. (“Ciel”) to develop certain spectrum rights at the 103 degree orbital location (the “103 Spectrum Rights”). During June 2013, we and EchoStar entered into a spectrum development agreement (the “DISH 103 Spectrum Development Agreement”) pursuant to which we may use and develop the 103 Spectrum Rights. During the third quarter 2013, we made a $23 million payment to EchoStar in exchange for these rights. In accordance with accounting principles that apply to transfers of assets between companies under common control, we recorded EchoStar’s net book value of this asset of $20 million in “Other noncurrent assets, net” on our Consolidated Balance Sheets and recorded the amount in excess of EchoStar’s net book value of $3 million as a capital distribution. 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. | ||||||||||||||||||||||||
As part of the Satellite and Tracking Stock Transaction, on February 20, 2014, we amended the 2012 TT&C Agreement to cease the provision of TT&C services from EchoStar for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. As of March 1, 2014, EchoStar is providing us TT&C services for the EchoStar XV satellite. | In connection with the 103 Spectrum Development Agreement, during May 2012, EchoStar also entered into a ten-year service agreement with Ciel pursuant to which EchoStar leases certain satellite capacity from Ciel on the SES-3 satellite at the 103 degree orbital location (the “103 Service Agreement”). During June 2013, we and EchoStar entered into an agreement pursuant to which we lease certain satellite capacity from EchoStar on the SES-3 satellite (the “DISH 103 Service Agreement”). Under the terms of the DISH 103 Service Agreement, we make certain monthly payments to EchoStar through the service term. Unless earlier terminated under the terms and conditions of the DISH 103 Service Agreement, the initial service term will expire on the earlier of: (i) the date the SES-3 satellite fails; (ii) the date the transponder(s) on which service was being provided under the agreement fails; or (iii) ten years following the actual service commencement date. Upon in-orbit failure or end of life of the SES-3 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite. There can be no assurance that we will exercise our option to receive service on a replacement satellite. | ||||||||||||||||||||||||
“General and administrative expenses” | TT&C Agreement. In connection with the Spin-off, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we received TT&C services from EchoStar for a period ending on January 1, 2012 (the “Prior TT&C Agreement”). The fees for services provided under the Prior TT&C Agreement were calculated at cost plus a fixed margin. We were able to terminate the Prior TT&C Agreement for any reason upon 60 days notice. Effective January 1, 2012, we entered into a new TT&C agreement pursuant to which we receive TT&C services from EchoStar for a period ending on December 31, 2016 (the “2012 TT&C Agreement”). The material terms of the 2012 TT&C Agreement are substantially the same as the material terms of the Prior TT&C Agreement, except that 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. | ||||||||||||||||||||||||
During the three months ended September 30, 2014 and 2013, we incurred $25 million and $17 million, respectively, for general and administrative expenses from EchoStar. These amounts are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the nine months ended September 30, 2014 and 2013, we incurred $74 million and $50 million, respectively, for these general and administrative expenses. The agreements pertaining to these expenses are discussed below. In addition, the expenses incurred pursuant to the Commercial Agreement discussed in “DISH Digital” under “Other Agreements — EchoStar” below, are also included in these amounts. | As part of the Satellite and Tracking Stock Transaction, on February 20, 2014, we amended the 2012 TT&C Agreement to cease the provision of TT&C services from EchoStar for the EchoStar I, EchoStar VII, EchoStar X, EchoStar XI and EchoStar XIV satellites. | ||||||||||||||||||||||||
Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services. | “General and administrative expenses — EchoStar” | ||||||||||||||||||||||||
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: | Product Support Agreement. In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us. The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided. The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier. We may terminate the product support agreement for any reason upon at least 60 days notice. In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services. | ||||||||||||||||||||||||
· Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East in Englewood, Colorado is for a period ending on December 31, 2016. This agreement can be terminated by either party upon six months prior notice. | 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. | · Inverness Lease Agreement. The lease for certain space at 90 Inverness Circle East in Englewood, Colorado is for a period ending on December 31, 2016. This agreement can be terminated by either party upon six months prior notice. | ||||||||||||||||||||||||
· Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016, with a renewal option for one additional year. | · Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016. | ||||||||||||||||||||||||
· EchoStar Data Networks Sublease Agreement. The sublease for certain space at 211 Perimeter Center in Atlanta, Georgia is for a period ending on October 31, 2016. | · Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016, with a renewal option for one additional year. | ||||||||||||||||||||||||
· Gilbert Lease Agreement. The lease for certain space at 801 N. DISH Dr. in Gilbert, Arizona terminated on May 31, 2014. | · EchoStar Data Networks Sublease Agreement. The sublease for certain space at 211 Perimeter Center in Atlanta, Georgia is for a period ending on October 31, 2016. | ||||||||||||||||||||||||
· Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. | · Gilbert Lease Agreement. The lease for certain space at 801 N. DISH Dr. in Gilbert, Arizona is a month to month lease and can be terminated by either party upon 30 days prior notice. | ||||||||||||||||||||||||
DISHOnline.com Services Agreement. Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we receive certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. We have the option to renew this agreement for successive one year terms and the agreement may be terminated for any reason upon at least 120 days notice to EchoStar. In November 2014, we exercised our right to renew this agreement for a one-year period ending on December 31, 2015. | · Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. | ||||||||||||||||||||||||
DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | DISHOnline.com Services Agreement. Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we receive certain services associated with an online video portal. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. We have the option to renew this agreement for three successive one year terms and the agreement may be terminated for any reason upon at least 120 days notice to EchoStar. In November 2013, we exercised our right to renew this agreement for a one-year period ending on December 31, 2014. | ||||||||||||||||||||||||
SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive certain services related to placeshifting. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | DISH Remote Access Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive, among other things, certain remote DVR management services. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | ||||||||||||||||||||||||
Application Development Agreement. During the fourth quarter 2012, we and EchoStar entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which EchoStar provides us with certain services relating to the development of web-based applications for set-top boxes for a period ending on February 1, 2015. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or EchoStar at any time upon at least 90 days notice. The fees for services provided under the Application Development Agreement are calculated at EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. | SlingService Services Agreement. Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we receive certain services related to placeshifting. The fees for the services provided under this services agreement depend, among other things, upon the cost to develop and operate such services. This agreement has a term of five years with automatic renewal for successive one year terms. This agreement may be terminated for any reason upon at least 120 days notice to EchoStar. | ||||||||||||||||||||||||
XiP Encryption Agreement. During the third quarter 2012, we entered into an encryption agreement with EchoStar for our whole-home HD DVR line of set-top boxes (the “XiP Encryption Agreement”) pursuant to which EchoStar provides certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. The term of the XiP Encryption Agreement is for a period until December 31, 2014. Under the XiP Encryption Agreement, we have the option, but not the obligation, to extend the XiP Encryption Agreement for one additional year upon 180 days notice prior to the end of the term. On May 5, 2014, we provided EchoStar notice to extend the XiP Encryption Agreement for one additional year until December 31, 2015. We and EchoStar each have the right to terminate the XiP Encryption Agreement for any reason upon at least 30 days notice and 180 days notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. | Application Development Agreement. During the fourth quarter 2012, we and EchoStar entered into a set-top box application development agreement (the “Application Development Agreement”) pursuant to which EchoStar provides us with certain services relating to the development of web-based applications for set-top boxes for a period ending on February 1, 2015. The Application Development Agreement renews automatically for successive one-year periods thereafter, unless terminated earlier by us or EchoStar at any time upon at least 90 days notice. The fees for services provided under the Application Development Agreement are calculated at EchoStar’s cost of providing the relevant service plus a fixed margin, which will depend on the nature of the services provided. | ||||||||||||||||||||||||
Other Agreements — EchoStar | XiP Encryption Agreement. During the third quarter 2012, we entered into an encryption agreement with EchoStar for our whole-home HD DVR line of set-top boxes (the “XiP Encryption Agreement”) pursuant to which EchoStar provides certain security measures on our whole-home HD DVR line of set-top boxes to encrypt the content delivered to the set-top box via a smart card and secure the content between set-top boxes. The term of the XiP Encryption Agreement is for a period until December 31, 2014. Under the XiP Encryption Agreement, we have the option, but not the obligation, to extend the XiP Encryption Agreement for one additional year upon 180 days notice prior to the end of the term. We and EchoStar each have the right to terminate the XiP Encryption Agreement for any reason upon at least 30 days notice and 180 days notice, respectively. The fees for the services provided under the XiP Encryption Agreement are calculated on a monthly basis based on the number of receivers utilizing such security measures each month. | ||||||||||||||||||||||||
Receiver Agreement. EchoStar is currently our primary supplier of set-top box receivers. Effective January 1, 2012, we and EchoStar entered into a receiver agreement (the “2012 Receiver Agreement”) pursuant to which we have the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from EchoStar for the period from January 1, 2012 to December 31, 2014. We have an option, but not the obligation, to extend the 2012 Receiver Agreement for one additional year upon 180 days notice prior to the end of the term. On May 5, 2014, we provided EchoStar notice to extend the 2012 Receiver Agreement for one additional year until December 31, 2015. The 2012 Receiver Agreement allows us to purchase digital set-top boxes, related accessories and other equipment from EchoStar either: (i) at a cost (decreasing as EchoStar reduces costs and increasing as costs increase) plus a dollar mark-up which will depend upon the cost of the product subject to a collar on EchoStar’s mark-up; or (ii) at cost plus a fixed margin, which will depend on the nature of the equipment purchased. Under the 2012 Receiver Agreement, EchoStar’s margins will be increased if they are able to reduce the costs of their digital set-top boxes and their margins will be reduced if these costs increase. EchoStar provides us with standard manufacturer warranties for the goods sold under the 2012 Receiver Agreement. Additionally, the 2012 Receiver Agreement includes an indemnification provision, whereby the parties indemnify each other for certain intellectual property matters. We are able to terminate the 2012 Receiver Agreement for any reason upon at least 60 days notice to EchoStar. EchoStar is able to terminate the 2012 Receiver Agreement if certain entities acquire us. | Other Agreements — EchoStar | ||||||||||||||||||||||||
For the three months ended September 30, 2014 and 2013, we purchased set-top boxes and other equipment from EchoStar of $293 million and $341 million, respectively. For the nine months ended September 30, 2014 and 2013, we purchased set-top boxes and other equipment from EchoStar of $883 million and $947 million, respectively. Included in these amounts are purchases of certain broadband equipment from EchoStar under the 2012 Receiver Agreement. These amounts are initially included in “Inventory” and are subsequently capitalized as “Property and equipment, net” on our Condensed Consolidated Balance Sheets or expensed as “Subscriber acquisition costs” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the equipment is deployed. | Receiver Agreement. EchoStar is currently our sole supplier of set-top box receivers. In connection with the Spin-off, we and EchoStar entered into a receiver agreement pursuant to which we had the right, but not the obligation, to purchase digital set-top boxes and related accessories, and other equipment from EchoStar for a period ending on January 1, 2012 (the “Prior Receiver Agreement”). The Prior Receiver Agreement allowed us to purchase digital set-top boxes, related accessories and other equipment from EchoStar at cost plus a fixed percentage margin, which varied depending on the nature of the equipment purchased. Additionally, EchoStar provided us with standard manufacturer warranties for the goods sold under the Prior Receiver Agreement. We were able to terminate the Prior Receiver Agreement for any reason upon at least 60 days notice to EchoStar. EchoStar was able to terminate the Prior Receiver Agreement if certain entities were to acquire us. The Prior Receiver Agreement also included an indemnification provision, whereby the parties indemnified each other for certain intellectual property matters. | ||||||||||||||||||||||||
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. | Effective January 1, 2012, we and EchoStar entered into a new agreement (the “2012 Receiver Agreement”) pursuant to which we have the right, but not the obligation, to purchase digital set-top boxes, related accessories, and other equipment from EchoStar for the period from January 1, 2012 to December 31, 2014. We have an option, but not the obligation, to extend the 2012 Receiver Agreement for one additional year upon 180 days notice prior to the end of the term. The material terms of the 2012 Receiver Agreement are substantially the same as the material terms of the Prior Receiver Agreement, except that the 2012 Receiver Agreement allows us to purchase digital set-top boxes, related accessories and other equipment from EchoStar either: (i) at a cost (decreasing as EchoStar reduces costs and increasing as costs increase) plus a dollar mark-up which will depend upon the cost of the product subject to a collar on EchoStar’s mark-up; or (ii) at cost plus a fixed margin, which will depend on the nature of the equipment purchased. Under the 2012 Receiver Agreement, EchoStar’s margins will be increased if they are able to reduce the costs of their digital set-top boxes and their margins will be reduced if these costs increase. | ||||||||||||||||||||||||
In light of the tax sharing agreement, among other things, and in connection with DISH Network’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, during the third quarter 2013, DISH Network and EchoStar agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’ examination of these consolidated tax returns. As a result, DISH Network agreed to pay EchoStar $83 million of the tax benefit DISH Network received or will receive. Any payment to EchoStar, including accrued interest, will be made at such time as EchoStar would have otherwise been able to realize such tax benefit. In addition, during the third quarter 2013, DISH Network and EchoStar agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between DISH Network and EchoStar for such combined returns, through the taxable period ending on December 31, 2017. | For the years ended December 31, 2013, 2012 and 2011, we purchased set-top boxes and other equipment from EchoStar of $1.242 billion, $1.005 billion and $1.158 billion, respectively. Included in these amounts for 2012 and 2013 are purchases of certain broadband equipment from EchoStar under the 2012 Receiver Agreement. These amounts are initially included in “Inventory” and are subsequently capitalized as “Property and equipment, net” on our Consolidated Balance Sheets or expensed as “Subscriber acquisition costs” on our Consolidated Statements of Operations and Comprehensive Income (Loss) when the equipment is deployed. | ||||||||||||||||||||||||
RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), our wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the United States Department of Agriculture to receive up to approximately $14 million in broadband stimulus grant funds (the “Grant Funds”). Effective November 2011, DISH Broadband and HNS entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which HNS provides certain portions of the equipment and broadband service used to implement our RUS program. The RUS Agreement expired during June 2013, when the Grant Funds were exhausted. During the nine months ended September 30, 2013, we expensed $3 million under the RUS Agreement, which is included in “Cost of sales — equipment, services and other” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). | 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. | ||||||||||||||||||||||||
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. | In light of the tax sharing agreement, among other things, and in connection with DISH Network’s consolidated federal income tax returns for certain tax years prior to and for the year of the Spin-off, during the third quarter 2013, DISH Network and EchoStar agreed upon a supplemental allocation of the tax benefits arising from certain tax items resolved in the course of the IRS’ examination of these consolidated tax returns. As a result, DISH Network agreed to pay EchoStar $83 million of the tax benefit DISH Network received or will receive. This resulted in a reduction of DISH Network’s recorded unrecognized tax benefits. Any payment to EchoStar, including accrued interest, will be made at such time as EchoStar would have otherwise been able to realize such tax benefit. In addition, during the third quarter 2013, DISH Network and EchoStar agreed upon a tax sharing arrangement for filing certain combined state income tax returns and a method of allocating the respective tax liabilities between DISH Network and EchoStar for such combined returns, through the taxable period ending on December 31, 2017. | ||||||||||||||||||||||||
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 will be 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. | RUS Implementation Agreement. In September 2010, DISH Broadband L.L.C. (“DISH Broadband”), our wholly-owned subsidiary, was selected by the Rural Utilities Service (“RUS”) of the United States Department of Agriculture to receive up to approximately $14 million in broadband stimulus grant funds (the “Grant Funds”). Effective November 2011, DISH Broadband and Hughes Network Systems, LLC (“HNS”) a wholly-owned subsidiary of Hughes Communications, Inc. (“Hughes”), entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which HNS provides certain portions of the equipment and broadband service used to implement our RUS program. The RUS Agreement expired during June 2013, when the Grant Funds were exhausted. During the years ended December 31, 2013 and 2012, we expensed $3 million and $7 million, respectively, under the RUS Agreement, which is included in “Cost of sales — equipment, services and other” on our Consolidated Statement of Operations and Comprehensive Income (Loss). During the year ended December 31, 2011, we did not record any expense under the RUS Agreement. | ||||||||||||||||||||||||
Patent Cross-License Agreements. During 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. If both options are exercised, the aggregate additional payments to such third-party would total less than $3 million. However, DISH Network and EchoStar may elect to extend their respective Cross-License Agreement independently of each other. 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. | 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. | ||||||||||||||||||||||||
DISH Digital. On May 2, 2014, DISH Network contributed its equity interest in DISH Digital to us. See “Related Party Transactions with DISH Network” within the related party section previously discussed. Effective July 1, 2012, DISH Network and EchoStar formed DISH Digital, which was owned two-thirds by DISH Network and one-third by EchoStar and was consolidated into DISH Network’s financial statements beginning July 1, 2012. DISH Digital was formed to develop and commercialize certain advanced technologies. At that time, DISH Network, EchoStar and DISH Digital entered into the following agreements with respect to DISH Digital: (i) a contribution agreement pursuant to which DISH Network and EchoStar contributed certain assets in exchange for its respective ownership interests in DISH Digital; (ii) a limited liability company operating agreement (the “Operating Agreement”), which provides for the governance of DISH Digital; and (iii) a commercial agreement (the “Commercial Agreement”) pursuant to which, among other things, DISH Digital has: (a) certain rights and corresponding obligations with respect to its business; and (b) the right, but not the obligation, to receive certain services from DISH Network and EchoStar, respectively. Since this was a formation of an entity under common control and a step-up in basis was not allowed, each party’s contributions were recorded at historical book value for accounting purposes. DISH Network consolidated DISH Digital with EchoStar’s ownership position recorded as non-controlling interest. | 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 will be 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. | ||||||||||||||||||||||||
Effective August 1, 2014, EchoStar and DISH Digital entered into the Exchange Agreement pursuant to which, among other things, DISH Digital distributed certain assets to EchoStar and EchoStar reduced its interest in DISH Digital to a ten percent non-voting interest. We now have a ninety percent equity interest and a 100% voting interest in DISH Digital. In addition, we, EchoStar and DISH Digital amended and restated the Operating Agreement, primarily to reflect the changes implemented by the Exchange Agreement. Finally, we, EchoStar and DISH Digital amended and restated the Commercial Agreement, pursuant to which, among other things, DISH Digital: (1) continues to have certain rights and corresponding obligations with respect to its business; (2) continues to have the right, but not the obligation, to receive certain services from us and EchoStar; and (3) has a license from EchoStar to use certain of the assets distributed to EchoStar as part of the Exchange Agreement. | Our total litigation accrual for TiVo was $517 million as of December 31, 2010. As a result of the settlement agreement, during 2011, we reversed $335 million of this accrual and made a payment of approximately $290 million for our portion of the initial payment to TiVo. Of this amount, approximately $182 million related to periods prior to 2011 and the remaining $108 million represented a prepayment. Our $108 million prepayment and our $190 million share of the remaining payments, a total of $298 million, is being expensed ratably as a subscriber-related expense from April 1, 2011 through July 31, 2018, the expiration date of the ‘389 patent. In connection with our TiVo settlement, TiVo agreed to advertise and market certain of our products and services. As a result, during 2011, $6 million was recognized as a reduction of litigation expense and we recorded a pre-paid marketing asset on our Consolidated Statements of Operations and Comprehensive Income (Loss) and our Consolidated Balance Sheets, respectively, which is being amortized as costs of sales over the term of the agreement. | ||||||||||||||||||||||||
Since the Exchange Agreement is among entities under common control, we recorded the difference between the historical cost basis of the assets transferred to EchoStar and our historical cost basis in EchoStar’s one-third noncontrolling interest in DISH Digital as a $6 million, net of deferred taxes, capital distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. In addition, we recorded the initial fair value of EchoStar’s ten percent non-voting interest as a $14 million, net of deferred taxes, deemed distribution in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. All services provided to DISH Digital by EchoStar under the Commercial Agreement are recorded in “General and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See “General and administrative expenses” within the related party section previously discussed. | In addition, under the settlement agreement, TiVo granted DISH Network a license under its ‘389 patent and certain related patents, for the remaining life of those patents, with respect to DISH-branded and co-branded products and services. | ||||||||||||||||||||||||
Satellite and Tracking Stock Transaction with EchoStar. To improve our position in the growing consumer satellite broadband market, among other reasons, on February 20, 2014, we entered into the Satellite and Tracking Stock Transaction with EchoStar pursuant to which, among other things: (i) on March 1, 2014, we transferred to EchoStar and HSSC the Transferred Satellites, including related in-orbit incentive obligations and cash interest payments of approximately $59 million and approximately $11 million in cash in exchange for the Tracking Stock; and (ii) beginning on March 1, 2014, we lease back certain satellite capacity on the Transferred Satellites. The Satellite and Tracking Stock Transaction is further described below: | DISH Network and EchoStar, on the one hand, and TiVo, on the other hand, also agreed on mutual releases of certain related claims and agreed not to challenge each other’s DVR technology-related patents that are licensed under the settlement agreement. | ||||||||||||||||||||||||
· Transaction Agreement. On February 20, 2014, DOLLC, DNLLC and EchoStar XI Holding L.L.C., all indirect wholly-owned subsidiaries of us, entered into the Transaction Agreement with EchoStar, HSSC and Alpha Company LLC, a wholly-owned subsidiary of EchoStar, pursuant to which, on March 1, 2014, we, among other things, transferred to EchoStar and HSSC the Transferred Satellites in exchange for the Tracking Stock. The Tracking Stock generally tracks the Hughes Retail Group. The shares of the Tracking Stock issued to us represent an aggregate 80% economic interest in the Hughes Retail Group. Since the Satellite and Tracking Stock Transaction is among entities under common control, we recorded the Tracking Stock at EchoStar and HSSC’s historical cost basis for these instruments of $229 million and $87 million, respectively. The difference between the historical cost basis of the Tracking Stock received and the net carrying value of the Transferred Satellites of $356 million (including debt obligations, net of deferred taxes), plus the $11 million in cash, resulted in a $51 million capital transaction recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheet. Although our investment in the Tracking Stock represents an aggregate 80% economic interest in the Hughes Retail Group, we have no operational control or significant influence over the Hughes Retail Group business, and currently there is no public market for the Tracking Stock. As such, the Tracking Stock is accounted for under the cost method of accounting. The Transaction Agreement includes, among other things, customary mutual provisions for representations, warranties and indemnification. | Because both DISH Network and EchoStar were defendants in the TiVo lawsuit, DISH Network and EchoStar were jointly and severally liable to TiVo for any final damages and sanctions that could have been awarded by the District Court. As previously disclosed, DISH Network determined that it was obligated under the agreements entered into in connection with the Spin-off to indemnify EchoStar for substantially all liability arising from this lawsuit. EchoStar contributed an amount equal to its $5 million intellectual property liability limit under the receiver agreement. DISH Network and EchoStar further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to DISH Network for other intellectual property claims that may arise under the receiver agreement. DISH Network and EchoStar also agreed that DISH Network would each be entitled to joint ownership of, and a cross-license to use, any intellectual property developed in connection with any potential new alternative technology. Any amounts that EchoStar is responsible for under the settlement agreement with TiVo are in addition to the $5 million contribution previously made by EchoStar. | ||||||||||||||||||||||||
· Satellite Capacity Leased from EchoStar. On February 20, 2014, we entered into satellite capacity agreements with certain subsidiaries of EchoStar pursuant to which, beginning March 1, 2014, we, among other things, lease certain satellite capacity on the Transferred Satellites. See further discussion under “Satellite and transmission expenses — Satellite Capacity Leased from EchoStar.” | Patent Cross-License Agreements. During 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. If both options are exercised, the aggregate additional payments to such third party would total less than $3 million. However, DISH Network and EchoStar may elect to extend their respective Cross-License Agreement independently of each other. 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. | ||||||||||||||||||||||||
· Investor Rights Agreement. On February 20, 2014, EchoStar, HSSC, DOLLC and DNLLC (DOLLC and DNLLC, collectively referred to as the “DISH Investors”) also entered into the Investor Rights Agreement with respect to the Tracking Stock. The Investor Rights Agreement provides, among other things, certain information and consultation rights for the DISH Investors; certain transfer restrictions on the Tracking Stock and certain rights and obligations to offer and sell under certain circumstances (including a prohibition on transfers of the Tracking Stock for one year, with continuing transfer restrictions (including a right of first offer in favor of EchoStar) thereafter, an obligation to sell the Tracking Stock to EchoStar in connection with a change of control of DISH Network and a right to require EchoStar to repurchase the Tracking Stock in connection with a change of control of EchoStar, in each case subject to certain terms and conditions); certain registration rights; certain obligations to provide conversion and exchange rights of the Tracking Stock under certain circumstances; and certain protective covenants afforded to holders of the Tracking Stock. The Investor Rights Agreement generally will terminate as to the DISH Investors at such time as the DISH Investors no longer hold any shares of the HSSC-issued Tracking Stock and any registrable securities under the Investor Rights Agreement. | Sprint Settlement Agreement. On November 3, 2011, DISH Network and Sprint entered into the Sprint Settlement Agreement pursuant to which all disputed issues relating to the DBSD Transaction and the TerreStar Transaction were resolved between DISH Network and Sprint, including, but not limited to, issues relating to the costs allegedly incurred by Sprint to relocate users from the spectrum then licensed to DBSD North America and TerreStar (the “Sprint Clearing Costs”). EchoStar was a party to the Sprint Settlement Agreement solely for the purposes of executing a mutual release between it and Sprint relating to the Sprint Clearing Costs. EchoStar was a holder of certain TerreStar debt instruments. In March 2012, EchoStar’s remaining debt instruments were exchanged for a right to receive a distribution in accordance with the terms of the liquidating trust established pursuant to TerreStar’s chapter 11 plan of liquidation. Pursuant to the terms of the Sprint Settlement Agreement, DISH Network made a net payment of approximately $114 million to Sprint. | ||||||||||||||||||||||||
Other Agreements | Voom Settlement Agreement. On October 21, 2012, we entered into the Voom Settlement Agreement with Voom HD Holdings LLC (“Voom”) and CSC Holdings, LLC (“Cablevision”), and for certain limited purposes, MSG Holdings, L.P., The Madison Square Garden Company and EchoStar. The Voom Settlement Agreement resolved the litigation between the parties relating to the Voom programming services. EchoStar was a party to the Voom Settlement Agreement solely for the purposes of executing a mutual release of claims with Voom, Cablevision, MSG Holdings, L.P. and The Madison Square Garden Company relating to the Voom programming services. | ||||||||||||||||||||||||
In November 2009, Mr. Roger Lynch became employed by both DISH Network and EchoStar as an Executive Vice President. Mr. Lynch is responsible for the development and implementation of advanced technologies that are of potential utility and importance to both DISH Network and EchoStar. Mr. Lynch’s compensation consists of cash and equity compensation and is borne by both EchoStar and DISH Network. | Other Agreements | ||||||||||||||||||||||||
Related Party Transactions with NagraStar L.L.C. | In November 2009, Mr. Roger Lynch became employed by both DISH Network and EchoStar as Executive Vice President. Mr. Lynch is responsible for the development and implementation of advanced technologies that are of potential utility and importance to both DISH Network and EchoStar. Mr. Lynch’s compensation consists of cash and equity compensation and is borne by both EchoStar and DISH Network. | ||||||||||||||||||||||||
NagraStar is a joint venture between EchoStar and Nagra USA, Inc. that is our provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. These expenses are recorded in “Subscriber-related expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). We record all payables in “Trade accounts payable — other” or “Other accrued expenses” on our Condensed Consolidated Balance Sheets. | Related Party Transactions with NagraStar L.L.C. | ||||||||||||||||||||||||
The table below summarizes our transactions with NagraStar. | NagraStar is a joint venture between EchoStar and Nagra USA, Inc. that is our provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. | ||||||||||||||||||||||||
For the Three Months | For the Nine Months | The table below summarizes our transactions with NagraStar. | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | For the Years Ended December 31, | |||||||||||||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||||||||||||||||
Purchases (including fees): | (In thousands) | ||||||||||||||||||||||||
Purchases from NagraStar | $ | 20,914 | $ | 22,563 | $ | 60,964 | $ | 69,129 | Purchases (including fees): | ||||||||||||||||
Purchases from NagraStar | $ | 91,712 | $ | 72,549 | $ | 77,705 | |||||||||||||||||||
As of | As of December 31, | ||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | ||||||||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||||||||
(In thousands) | Amounts Payable and Commitments: | ||||||||||||||||||||||||
Amounts Payable and Commitments: | Amounts payable to NagraStar | $ | 23,417 | $ | 21,930 | ||||||||||||||||||||
Amounts payable to NagraStar | $ | 13,924 | $ | 20,954 | |||||||||||||||||||||
Commitments to NagraStar | $ | 7,749 | $ | 2,463 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
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, 2013. 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 interest or redeemable non-controlling interest. See below for further discussion. Non-majority owned investments are accounted for using the equity method when we have the ability to significantly influence the operating decisions of the investee. When we do not have the ability to significantly influence the operating decisions of an investee, the cost method is used. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
Redeemable Noncontrolling Interests | Redeemable Noncontrolling Interests. DISH Digital Holding L.L.C. (“DISH Digital”) has been consolidated into our financial statements since May 2, 2014. Effective August 1, 2014, EchoStar Corporation (“EchoStar”) and DISH Digital entered into an exchange agreement (the “Exchange Agreement”) pursuant to which, among other things, DISH Digital distributed certain assets to EchoStar and EchoStar reduced its interest in DISH Digital to a ten percent non-voting interest. EchoStar’s ten percent non-voting interest is redeemable, subject to certain conditions, at fair value within sixty days following the fifth anniversary of the Exchange Agreement. This interest is considered temporary equity and is recorded as “Redeemable noncontrolling interest” in the mezzanine section of our Condensed Consolidated Balance Sheets. Since any redemption of EchoStar’s ten percent non-voting interest would occur at fair value, the “Redeemable noncontrolling interest” was initially accounted for at fair value, which established a minimum threshold value for this interest. Redemption of the interest is contingent on a certain performance goal being achieved by DISH Digital, which is not yet probable of being achieved. At such time that we determine the performance goal to be probable, the value of the “Redeemable noncontrolling interest” will be adjusted for any change in redemption value above the minimum threshold, with the offset recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets. In addition, the operating results of DISH Digital attributable to EchoStar are recorded as “Redeemable noncontrolling interest” in our Condensed Consolidated Balance Sheets effective August 1, 2014. See Note 10 for further discussion on DISH Digital and the Exchange Agreement. | |
Use of Estimates | Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Sustained economic weakness has increased 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. | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense for each reporting period. Estimates are used in accounting for, among other things, allowances for doubtful accounts, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, fair value of financial instruments, fair value of options granted under our stock-based compensation plans, fair value of assets and liabilities acquired in business combinations, fair value of multi-element arrangements, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, retailer incentives, programming expenses, subscriber lives and royalty obligations. Weak economic conditions have increased 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 the Consolidated Financial Statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. | |
Fair Value Measurements | Fair Value Measurements | 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: | 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, including U.S. treasury notes; | · Level 1, defined as observable inputs being quoted prices in active markets for identical assets, including U.S. treasury notes; | |
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and | ||
· 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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; 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. | |
· 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 December 31, 2013 and 2012, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | |
As of September 30, 2014 and December 31, 2013, the carrying value for cash and cash equivalents, trade accounts receivable (net of allowance for doubtful accounts) and current liabilities (excluding the “Current portion of long-term debt and capital lease obligations”) is equal to or approximates fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities. | Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | |
Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are estimated based on an analysis in which we evaluate market conditions, related securities, various public and private offerings, and other publicly available information. In performing this analysis, we make various assumptions regarding, among other things, credit spreads, and the impact of these factors on the value of the debt securities. See Note 7 for the fair value of our long-term debt. | ||
New Accounting Pronouncements | New Accounting Pronouncements | |
Revenue from Contracts with Customers. On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. This converged standard on revenue recognition was issued jointly with the International Accounting Standards Board (“IASB”) to improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards (“IFRS”). ASU 2014-09 provides a framework for revenue recognition that replaces most existing GAAP revenue recognition guidance when it becomes effective. ASU 2014-09 will become effective for us on January 1, 2017. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. |
Supplemental_Data_Statements_o1
Supplemental Data - Statements of Cash Flows (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Schedule of supplemental cash flow and other non-cash data | |||||||||||||||||||
For the Nine Months | For the Years Ended December 31, | ||||||||||||||||||
Ended September 30, | 2013 | 2012 | 2011 | ||||||||||||||||
2014 | 2013 | (In thousands) | |||||||||||||||||
(In thousands) | Cash paid for interest | $ | 875,006 | $ | 537,512 | $ | 545,406 | ||||||||||||
Supplemental Disclosure of Cash Flow Information: | Cash received for interest | 36,242 | 22,431 | 11,468 | |||||||||||||||
Cash paid for interest | $ | 652,150 | $ | 662,264 | Cash paid for income taxes | 1,351 | 20,624 | 14,661 | |||||||||||
Cash received for interest | 26,242 | 26,771 | Cash paid for income taxes to DISH Network | 433,120 | 272,599 | 384,462 | |||||||||||||
Cash paid for income taxes | 4,355 | 751 | Satellites and other assets financed under capital lease obligations | 1,070 | 5,857 | 10,548 | |||||||||||||
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | Receipt of marketable investment securities with no cash consideration | — | 13,237 | — | |||||||||||||
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | Net satellite broadband assets distributed to DISH Network | — | 8,628 | — | |||||||||||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 432,080 | — | |||||||||||||||||
Investment in EchoStar and HSSC preferred tracking stock - cost method | 316,204 | — | |||||||||||||||||
Transfer of liabilities and other | 44,540 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $31,274 | 51,466 | — | |||||||||||||||||
DISH Digital Exchange Transaction with EchoStar: | |||||||||||||||||||
Transfer of property and equipment, net | 8,978 | — | |||||||||||||||||
Transfer of investments and intangibles, net | 25,097 | — | |||||||||||||||||
Capital distribution to EchoStar, net of deferred taxes of $3,542 | 5,845 | — | |||||||||||||||||
Deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest, net of deferred taxes of $8,491 | 14,009 | — | |||||||||||||||||
Marketable_Investment_Securiti7
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities and Restricted Cash and Cash Equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of marketable investment securities, restricted cash and cash equivalents, and other investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Marketable investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable investment securities: | Current marketable investment securities - VRDNs | $ | 105,854 | $ | 124,007 | |||||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - VRDNs | $ | 20,538 | $ | 105,854 | Current marketable investment securities - other | 4,011,472 | 2,145,663 | |||||||||||||||||||||||||||||||||||||||||||||
Current marketable investment securities - other | 3,728,301 | 4,011,472 | Total current marketable investment securities | 4,117,326 | 2,269,670 | |||||||||||||||||||||||||||||||||||||||||||||||
Total current marketable investment securities | 3,748,839 | 4,117,326 | Restricted marketable investment securities (1) | 63,902 | 49,044 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted marketable investment securities (1) | 74,194 | 63,902 | Total marketable investment securities | 4,181,228 | 2,318,714 | |||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities | 3,823,033 | 4,181,228 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 18,878 | 72,617 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash and cash equivalents (1) | 6,490 | 18,878 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,200,106 | $ | 2,391,331 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in EchoStar preferred tracking stock - cost method (2) | 228,795 | — | (1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Consolidated Balance Sheets. | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in HSSC preferred tracking stock - cost method (2) | 87,409 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other investment securities - cost method (2) | 13,546 | 5,396 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable investment securities and restricted cash and cash equivalents | $ | 4,159,273 | $ | 4,205,502 | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash and marketable investment securities” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Other investment securities are included in “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of unrealized gain (loss) on marketable investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of December 31, 2013 | As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable | Marketable | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment | Unrealized | Investment | Unrealized | Marketable | Marketable | |||||||||||||||||||||||||||||||||||||||||||||||
Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | Investment | Unrealized | Investment | Unrealized | |||||||||||||||||||||||||||||||||||||||||
(In thousands) | Securities | Gains | Losses | Net | Securities | Gains | Losses | Net | ||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | — | $ | — | $ | 105,854 | $ | — | $ | — | $ | — | Debt securities: | |||||||||||||||||||||||||||||||||||
Other (including restricted) | 3,759,837 | 6,767 | (1,263 | ) | 5,504 | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | VRDNs | $ | 105,854 | $ | — | $ | — | $ | — | $ | 124,007 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||
Equity securities: | Other (including restricted) | 4,048,851 | 5,447 | (3,355 | ) | 2,092 | 2,181,064 | 7,335 | (1,144 | ) | 6,191 | |||||||||||||||||||||||||||||||||||||||||
Other | 42,658 | 29,421 | — | 29,421 | 26,523 | 13,286 | — | 13,286 | Equity securities: | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 36,188 | $ | (1,263 | ) | $ | 34,925 | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | Other (1) | 26,523 | 13,286 | — | 13,286 | 13,643 | 406 | — | 406 | |||||||||||||||||||||||||
Total | $ | 4,181,228 | $ | 18,733 | $ | (3,355 | ) | $ | 15,378 | $ | 2,318,714 | $ | 7,741 | $ | (1,144 | ) | $ | 6,597 | ||||||||||||||||||||||||||||||||||
(1) In connection with certain commercial arrangements that we entered into during the third quarter 2012, among other things, we received shares of common stock from a single issuer for no cash consideration. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of available-for-sale securities in continuous unrealized loss position by length of time and their fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||||||||||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities: | Debt Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | $ | 1,858,459 | $ | (1,243 | ) | $ | 2,002,239 | $ | (2,820 | ) | Less than 12 months | $ | 2,002,239 | $ | (2,820 | ) | $ | 724,739 | $ | (865 | ) | |||||||||||||||||||||||||||||||
12 months or more | 168,734 | (20 | ) | 38,043 | (535 | ) | 12 months or more | 38,043 | (535 | ) | 29,045 | (279 | ) | |||||||||||||||||||||||||||||||||||||||
Total | $ | 2,027,193 | $ | (1,263 | ) | $ | 2,040,282 | $ | (3,355 | ) | Total | $ | 2,040,282 | $ | (3,355 | ) | $ | 753,784 | $ | (1,144 | ) | |||||||||||||||||||||||||||||||
Schedule of investments measured at fair value on a recurring basis | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Equivalents (including restricted) | $ | 4,183,698 | $ | 67,535 | $ | 4,116,163 | $ | — | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | Cash equivalents (including restricted) | $ | 3,743,328 | $ | 275,277 | $ | 3,468,051 | $ | — | $ | 3,014,946 | $ | 59,386 | $ | 2,955,560 | $ | — | |||||||||||||||||||
Debt securities: | Debt securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||
VRDNs | $ | 20,538 | $ | — | $ | 20,538 | $ | — | $ | 105,854 | $ | — | $ | 105,854 | $ | — | VRDNs | $ | 105,854 | $ | — | $ | 105,854 | $ | — | $ | 124,007 | $ | — | $ | 124,007 | $ | — | |||||||||||||||||||
Other (including restricted) | 3,759,837 | — | 3,759,837 | — | 4,048,851 | — | 4,048,851 | — | Other (including restricted) | 4,048,851 | — | 4,048,851 | — | 2,181,064 | — | 2,181,064 | — | |||||||||||||||||||||||||||||||||||
Equity securities | 42,658 | 42,658 | — | — | 26,523 | 26,523 | — | — | Equity securities | 26,523 | 26,523 | — | — | 13,643 | 13,643 | — | — | |||||||||||||||||||||||||||||||||||
Total | $ | 3,823,033 | $ | 42,658 | $ | 3,780,375 | $ | — | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | Total | $ | 4,181,228 | $ | 26,523 | $ | 4,154,705 | $ | — | $ | 2,318,714 | $ | 13,643 | $ | 2,305,071 | $ | — |
Inventory_Tables1
Inventory (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||
Inventory | ||||||||||||||||
Schedule of inventory | ||||||||||||||||
As of | As of December 31, | |||||||||||||||
September 30, | December 31, | 2013 | 2012 | |||||||||||||
2014 | 2013 | (In thousands) | ||||||||||||||
(In thousands) | Finished goods | $ | 299,975 | $ | 259,274 | |||||||||||
Finished goods | $ | 280,369 | $ | 299,975 | Raw materials | 102,563 | 122,758 | |||||||||
Raw materials | 159,210 | 102,563 | Work-in-process | 110,108 | 82,361 | |||||||||||
Work-in-process | 88,237 | 110,108 | Total (1) | $ | 512,646 | $ | 464,393 | |||||||||
Total | $ | 527,816 | $ | 512,646 | ||||||||||||
(1) The increase in inventory as of December 31, 2013 primarily related to an increase in Hopper® and Joey® set-top boxes and broadband equipment. |
Property_and_Equipment_and_FCC1
Property and Equipment and FCC Authorizations (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||
Schedule of property and equipment | |||||||||||||||||||||||||
Depreciable | As of | Depreciable | |||||||||||||||||||||||
Life | September 30, | December 31, | Life | As of December 31, | |||||||||||||||||||||
(In Years) | 2014 | 2013 | (In Years) | 2013 | 2012 | ||||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Equipment leased to customers | 5-Feb | $ | 3,526,090 | $ | 3,496,994 | Equipment leased to customers | 5-Feb | $ | 3,496,994 | $ | 3,424,911 | ||||||||||||||
EchoStar I (1) | 12 | — | 201,607 | EchoStar I | 12 | 201,607 | 201,607 | ||||||||||||||||||
EchoStar VII (1) | 15 | — | 177,000 | EchoStar VII | 15 | 177,000 | 177,000 | ||||||||||||||||||
EchoStar X (1) | 15 | — | 177,192 | EchoStar X | 15 | 177,192 | 177,192 | ||||||||||||||||||
EchoStar XI (1) | 15 | — | 200,198 | EchoStar XI | 15 | 200,198 | 200,198 | ||||||||||||||||||
EchoStar XIV (1) | 15 | — | 316,541 | EchoStar XIV | 15 | 316,541 | 316,541 | ||||||||||||||||||
EchoStar XV | 15 | 277,658 | 277,658 | EchoStar XV | 15 | 277,658 | 277,658 | ||||||||||||||||||
Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | Satellites acquired under capital lease agreements | 15-Oct | 499,819 | 499,819 | ||||||||||||||||||
Furniture, fixtures, equipment and other | 10-Jan | 661,321 | 600,439 | Furniture, fixtures, equipment and other | 10-Jan | 600,439 | 580,588 | ||||||||||||||||||
Buildings and improvements | Jan-40 | 83,258 | 80,439 | Buildings and improvements | Jan-40 | 80,439 | 74,398 | ||||||||||||||||||
Land | — | 5,504 | 5,504 | Land | - | 5,504 | 5,207 | ||||||||||||||||||
Construction in progress | — | 19,006 | 39,043 | Construction in progress | - | 39,043 | 20,469 | ||||||||||||||||||
Total property and equipment | 5,072,656 | 6,072,434 | Total property and equipment | 6,072,434 | 5,955,588 | ||||||||||||||||||||
Accumulated depreciation (1) | (2,591,343 | ) | (3,093,111 | ) | Accumulated depreciation | (3,093,111 | ) | (2,948,204 | ) | ||||||||||||||||
Property and equipment, net | $ | 2,481,313 | $ | 2,979,323 | Property and equipment, net | $ | 2,979,323 | $ | 3,007,384 | ||||||||||||||||
(1) Property and equipment and accumulated depreciation decreased $1.073 billion and $633 million, respectively, as a result of the Satellite and Tracking Stock Transaction. See Note 4 and Note 10 for further discussion | |||||||||||||||||||||||||
Schedule of depreciation and amortization expense | |||||||||||||||||||||||||
For the Three Months | For the Nine Months | For the Years Ended December 31, | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | 2013 | 2012 | 2011 | |||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | (In thousands) | |||||||||||||||||||||
(In thousands) | Equipment leased to customers | $ | 739,266 | $ | 649,394 | $ | 725,904 | ||||||||||||||||||
Equipment leased to customers | $ | 208,208 | $ | 188,524 | $ | 607,584 | $ | 538,457 | Satellites | 108,682 | 123,431 | 128,352 | |||||||||||||
Satellites | 15,261 | 27,171 | 53,723 | 81,512 | Buildings, furniture, fixtures, equipment and other | 58,039 | 58,081 | 50,699 | |||||||||||||||||
Buildings, furniture, fixtures, equipment and other | 22,671 | 14,054 | 58,181 | 43,441 | 148 degree orbital location (1) | — | 67,776 | — | |||||||||||||||||
Total depreciation and amortization | $ | 246,140 | $ | 229,749 | $ | 719,488 | $ | 663,410 | Total depreciation and amortization | $ | 905,987 | $ | 898,682 | $ | 904,955 | ||||||||||
(1) See “FCC Authorizations” below. | |||||||||||||||||||||||||
Schedule of pay-TV satellite fleet | |||||||||||||||||||||||||
Degree | Estimated | ||||||||||||||||||||||||
Launch | Orbital | Useful Life | |||||||||||||||||||||||
Satellites | Date | Location | (Years) | ||||||||||||||||||||||
Owned: | |||||||||||||||||||||||||
EchoStar XV (1) | July 2010 | 45 | 15 | ||||||||||||||||||||||
Leased from EchoStar (1): | |||||||||||||||||||||||||
EchoStar I (2)(3) | December 1995 | 77 | NA | ||||||||||||||||||||||
EchoStar VII (2)(3) | February 2002 | 119 | NA | ||||||||||||||||||||||
EchoStar VIII | August 2002 | 77 | NA | ||||||||||||||||||||||
EchoStar IX | August 2003 | 121 | NA | ||||||||||||||||||||||
EchoStar X (2)(3) | February 2006 | 110 | NA | ||||||||||||||||||||||
EchoStar XI (2)(3) | July 2008 | 110 | NA | ||||||||||||||||||||||
EchoStar XII (2) | July 2003 | 61.5 | NA | ||||||||||||||||||||||
EchoStar XIV (2)(3) | March 2010 | 119 | NA | ||||||||||||||||||||||
EchoStar XVI | November 2012 | 61.5 | NA | ||||||||||||||||||||||
Nimiq 5 | September 2009 | 72.7 | NA | ||||||||||||||||||||||
QuetzSat-1 | September 2011 | 77 | NA | ||||||||||||||||||||||
Leased from Other Third Party: | |||||||||||||||||||||||||
Anik F3 | April 2007 | 118.7 | NA | ||||||||||||||||||||||
Ciel II | December 2008 | 129 | NA | ||||||||||||||||||||||
Under Construction: | |||||||||||||||||||||||||
EchoStar XVIII | 2015 | 110 | 15 | ||||||||||||||||||||||
(1) See Note 10 for further discussion of our Related Party Transactions with EchoStar. | |||||||||||||||||||||||||
(2) We generally have the option to renew each lease on a year-to-year basis through the end of the respective satellite’s useful life. | |||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction with EchoStar pursuant to which, among other things, we transferred these satellites to EchoStar and lease back certain satellite capacity on these satellites. See Note 4 for further discussion. |
LongTerm_Debt_Tables1
Long-Term Debt (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||||||||
Long-Term Debt | ||||||||||||||||||||||||||||
Schedule of carrying and fair values of the entity's debt facilities | ||||||||||||||||||||||||||||
As of | As of December 31, | |||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | 2013 | 2012 | |||||||||||||||||||||||||
Carrying | Carrying | Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||||
Value | Fair Value | Value | Fair Value | Value | Value | |||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
6 5/8% Senior Notes due 2014 (1) | $ | 900,000 | $ | 900,000 | $ | 1,000,000 | $ | 1,040,200 | 7 % Senior Notes due 2013 (1) | — | — | 500,000 | 521,875 | |||||||||||||||
7 3/4% Senior Notes due 2015 (2) | 650,001 | 673,564 | 750,000 | 813,750 | 6 5/8% Senior Notes due 2014 (2) | 1,000,000 | 1,040,200 | 1,000,000 | 1,078,500 | |||||||||||||||||||
7 1/8% Senior Notes due 2016 | 1,500,000 | 1,591,875 | 1,500,000 | 1,657,500 | 7 3/4% Senior Notes due 2015 | 750,000 | 813,750 | 750,000 | 844,725 | |||||||||||||||||||
4 5/8% Senior Notes due 2017 | 900,000 | 918,099 | 900,000 | 946,962 | 7 1/8% Senior Notes due 2016 | 1,500,000 | 1,657,500 | 1,500,000 | 1,683,750 | |||||||||||||||||||
4 1/4% Senior Notes due 2018 | 1,200,000 | 1,207,200 | 1,200,000 | 1,221,792 | 4 5/8% Senior Notes due 2017 | 900,000 | 946,962 | 900,000 | 940,500 | |||||||||||||||||||
7 7/8% Senior Notes due 2019 | 1,400,000 | 1,589,000 | 1,400,000 | 1,603,000 | 4 1/4% Senior Notes due 2018 | 1,200,000 | 1,221,792 | — | — | |||||||||||||||||||
5 1/8% Senior Notes due 2020 | 1,100,000 | 1,127,500 | 1,100,000 | 1,104,950 | 7 7/8% Senior Notes due 2019 | 1,400,000 | 1,603,000 | 1,400,000 | 1,669,500 | |||||||||||||||||||
6 3/4% Senior Notes due 2021 | 2,000,000 | 2,146,260 | 2,000,000 | 2,122,500 | 5 1/8% Senior Notes due 2020 | 1,100,000 | 1,104,950 | — | — | |||||||||||||||||||
5 7/8% Senior Notes due 2022 | 2,000,000 | 2,040,000 | 2,000,000 | 1,997,500 | 6 3/4% Senior Notes due 2021 | 2,000,000 | 2,122,500 | 2,000,000 | 2,280,000 | |||||||||||||||||||
5 % Senior Notes due 2023 | 1,500,000 | 1,447,500 | 1,500,000 | 1,458,090 | 5 7/8% Senior Notes due 2022 | 2,000,000 | 1,997,500 | 2,000,000 | 2,150,000 | |||||||||||||||||||
Mortgages and other notes payable (3) | 14,892 | 14,892 | 59,313 | 59,313 | 5 % Senior Notes due 2023 | 1,500,000 | 1,458,090 | 1,500,000 | 1,548,750 | |||||||||||||||||||
Subtotal | 13,164,893 | $ | 13,655,890 | 13,409,313 | $ | 14,025,557 | Mortgages and other notes payable | 59,313 | 59,313 | 65,427 | 65,427 | |||||||||||||||||
Unamortized discounts, net | (16,142 | ) | (19,198 | ) | Subtotal | 13,409,313 | $ | 14,025,557 | 11,615,427 | $ | 12,783,027 | |||||||||||||||||
Capital lease obligations (4) | 201,867 | NA | 219,902 | NA | Capital lease obligations (3) | 219,902 | NA | 248,304 | NA | |||||||||||||||||||
Total long-term debt and capital lease obligations (including current portion) | $ | 13,350,618 | $ | 13,610,017 | Total long-term debt and capital | |||||||||||||||||||||||
lease obligations (including current portion) | $ | 13,629,215 | $ | 11,863,731 | ||||||||||||||||||||||||
(1) During the nine months ended September 30, 2014, we repurchased $100 million of our 6 5/8% Senior Notes due 2014 in open market trades. The remaining balance of $900 million was redeemed on October 1, 2014 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | ||||||||||||||||||||||||||||
(2) During the nine months ended September 30, 2014, we repurchased $100 million of our 7 3/4% Senior Notes due 2015 in open market trades. The remaining balance of $650 million matures on May 31, 2015 and is included in “Current portion of long-term debt and capital lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2014. | (1) During September 2013, we repurchased $49 million of our 7% Senior Notes due 2013 in open market transactions. On October 1, 2013, we redeemed the remaining $451 million principal balance of our 7% Senior Notes due 2013. | |||||||||||||||||||||||||||
(3) On February 20, 2014, we entered into the Satellite and Tracking Stock Transaction, which resulted in a decrease in “Mortgages and other notes payable” of $44 million related to the in-orbit incentive obligations associated with the Transferred Satellites. See Note 4 and Note 10 for further discussion. | (2) Our 6 5/8% Senior Notes with an aggregate principal balance of $1.0 billion mature on October 1, 2014 and have been reclassified to “Current portion of long-term debt and capital lease obligations” on our Consolidated Balance Sheets as of December 31, 2013. | |||||||||||||||||||||||||||
(4) Disclosure regarding fair value of capital leases is not required. | (3) Disclosure regarding fair value of capital leases is not required. |
Related_Party_Transactions_Tab1
Related Party Transactions (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||||
Related Party Transactions | |||||||||||||||||||||||||
Schedule of transactions with NagraStar | |||||||||||||||||||||||||
For the Three Months | For the Nine Months | For the Years Ended December 31, | |||||||||||||||||||||||
Ended September 30, | Ended September 30, | 2013 | 2012 | 2011 | |||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | (In thousands) | |||||||||||||||||||||
(In thousands) | Purchases (including fees): | ||||||||||||||||||||||||
Purchases (including fees): | Purchases from NagraStar | $ | 91,712 | $ | 72,549 | $ | 77,705 | ||||||||||||||||||
Purchases from NagraStar | $ | 20,914 | $ | 22,563 | $ | 60,964 | $ | 69,129 | |||||||||||||||||
As of December 31, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
As of | (In thousands) | ||||||||||||||||||||||||
September 30, | December 31, | Amounts Payable and Commitments: | |||||||||||||||||||||||
2014 | 2013 | Amounts payable to NagraStar | $ | 23,417 | $ | 21,930 | |||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Amounts Payable and Commitments: | |||||||||||||||||||||||||
Amounts payable to NagraStar | $ | 13,924 | $ | 20,954 | |||||||||||||||||||||
Commitments to NagraStar | $ | 7,749 | $ | 2,463 |
Organization_and_Business_Acti2
Organization and Business Activities (Details) | Sep. 30, 2014 |
item | |
Organization and Business Activities | |
Number of subscribers | 14,041,000 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details) (DISH Digital Holding LLC, Exchange Agreement) | 9 Months Ended | |
Sep. 30, 2014 | Aug. 01, 2014 | |
Redeemable Noncontrolling Interests | ||
Non-voting interest (as a percent) | 10.00% | |
Maximum | ||
Redeemable Noncontrolling Interests | ||
Period following the fifth anniversary of exchange agreement within which non-voting interest is redeemable at fair value | 60 days |
Supplemental_Data_Statements_o2
Supplemental Data - Statements of Cash Flows (Details) (USD $) | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Supplemental Disclosure of Cash Flow Information: | |||||
Cash paid for interest | $652,150 | $662,264 | $875,006 | $537,512 | $545,406 |
Cash received for interest | 26,242 | 26,771 | 36,242 | 22,431 | 11,468 |
Cash paid for income taxes | 4,355 | 751 | 1,351 | 20,624 | 14,661 |
Cash paid for income taxes to DISH Network | 322,632 | 274,894 | 433,120 | 272,599 | 384,462 |
Satellites and other assets financed under capital lease obligations | 3,462 | 904 | 1,070 | 5,857 | 10,548 |
Satellite and Tracking Stock Transaction | EchoStar | |||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||
Transfer of property and equipment, net | 432,080 | ||||
Investment in EchoStar and HSSC preferred tracking stock - cost method | 316,204 | ||||
Transfer of liabilities and other | 44,540 | ||||
Capital distribution to EchoStar | 51,466 | ||||
Deferred taxes for capital distribution to EchoStar | 31,274 | ||||
DISH Digital Exchange Transaction | EchoStar | |||||
Satellite and Tracking Stock Transaction with EchoStar: | |||||
Transfer of property and equipment, net | 8,978 | ||||
Transfer of investments and intangibles, net | 25,097 | ||||
Capital distribution to EchoStar | 5,845 | ||||
Deferred taxes for capital distribution to EchoStar | 3,542 | ||||
Deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest, net of deferred taxes of $8,491 | 14,009 | ||||
Deferred taxes for deemed distribution to EchoStar- initial fair value of redeemable noncontrolling interest | $8,491 |
Marketable_Investment_Securiti8
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Current marketable investment securities | $3,748,839 | $4,117,326 | $2,269,670 |
Restricted marketable investment securities | 74,194 | 63,902 | 49,044 |
Total marketable investment securities | 3,823,033 | 4,181,228 | 2,318,714 |
Restricted cash and cash equivalents | 6,490 | 18,878 | 72,617 |
Total marketable investment securities and restricted cash and cash equivalents | 4,159,273 | 4,205,502 | |
EchoStar | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Other investment securities - cost method | 228,795 | ||
HSSC | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Other investment securities - cost method | 87,409 | ||
Current marketable investment securities - VRDNs | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Current marketable investment securities | 20,538 | 105,854 | 124,007 |
Settlement period | 5 days | 5 days | |
Current marketable investment securities - other | |||
Marketable Investment Securities, Restricted Cash and Cash Equivalents and Other Investment Securities: | |||
Current marketable investment securities | 3,728,301 | 4,011,472 | 2,145,663 |
Other investment securities - cost method | $13,546 | $5,396 |
Marketable_Investment_Securiti9
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details 2) (USD $) | 0 Months Ended | 9 Months Ended |
Feb. 20, 2014 | Sep. 30, 2014 | |
Transaction Agreement | DISH Investors | ||
Other investment securities: | ||
Percentage of economic interest in the Hughes Retail Group | 80.00% | |
EchoStar and HSSC | Transaction Agreement | ||
Other investment securities: | ||
Number of owned satellites transferred and leased back | 5 | |
Obligations and interest payments transferred | 59,000,000 | |
Cash in exchange for shares of series of preferred tracking stock issued | 11,000,000 | |
Capital transaction | 356,000,000 | |
Capital transaction recorded in additional paid-in capital | 51,000,000 | |
EchoStar and HSSC | Investor Rights Agreement | DISH Investors | ||
Other investment securities: | ||
Tracking stock prohibited transfer period | 1 year | |
EchoStar | Transaction Agreement | ||
Other investment securities: | ||
Obligations and interest payments transferred | 44,540,000 | |
Historical cost of tracking stock | 316,204,000 | |
Capital transaction recorded in additional paid-in capital | 51,466,000 | |
EchoStar | Transaction Agreement | DISH Investors | ||
Other investment securities: | ||
Preferred tracking stock issued by related party | 6,290,499 | |
Historical cost of tracking stock | 229,000,000 | |
HSSC | Transaction Agreement | DISH Investors | ||
Other investment securities: | ||
Preferred tracking stock issued by related party | 81.128 | |
Historical cost of tracking stock | 87,000,000 |
Recovered_Sheet1
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details 3) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated net unrealized gains (losses) | |||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | $34,925,000 | $15,378,000 | |
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss) | 25,000,000 | 11,000,000 | 6,000,000 |
Components of available-for-sale investments | |||
Debt securities | 3,748,839,000 | 4,117,326,000 | 2,269,670,000 |
Total marketable investment securities | 3,823,033,000 | 4,181,228,000 | 2,318,714,000 |
Unrealized Gains (Losses) on Marketable Investment Securities | |||
Unrealized Gains | 36,188,000 | 18,733,000 | |
Unrealized Losses | -1,263,000 | -3,355,000 | |
Unrealized Gains Losses, Net | 34,925,000 | 15,378,000 | |
Contractual maturities of restricted and non-restricted marketable investment securities | |||
Debt securities with contractual maturities within one year | 2,487,000,000 | 3,819,000,000 | |
Debt securities with contractual maturities extending longer than one year through and including five years | 1,270,000,000 | 314,000,000 | |
Debt securities with contractual maturities longer than ten years | 23,000,000 | 21,000,000 | |
VRDNs | |||
Components of available-for-sale investments | |||
Debt securities | 20,538,000 | 105,854,000 | 124,007,000 |
Other (including restricted) | |||
Accumulated net unrealized gains (losses) | |||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | 5,504,000 | 2,092,000 | |
Components of available-for-sale investments | |||
Debt security | 3,759,837,000 | 4,048,851,000 | 2,181,064,000 |
Unrealized Gains (Losses) on Marketable Investment Securities | |||
Unrealized Gains | 6,767,000 | 5,447,000 | |
Unrealized Losses | -1,263,000 | -3,355,000 | |
Unrealized Gains Losses, Net | 5,504,000 | 2,092,000 | |
Equity securities | |||
Accumulated net unrealized gains (losses) | |||
Accumulated net unrealized gains, before tax, in accumulated other comprehensive income (loss) | 29,421,000 | 13,286,000 | |
Components of available-for-sale investments | |||
Equity securities | 42,658,000 | 26,523,000 | 13,643,000 |
Unrealized Gains (Losses) on Marketable Investment Securities | |||
Unrealized Gains | 29,421,000 | 13,286,000 | |
Unrealized Gains Losses, Net | $29,421,000 | $13,286,000 |
Recovered_Sheet2
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details 4) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Fair value of marketable investment securities in a loss position | |||
Total | $2,027,193 | $2,040,282 | $753,784 |
Unrealized loss on marketable investment securities in a loss position | |||
Total | -1,263 | -3,355 | |
Debt Securities | |||
Fair value of marketable investment securities in a loss position | |||
Less than 12 months | 1,858,459 | 2,002,239 | 724,739 |
12 months or more | 168,734 | 38,043 | 29,045 |
Unrealized loss on marketable investment securities in a loss position | |||
Less than 12 months | -1,243 | -2,820 | |
12 months or more | ($20) | ($535) |
Recovered_Sheet3
Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities (Details 5) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Fair value of marketable securities | |||
Debt securities | $3,748,839 | $4,117,326 | $2,269,670 |
Total marketable investment securities | 3,823,033 | 4,181,228 | 2,318,714 |
Transfer of investments from Level 1 to Level 2 | 0 | 0 | |
Transfer of investments from Level 2 to Level 1 | 0 | 0 | |
VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | 3,759,837 | 4,048,851 | 2,181,064 |
Equity securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Total | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 4,183,698 | 3,743,328 | 3,014,946 |
Total marketable investment securities | 3,823,033 | 4,181,228 | 2,318,714 |
Fair value measurements on recurring basis | Total | VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Fair value measurements on recurring basis | Total | Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | 3,759,837 | 4,048,851 | 2,181,064 |
Fair value measurements on recurring basis | Total | Equity securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 1 | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 67,535 | 275,277 | 59,386 |
Total marketable investment securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 1 | Equity securities | |||
Fair value of marketable securities | |||
Equity securities | 42,658 | 26,523 | 13,643 |
Fair value measurements on recurring basis | Level 2 | |||
Fair value of marketable securities | |||
Cash equivalents (including restricted) | 4,116,163 | 3,468,051 | 2,955,560 |
Total marketable investment securities | 3,780,375 | 4,154,705 | 2,305,071 |
Fair value measurements on recurring basis | Level 2 | VRDNs | |||
Fair value of marketable securities | |||
Debt securities | 20,538 | 105,854 | 124,007 |
Fair value measurements on recurring basis | Level 2 | Other (including restricted) | |||
Fair value of marketable securities | |||
Debt security | $3,759,837 | $4,048,851 | $2,181,064 |
Inventory_Details1
Inventory (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Inventory | |||
Finished goods | $280,369 | $299,975 | $259,274 |
Raw materials | 159,210 | 102,563 | 122,758 |
Work-in-process | 88,237 | 110,108 | 82,361 |
Total inventory | $527,816 | $512,646 | $464,393 |
Property_and_Equipment_and_FCC2
Property and Equipment and FCC Authorizations (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2012 | Sep. 30, 2014 | Sep. 30, 2012 | Dec. 31, 2013 | |
Property and Equipment | ||||
Total property and equipment | $5,955,588,000 | $5,072,656,000 | $6,072,434,000 | |
Accumulated depreciation | -2,948,204,000 | -2,591,343,000 | -3,093,111,000 | |
Property and equipment, net | 3,007,384,000 | 2,481,313,000 | 2,979,323,000 | |
Decrease in accumulated depreciation of property and equipment | 1,073,000,000 | 633,000,000 | ||
Minimum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 1 year | |||
Maximum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 40 years | |||
Equipment leased to customers | ||||
Property and Equipment | ||||
Total property and equipment | 3,424,911,000 | 3,526,090,000 | 3,496,994,000 | |
Equipment leased to customers | Minimum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 2 years | 2 years | ||
Equipment leased to customers | Maximum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 5 years | 5 years | ||
EchoStar I | ||||
Property and Equipment | ||||
Total property and equipment | 201,607,000 | 201,607,000 | ||
Useful life of property and equipment | 12 years | 12 years | ||
EchoStar VII | ||||
Property and Equipment | ||||
Total property and equipment | 177,000,000 | 177,000,000 | ||
Useful life of property and equipment | 15 years | 15 years | 12 years | 15 years |
EchoStar X | ||||
Property and Equipment | ||||
Total property and equipment | 177,192,000 | 177,192,000 | ||
Useful life of property and equipment | 15 years | 15 years | 12 years | 15 years |
EchoStar XI | ||||
Property and Equipment | ||||
Total property and equipment | 200,198,000 | 200,198,000 | ||
Useful life of property and equipment | 15 years | 15 years | 12 years | 15 years |
EchoStar XIV | ||||
Property and Equipment | ||||
Total property and equipment | 316,541,000 | 316,541,000 | ||
Useful life of property and equipment | 15 years | 15 years | ||
EchoStar XV | ||||
Property and Equipment | ||||
Total property and equipment | 277,658,000 | 277,658,000 | 277,658,000 | |
Useful life of property and equipment | 15 years | 15 years | ||
Satellites acquired under capital lease agreements | ||||
Property and Equipment | ||||
Total property and equipment | 499,819,000 | 499,819,000 | 499,819,000 | |
Satellites acquired under capital lease agreements | Minimum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 10 years | 10 years | ||
Satellites acquired under capital lease agreements | Maximum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 15 years | 15 years | ||
Furniture, fixtures, equipment and other | ||||
Property and Equipment | ||||
Total property and equipment | 580,588,000 | 661,321,000 | 600,439,000 | |
Furniture, fixtures, equipment and other | Minimum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 1 year | 1 year | ||
Furniture, fixtures, equipment and other | Maximum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 10 years | 10 years | ||
Buildings and improvements | ||||
Property and Equipment | ||||
Total property and equipment | 74,398,000 | 83,258,000 | 80,439,000 | |
Buildings and improvements | Minimum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 1 year | 1 year | ||
Buildings and improvements | Maximum | ||||
Property and Equipment | ||||
Useful life of property and equipment | 40 years | 40 years | ||
Land | ||||
Property and Equipment | ||||
Total property and equipment | 5,207,000 | 5,504,000 | 5,504,000 | |
Construction in progress | ||||
Property and Equipment | ||||
Total property and equipment | $20,469,000 | $19,006,000 | $39,043,000 |
Property_and_Equipment_and_FCC3
Property and Equipment and FCC Authorizations (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | $246,140 | $229,749 | $719,488 | $663,410 | $905,987 | $898,682 | $904,955 |
Equipment leased to customers | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | 208,208 | 188,524 | 607,584 | 538,457 | 739,266 | 649,394 | 725,904 |
Satellites | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | 15,261 | 27,171 | 53,723 | 81,512 | 108,682 | 123,431 | 128,352 |
Buildings, furniture, fixtures, equipment and other | |||||||
Depreciation and amortization expense | |||||||
Depreciation and amortization expense | $22,671 | $14,054 | $58,181 | $43,441 | $58,039 | $58,081 | $50,699 |
Pay-TV Satellites | |||||||
Depreciation and amortization expense | |||||||
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator | 14 | ||||||
Owned Satellites | 1 | 1 | |||||
Number of satellites utilized under operating lease | 11 | ||||||
Number of satellites utilized under capital lease | 2 |
Property_and_Equipment_and_FCC4
Property and Equipment and FCC Authorizations (Details 3) (USD $) | 9 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Property and Equipment | ||
Number of geographical license areas | 214 | |
MVDDS Licenses | ||
Property and Equipment | ||
Number of geographical license areas | 82 | |
Additional license term | 4 years | |
Minimum | ||
Property and Equipment | ||
Estimate Useful life of assets | 1 year | |
Maximum | ||
Property and Equipment | ||
Estimate Useful life of assets | 40 years | |
Maximum | MVDDS Licenses | ||
Property and Equipment | ||
Amount of carrying value to be written-off on termination of license | 24 | |
EchoStar XV | ||
Property and Equipment | ||
Estimate Useful life of assets | 15 years | 15 years |
EchoStar XVIII | ||
Property and Equipment | ||
Estimate Useful life of assets | 15 years | 15 years |
LongTerm_Debt_Details1
Long-Term Debt (Details) (USD $) | 0 Months Ended | ||||||||
Oct. 01, 2014 | Feb. 20, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 16-May-12 | Apr. 05, 2013 | 5-May-11 | Dec. 27, 2012 | |
Long-term debt | |||||||||
Carrying Value | $13,164,893,000 | $13,409,313,000 | $11,615,427,000 | ||||||
Fair Value | 13,655,890,000 | 14,025,557,000 | 12,783,027,000 | ||||||
Unamortized discounts, net | -16,142,000 | -19,198,000 | |||||||
Capital lease obligations | 201,867,000 | 219,902,000 | 248,304,000 | ||||||
Total long-term debt and capital lease obligations (including current portion) | 13,350,618,000 | 13,610,017,000 | |||||||
Interest rate (as a percent) | 7.00% | ||||||||
6 5/8% Senior Notes due 2014 | |||||||||
Long-term debt | |||||||||
Carrying Value | 900,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||
Fair Value | 900,000,000 | 1,040,200,000 | 1,078,500,000 | ||||||
Interest rate (as a percent) | 6.63% | 6.63% | 6.63% | ||||||
Debt repurchased | 100,000,000 | ||||||||
Principal balance reclassified to current portion of long-term debt and capital lease obligations | 1,000,000,000 | ||||||||
6 5/8% Senior Notes due 2014 | Subsequent event | |||||||||
Long-term debt | |||||||||
Principal balance of debt redeemed | 900,000,000 | ||||||||
7 3/4% Senior Notes due 2015 | |||||||||
Long-term debt | |||||||||
Carrying Value | 650,001,000 | 750,000,000 | 750,000,000 | ||||||
Fair Value | 673,564,000 | 813,750,000 | 844,725,000 | ||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | ||||||
Debt repurchased | 100,000,000 | ||||||||
Principal balance reclassified to current portion of long-term debt and capital lease obligations | 650,000,000 | ||||||||
7 1/8% Senior Notes due 2016 | |||||||||
Long-term debt | |||||||||
Carrying Value | 1,500,000,000 | 1,500,000,000 | 1,500,000,000 | ||||||
Fair Value | 1,591,875,000 | 1,657,500,000 | 1,683,750,000 | ||||||
Interest rate (as a percent) | 7.13% | 7.13% | 7.13% | ||||||
4 5/8% Senior Notes due 2017 | |||||||||
Long-term debt | |||||||||
Carrying Value | 900,000,000 | 900,000,000 | 900,000,000 | ||||||
Fair Value | 918,099,000 | 946,962,000 | 940,500,000 | ||||||
Interest rate (as a percent) | 4.63% | 4.63% | 4.63% | 4.63% | |||||
4 1/4% Senior Notes due 2018 | |||||||||
Long-term debt | |||||||||
Carrying Value | 1,200,000,000 | 1,200,000,000 | |||||||
Fair Value | 1,207,200,000 | 1,221,792,000 | |||||||
Interest rate (as a percent) | 4.25% | 4.25% | 4.25% | 4.25% | |||||
7 7/8% Senior Notes due 2019 | |||||||||
Long-term debt | |||||||||
Carrying Value | 1,400,000,000 | 1,400,000,000 | 1,400,000,000 | ||||||
Fair Value | 1,589,000,000 | 1,603,000,000 | 1,669,500,000 | ||||||
Interest rate (as a percent) | 7.88% | 7.88% | 7.88% | ||||||
5 1/8% Senior Notes due 2020 | |||||||||
Long-term debt | |||||||||
Carrying Value | 1,100,000,000 | 1,100,000,000 | |||||||
Fair Value | 1,127,500,000 | 1,104,950,000 | |||||||
Interest rate (as a percent) | 5.13% | 5.13% | 5.13% | 5.13% | |||||
6 3/4% Senior Notes due 2021 | |||||||||
Long-term debt | |||||||||
Carrying Value | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | ||||||
Fair Value | 2,146,260,000 | 2,122,500,000 | 2,280,000,000 | ||||||
Interest rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% | |||||
5 7/8% Senior Notes due 2022 | |||||||||
Long-term debt | |||||||||
Carrying Value | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | ||||||
Fair Value | 2,040,000,000 | 1,997,500,000 | 2,150,000,000 | ||||||
Interest rate (as a percent) | 5.88% | 5.88% | 5.88% | 5.88% | |||||
5% Senior Notes due 2023 | |||||||||
Long-term debt | |||||||||
Carrying Value | 1,500,000,000 | 1,500,000,000 | 1,500,000,000 | ||||||
Fair Value | 1,447,500,000 | 1,458,090,000 | 1,548,750,000 | ||||||
Interest rate (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | |||||
Mortgages and other notes payable | |||||||||
Long-term debt | |||||||||
Carrying Value | 14,892,000 | 59,313,000 | 65,427,000 | ||||||
Fair Value | 14,892,000 | 59,313,000 | 65,427,000 | ||||||
Mortgages and other notes payable | Transaction Agreement | |||||||||
Long-term debt | |||||||||
Decrease in mortgages and other notes payable | $44,000,000 |
Commitments_and_Contingencies_6
Commitments and Contingencies (Details) (USD $) | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||
Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 28, 2014 | Oct. 29, 2013 | Dec. 31, 2008 | Dec. 20, 2013 | Dec. 17, 2013 | Oct. 30, 2014 | 31-May-14 | Mar. 09, 2012 | Feb. 27, 2014 | |
item | item | item | |||||||||||
Spectrum Investments | |||||||||||||
Accelerated period to meet Final Build-Out Requirement on failure to meet Interim Build-Out Requirement | 1 year | ||||||||||||
Dividend paid to DOC | $650,000,000 | $907,230,000 | $3,500,000,000 | ||||||||||
Dish Network | |||||||||||||
Spectrum Investments | |||||||||||||
Payment to acquire certain 700 MHz wireless licenses | 712,000,000 | ||||||||||||
700 MHz Interim Build-Out Requirement (as a percent) | 35.00% | 35.00% | |||||||||||
700 MHz Final Build-Out Requirement (as a percent) | 70.00% | 70.00% | |||||||||||
Modified 700 MHz Interim Build-Out Requirement (as a percent) | 40.00% | ||||||||||||
Modified 700 MHz Final Build-Out Requirement (as a percent) | 70.00% | ||||||||||||
Accelerated period to meet Modified 700 MHz Build-Out Requirement on failure to meet Modified 700 MHz Interim Build-Out Requirement | 1 year | 1 year | |||||||||||
Number of wireless spectrum licenses | 176 | ||||||||||||
Dividend paid to DOC | 650,000,000 | ||||||||||||
Dish Network | Subsequent event | |||||||||||||
Spectrum Investments | |||||||||||||
Dividend paid to DOC | 650,000,000 | ||||||||||||
Dish Network | Wireless Spectrum | |||||||||||||
Spectrum Investments | |||||||||||||
Accelerated period to meet Final Build-Out Requirement on failure to meet Interim Build-Out Requirement | 1 year | ||||||||||||
Extension term of AWS-4 Final Build-Out Requirement | 1 year | 1 year | |||||||||||
Number of wireless spectrum licenses | 176 | ||||||||||||
Aggregate bid price | 1,564,000,000 | ||||||||||||
Payment to meet H Block auction requirements | 328,000,000 | ||||||||||||
Remaining balance amount due of H Block spectrum licenses | 1,236,000,000 | ||||||||||||
H Block Interim Build-Out Requirement (as a percent) | 40.00% | 40.00% | |||||||||||
H Block Final Build-Out Requirement (as a percent) | 75.00% | 75.00% | |||||||||||
Accelerated period to meet Build-Out Requirement on failure | 2 years | 2 years | |||||||||||
Dish Network | Wireless Spectrum | Subsequent event | |||||||||||||
Spectrum Investments | |||||||||||||
Aggregate bid price | 1,564,000,000 | ||||||||||||
Number of other applicants qualified to participate in the AWS-3 auction | 69 | ||||||||||||
Aggregate reserve price for licenses in the 1695-1710 MHz band | 580,000,000 | ||||||||||||
Aggregate reserve price for paired licenses in the 1755-1780/2155-2180 MHz bands | 10,066,000,000 | ||||||||||||
Dish Network | Wireless Spectrum | UTAM, Inc. | |||||||||||||
Spectrum Investments | |||||||||||||
Payment for clearance costs associated with the lower H Block spectrum | 13,000,000 | 13,000,000 | |||||||||||
Dish Network | Wireless Spectrum | Sprint | |||||||||||||
Spectrum Investments | |||||||||||||
Payment for clearance costs associated with the upper H Block spectrum | 95,000,000 | 95,000,000 | |||||||||||
Dish Network | DBSD North America and TerreStar Transactions | Wireless Spectrum | |||||||||||||
Spectrum Investments | |||||||||||||
Purchase price | $2,860,000,000 | ||||||||||||
AWS-4 Interim Build-Out Requirement (as a percent) | 40.00% | 40.00% | |||||||||||
AWS-4 Final Build-Out Requirement (as a percent) | 70.00% | 70.00% |
Commitments_and_Contingencies_7
Commitments and Contingencies (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | |||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 09, 2013 | Dec. 31, 2007 | Oct. 11, 2012 | Apr. 30, 2009 | Mar. 31, 2013 | Dec. 31, 2008 | Jul. 31, 2009 | 31-May-12 | Mar. 31, 2012 | Dec. 23, 2013 | Jul. 25, 2014 | Jul. 08, 2014 | Jun. 21, 2011 | Dec. 31, 2010 | Mar. 15, 2010 | |
item | Patent | item | item | |||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
General and administrative expenses | $189,961,000 | $172,100,000 | $547,926,000 | $502,974,000 | $617,898,000 | $616,339,000 | $570,699,000 | |||||||||||||||
Garnet Digital | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of companies against whom similar complaints brought | 15 | |||||||||||||||||||||
LightSquared transaction shareholder derivative actions | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of shareholders who filed lawsuits | 5 | 5 | ||||||||||||||||||||
Katz Communications-Patent infringement | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of patents the suit alleges infringement of | 19 | |||||||||||||||||||||
Number of patents remain in the lawsuit | 4 | 4 | 4 | |||||||||||||||||||
Number of reexamination petitions pending before patent and trademark office | 2 | 2 | ||||||||||||||||||||
Satellite lease guarantees | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Guarantees for payments | 10,000,000 | 10,000,000 | 50,000,000 | |||||||||||||||||||
Guarantee term | P5M | P14M | ||||||||||||||||||||
Satellite transponder guarantees | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Guarantees for payments | 327,000,000 | 327,000,000 | 375,000,000 | |||||||||||||||||||
ESPN-Affiliation agreements | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 30,000,000 | 35,000,000 | ||||||||||||||||||||
Court ruling | 66,000,000 | 66,000,000 | ||||||||||||||||||||
Litigation accrual | 71,000,000 | 42,000,000 | ||||||||||||||||||||
Attorneys' fees | 24,000,000 | 5,000,000 | 71,000,000 | |||||||||||||||||||
General and administrative expenses | 5,000,000 | |||||||||||||||||||||
Payment of accrued interest | 12,000,000 | |||||||||||||||||||||
Technology Development Licensing | ||||||||||||||||||||||
Loss Contingency Terms | ||||||||||||||||||||||
Number of reexamination petitions pending before patent and trademark office | 2 | |||||||||||||||||||||
Hopper litigation | Maximum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of days to store HD primetime programs recordings | 8 days | |||||||||||||||||||||
Norman IP Holdings | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Minimum number of autonomous streamlined signal processors | 1 | 1 | ||||||||||||||||||||
Personalized Media Communications, Inc. | Minimum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 500,000,000 | |||||||||||||||||||||
Personalized Media Communications, Inc. | Maximum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 650,000,000 | |||||||||||||||||||||
Do Not Call Litigation | ||||||||||||||||||||||
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 | ||||||||||||||||||||
Do Not Call Litigation | DISH Network L.L.C. | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | 270,000,000 | |||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Business days allowed to terminate existing agreements | 3 days | 3 days | ||||||||||||||||||||
Number of claims asserted by Jacksonville PFPF | 5 | |||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | Mr. Ergen | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of claims asserted by Jacksonville PFPF | 3 | |||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | Director Defendants | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Number of claims asserted by Jacksonville PFPF | 1 | |||||||||||||||||||||
Lightsquared Harbinger Capital Partners LLC | Minimum | ||||||||||||||||||||||
Loss contingencies | ||||||||||||||||||||||
Claim amount | $500,000,000 |
Related_Party_Transactions_Det6
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 28, 2014 | Dec. 27, 2012 | Nov. 30, 2011 | Aug. 10, 2011 | Apr. 19, 2011 | Oct. 14, 2014 |
item | |||||||||||||
Related Party Transactions | |||||||||||||
Dividend paid to DOC | $650,000 | $907,230 | $3,500,000 | ||||||||||
Subscriber-related expenses | 2,072,891 | 1,938,142 | 6,131,068 | 5,718,781 | 7,677,111 | 7,246,104 | 6,841,760 | ||||||
Subscriber-related revenue | 3,553,828 | 3,408,510 | 10,582,989 | 10,131,098 | 13,559,511 | 13,038,611 | 12,959,025 | ||||||
Expenses associated with services | 3,000 | 3,000 | 8,000 | 7,000 | 10,000 | 11,000 | 2,000 | ||||||
Dish Network | |||||||||||||
Related Party Transactions | |||||||||||||
Dividend paid to DOC | 650,000 | 850,000 | 1,300,000 | 700,000 | 1,500,000 | ||||||||
Number of wireless spectrum licenses | 176 | ||||||||||||
Subscriber-related revenue | 5,000 | 5,000 | 14,000 | 11,000 | 15,000 | ||||||||
Dish Network | Subsequent event | |||||||||||||
Related Party Transactions | |||||||||||||
Dividend paid to DOC | 650,000 | 1,500,000 | |||||||||||
Blockbuster, Inc. | |||||||||||||
Related Party Transactions | |||||||||||||
Subscriber-related expenses | $3,000 | $11,000 | $11,000 | $21,000 | $4,000 |
Related_Party_Transactions_Det7
Related Party Transactions (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jan. 02, 2014 | 31-May-13 |
Related Party Transactions | |||||||||
Satellite and transmission expenses | $487,011 | $419,888 | $441,613 | ||||||
EchoStar | |||||||||
Related Party Transactions | |||||||||
Satellite and transmission expenses | $169,000 | $130,000 | $476,000 | $365,000 | |||||
EchoStar | Remanufactured Receiver Agreement | Minimum | |||||||||
Related Party Transactions | |||||||||
Minimum required notice period for termination of agreement by related party | 60 days | 60 days | |||||||
EchoStar | Professional Services Agreement | Dish Network | |||||||||
Related Party Transactions | |||||||||
Agreement term | 1 year | ||||||||
Automatic renewal period | 1 year | 1 year | |||||||
Minimum notice period for termination of agreement | 60 days | 60 days | |||||||
Minimum notice period for termination of a specific service | 30 days | 30 days | |||||||
EchoStar | EchoStar XV | |||||||||
Related Party Transactions | |||||||||
Notice period for termination of agreement | 30 days | ||||||||
EchoStar | El Paso Lease Agreement | Dish Network | |||||||||
Related Party Transactions | |||||||||
Number of consecutive three year renewal options | 4 | ||||||||
Term of renewal option | 3 years |
Related_Party_Transactions_Det8
Related Party Transactions (Details 3) (USD $) | 12 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Jan. 02, 2012 | 31-May-10 | Mar. 02, 2014 | 31-May-13 | Dec. 21, 2012 | Dec. 31, 2009 | Sep. 30, 2012 | Dec. 31, 2008 | 31-May-12 |
transponder | transponder | |||||||||||||||
Related Party Transactions | ||||||||||||||||
General and administrative expenses | $69,224 | $49,878 | $45,188 | |||||||||||||
EchoStar XVI | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Notice period to exercise option to extend agreement | 6 years | 6 years | ||||||||||||||
EchoStar | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
General and administrative expenses | 74,000 | $25,000 | $17,000 | $50,000 | ||||||||||||
EchoStar | Prior Broadcast Agreement | Minimum | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Required notice period for termination by the reporting entity | 60 days | |||||||||||||||
EchoStar | Certain Sports Related Programming Broadcast Agreement | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Agreement term | 10 years | |||||||||||||||
EchoStar | EchoStar VIII | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Notice period for termination of agreement | 30 days | 30 days | ||||||||||||||
EchoStar | EchoStar XVI | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Agreement term from commencement of service date | 4 years | 10 years | ||||||||||||||
Notice period to exercise option to extend agreement | 6 years | 6 years | ||||||||||||||
Additional term of renewal option | 5 years | 5 years | ||||||||||||||
EchoStar | DISH Nimiq 5 Agreement | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Agreement term | 10 years | |||||||||||||||
Agreement term with third party | 15 years | |||||||||||||||
Number of DBS transponders available to receive services | 32 | |||||||||||||||
Number of DBS transponders currently used | 32 | |||||||||||||||
EchoStar | QuetzSat-1 Lease Agreement | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Agreement term with third party | 10 years | |||||||||||||||
Number of DBS transponders currently used | 32 | |||||||||||||||
Number of DBS transponders expected to receive services | 24 | |||||||||||||||
Number of transponders subleased | 5 | |||||||||||||||
EchoStar | 103 degree orbital location member | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Agreement term | 10 years | |||||||||||||||
Agreement term from commencement of service date | 10 years | |||||||||||||||
EchoStar | TT&C Agreement | ||||||||||||||||
Related Party Transactions | ||||||||||||||||
Required notice period for termination by the reporting entity | 60 days | 60 days |
Related_Party_Transactions_Det9
Related Party Transactions (Details 4) (EchoStar) | 9 Months Ended | 12 Months Ended | 0 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | Jan. 02, 2010 | Feb. 23, 2010 | |
Product Support Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 60 days | 60 days | ||
Inverness Lease Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 6 months | 6 months | ||
Santa Fe Lease Agreement | ||||
Related Party Transactions | ||||
Notice period to exercise option to extend agreement | 1 year | 1 year | ||
DISH Online.com Services Agreement | ||||
Related Party Transactions | ||||
Term of renewal option exercised | 1 year | 1 year | ||
Agreement term | 2 years | |||
DISH Online.com Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | 120 days | ||
DISH Remote Access Services Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Agreement term | 5 years | |||
Automatic renewal period | 1 year | 1 year | ||
DISH Remote Access Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Sling Service Services Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Agreement term | 5 years | |||
Automatic renewal period | 1 year | 1 year | ||
Sling Service Services Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination by the reporting entity | 120 days | |||
Application Development Agreement | ||||
Related Party Transactions | ||||
Minimum notice period for termination of agreement | 90 days | 90 days | ||
Automatic renewal period | 1 year | 1 year | ||
XiP Encryption Agreement | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 180 days | |||
Notice period to exercise option to extend agreement | 1 year | 1 year | ||
Minimum notice period for termination of agreement | 30 days | 30 days | ||
Notice period required to extend the agreement term | 180 days | 180 days | ||
XiP Encryption Agreement | Minimum | ||||
Related Party Transactions | ||||
Required notice period for termination of agreement | 180 days |
Recovered_Sheet4
Related Party Transactions (Details 5) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Aug. 01, 2014 | Jul. 03, 2012 | Apr. 29, 2011 | Jan. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2010 | |
item | |||||||||||||
Related Party Transactions | |||||||||||||
Cost of sales - equipment, services and other | $24,240,000 | $24,073,000 | $80,451,000 | $64,789,000 | $85,627,000 | $96,240,000 | $79,563,000 | ||||||
DISH Digital Holding LLC | |||||||||||||
Related Party Transactions | |||||||||||||
Ownership percentage | 90.00% | 67.00% | |||||||||||
Related party ownership interest in subsidiary (as a percent) | 10.00% | 33.00% | |||||||||||
Voting interest (as a percent) | 100.00% | ||||||||||||
Capital distribution, net of deferred taxes | 6,000,000 | ||||||||||||
Deemed distribution, net of deferred taxes | 14,000,000 | ||||||||||||
Exchange Agreement | DISH Digital Holding LLC | |||||||||||||
Related Party Transactions | |||||||||||||
Non-voting interest (as a percent) | 10.00% | ||||||||||||
EchoStar | TiVo v. Dish Network and EchoStar Corporation | |||||||||||||
Related Party Transactions | |||||||||||||
Settlement amount | 500,000,000 | ||||||||||||
Initial settlement amount paid | 300,000,000 | ||||||||||||
Aggregate of six annual installment amounts between 2012 and 2017, net of contribution from related party | 200,000,000 | ||||||||||||
Litigation settlement number of annual installments | 6 | ||||||||||||
Contribution from related party | 10,000,000 | ||||||||||||
Percentage of litigation settlement amount to be made by related party annually | 95.00% | ||||||||||||
EchoStar | Receiver Agreement | |||||||||||||
Related Party Transactions | |||||||||||||
Notice period to exercise option to extend agreement | 1 year | 1 year | |||||||||||
Notice period required to extend the agreement term | 180 days | ||||||||||||
Minimum notice period for termination of agreement | 60 days | ||||||||||||
Purchased set-top boxes and other equipment from EchoStar | 293,000,000 | 341,000,000 | 883,000,000 | 947,000,000 | 1,242,000,000 | 1,005,000,000 | 1,158,000,000 | ||||||
EchoStar | Tax Sharing Agreement | Dish Network | |||||||||||||
Related Party Transactions | |||||||||||||
Net amount of the allocated tax attributes payable | 83,000,000 | 83,000,000 | |||||||||||
EchoStar | RUS Implementation Agreement | |||||||||||||
Related Party Transactions | |||||||||||||
Maximum grants receivable | 14,000,000 | ||||||||||||
Cost of sales - equipment, services and other | 3,000,000 | 3,000,000 | 7,000,000 | ||||||||||
EchoStar | Patent Cross-License Agreements | Dish Network | Maximum | |||||||||||||
Related Party Transactions | |||||||||||||
Payments to third party by related party | 10,000,000 | ||||||||||||
Payments to third party by related party under extension option | $3,000,000 | $3,000,000 | $3,000,000 |
Recovered_Sheet5
Related Party Transactions (Details 6) (USD $) | 0 Months Ended | 9 Months Ended |
Feb. 20, 2014 | Sep. 30, 2014 | |
Transaction Agreement | DISH Investors | ||
Related Party Transactions | ||
Percentage of economic interest in the Hughes Retail Group | 80.00% | |
Transaction Agreement | EchoStar and HSSC | ||
Related Party Transactions | ||
Obligations and cash interest payments transferred | 59,000,000 | |
Cash in exchange for shares of series of preferred tracking stock issued | 11,000,000 | |
Capital transaction | 356,000,000 | |
Capital transaction recorded in additional paid-in capital | 51,000,000 | |
Transaction Agreement | EchoStar | ||
Related Party Transactions | ||
Obligations and cash interest payments transferred | 44,540,000 | |
Historical cost of tracking stock | 316,204,000 | |
Capital transaction recorded in additional paid-in capital | 51,466,000 | |
Transaction Agreement | EchoStar | DISH Investors | ||
Related Party Transactions | ||
Historical cost of tracking stock | 229,000,000 | |
Transaction Agreement | HSSC | DISH Investors | ||
Related Party Transactions | ||
Historical cost of tracking stock | 87,000,000 | |
Investor Rights Agreement | EchoStar and HSSC | DISH Investors | ||
Related Party Transactions | ||
Tracking stock prohibited transfer period | 1 year |
Recovered_Sheet6
Related Party Transactions (Details 7) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Related Party Transactions | |||||||
Purchases from NagraStar | $3,000,000 | $3,000,000 | $8,000,000 | $7,000,000 | $10,000,000 | $11,000,000 | $2,000,000 |
NagraStar | |||||||
Related Party Transactions | |||||||
Purchases from NagraStar | 20,914,000 | 22,563,000 | 60,964,000 | 69,129,000 | 91,712,000 | 72,549,000 | 77,705,000 |
Amounts payable to NagraStar | 13,924,000 | 13,924,000 | 20,954,000 | ||||
Commitments to NagraStar | $7,749,000 | $7,749,000 | $2,463,000 |