10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012.

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                               TO                                .

Commission File Number:  0-26176

DISH Network Corporation

(Exact name of registrant as specified in its charter)

Nevada	88-0336997
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9601 South Meridian Boulevard
Englewood, Colorado	80112
(Address of principal executive offices)	(Zip code)

(303) 723-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

As of April 30, 2012, the registrant’s outstanding common stock consisted of 211,376,861 shares of Class A common stock and 238,435,208 shares of Class B common stock.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Disclosure Regarding Forward-Looking Statements	i
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets — March 31, 2012 and December 31, 2011 (Unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For the Three Months Ended March 31, 2012 and 2011 (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2012 and 2011 (Unaudited)	3
	Notes to Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	58
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	None
Item 4.	Mine Safety Disclosures	None
Item 5.	Other Information	None
Item 6.	Exhibits	65
	Signatures	66

PART I — FINANCIAL INFORMATION

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We make “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 throughout this report.  Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we “believe,” “intend,” “plan,” “estimate,” “expect” or “anticipate” will occur, and other similar statements), you must remember that our expectations may not be achieved, even though we believe they are reasonable.  We do not guarantee that any future transactions or events described herein will happen as described or that they will happen at all.  You should read this report completely and with the understanding that actual future results may be materially different from what we expect.  Whether actual events or results will conform with our expectations and predictions is subject to a number of risks and uncertainties.  The risks and uncertainties include, but are not limited to, the following:

Competition and Economic Risks Affecting our Business

·We face intense and increasing competition from satellite television providers, cable companies and telecommunications companies, especially as the pay-TV industry matures, which may require us to increase subscriber acquisition and retention spending or accept lower subscriber activations and higher subscriber churn.

·Competition from digital media companies that provide or facilitate the delivery of video content via the Internet may reduce our gross new subscriber activations and may cause our subscribers to purchase less services from us or to cancel our services altogether, resulting in less revenue to us.

·Economic weakness, including higher unemployment and reduced consumer spending, may adversely affect our ability to grow or maintain our business.

·Our competitors may be able to leverage their relationships with programmers to reduce their programming costs and offer exclusive content that will place them at a competitive advantage to us.

·We face increasing competition from other distributors of foreign language programming that may limit our ability to maintain our foreign language programming subscriber base.

Operational and Service Delivery Risks Affecting our Business

·If we do not continue improving our operational performance and customer satisfaction, our gross new subscriber activations may decrease and our subscriber churn may increase.

·If our gross new subscriber activations decrease, or if subscriber churn, subscriber acquisition costs or retention costs increase, our financial performance will be adversely affected.

·Programming expenses are increasing and could adversely affect our future financial condition and results of operations.

·We depend on others to provide the programming that we offer to our subscribers and, if we lose access to this programming, our gross new subscriber activations may decline and subscriber churn may increase.

·We may be required to make substantial additional investments to maintain competitive programming offerings.

·Any failure or inadequacy of our information technology infrastructure could harm our business.

·We rely on EchoStar Corporation and its subsidiaries, or EchoStar, to design, develop and manufacture all of our new set-top boxes and certain related components, and to provide transponder capacity, digital broadcast operations and other services to us.  Our business would be adversely affected if EchoStar ceases to provide these products and services to us and we are unable to obtain suitable replacement products and services from third parties.

·We operate in an extremely competitive environment and our success may depend in part on our timely introduction and implementation of, and effective investment in, new competitive products and services, the failure of which could negatively impact our business.

i

·Technology in our industry changes rapidly and our inability to offer new subscribers and upgrade existing subscribers with more advanced equipment could cause our products and services to become obsolete.

·We rely on a single vendor or a limited number of vendors to provide certain key products or services to us such as information technology support, billing systems, and security access devices, and the inability of these key vendors to meet our needs could have a material adverse effect on our business.

·Our sole supplier of new set-top boxes, EchoStar, relies on a few suppliers and in some cases a single supplier, for many components of our new set-top boxes, and any reduction or interruption in supplies or significant increase in the price of supplies could have a negative impact on our business.

·Our programming signals are subject to theft, and we are vulnerable to other forms of fraud that could require us to make significant expenditures to remedy.

·We depend on third parties to solicit orders for DISH services that represent a significant percentage of our total gross new subscriber activations.

·Our local programming strategy faces uncertainty because we may not be able to obtain necessary retransmission consent agreements at acceptable rates from local network stations.

·We have limited owned and leased satellite capacity and failures or reduced capacity could adversely affect our business.

·Our owned and leased satellites are subject to construction, launch, operational and environmental risks that could limit our ability to utilize these satellites.

·We generally do not have commercial insurance coverage on the satellites we use and could face significant impairment charges if one of our satellites fails.

·We may have potential conflicts of interest with EchoStar due to our common ownership and management.

·We rely on key personnel and the loss of their services may negatively affect our businesses.

Acquisition and Capital Structure Risks Affecting our Business

·We made a substantial investment to acquire certain wireless spectrum licenses and other assets from DBSD North America and TerreStar.  We will be required to make significant additional investments or partner with others to commercialize these assets.

·We made a substantial investment to acquire certain 700 MHz wireless spectrum licenses and will be required to make significant additional investments or partner with others to commercialize these licenses.

·Our Blockbuster business, and retail stores in particular, face risks, including, among other things, operational challenges and increasing competition from video rental kiosk, streaming and mail order businesses that may negatively impact the business, financial condition or results of operations of Blockbuster.

·We may pursue acquisitions and other strategic transactions to complement or expand our business that may not be successful and we may lose up to the entire value of our investment in these acquisitions and transactions.

·We may need additional capital, which may not be available on acceptable terms or at all, to continue investing in our business and to finance acquisitions and other strategic transactions.

·A portion of our investment portfolio is invested in securities that have experienced limited or no liquidity and may not be immediately accessible to support our financing needs.

·We have substantial debt outstanding and may incur additional debt.

·It may be difficult for a third party to acquire us, even if doing so may be beneficial to our shareholders, because of our ownership structure.

·We are controlled by one principal stockholder who is also our Chairman.

ii

Legal and Regulatory Risks Affecting our Business

·If Voom prevails in its breach of contract suit against us, we could be required to pay substantial damages, which would have a material adverse affect on our financial position and results of operations.

·Our business depends on certain intellectual property rights and on not infringing the intellectual property rights of others.

·We are party to various lawsuits which, if adversely decided, could have a significant adverse impact on our business, particularly lawsuits regarding intellectual property.

·Increased distribution of video content via the Internet could expose us to regulatory risk.

·We depend on the Cable Act for access to programming from cable-affiliate programmers at non-discriminatory rates.

·The injunction against our retransmission of distant networks, which is currently waived, may be reinstated.

·We are subject to significant regulatory oversight, and changes in applicable regulatory requirements, including any adoption or modification of laws or regulations relating to the Internet, could adversely affect our business.

·Our business depends on Federal Communications Commission, or FCC, licenses that can expire or be revoked or modified and applications for FCC licenses that may not be granted.

·We are subject to digital high-definition (“HD”) “carry-one, carry-all” requirements that cause capacity constraints.

·There can be no assurance that there will not be deficiencies leading to material weaknesses in our internal control over financial reporting.

·We may face other risks described from time to time in periodic and current reports we file with the Securities and Exchange Commission, or SEC.

All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear.  Investors should consider the risks described herein and should not place undue reliance on any forward-looking statements.  We assume no responsibility for updating forward-looking information contained or incorporated by reference herein or in other reports we file with the SEC.

In this report, the words “DISH Network,” the “Company,” “we,” “our” and “us” refer to DISH Network Corporation and its subsidiaries, unless the context otherwise requires.  “EchoStar” refers to EchoStar Corporation and its subsidiaries, unless the context otherwise requires.

iii

Item 1.  FINANCIAL STATEMENTS

DISH NETWORK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)

	As of
	March 31,			December 31,
	2012			2011
Assets
Current Assets:
Cash and cash equivalents	$	1,358,668		$	609,108
Marketable investment securities (Note 5)	1,334,546			1,431,745
Trade accounts receivable - other, net of allowance for doubtful accounts of $11,679 and $12,350, respectively	757,565			778,443
Trade accounts receivable - EchoStar, net of allowance for doubtful accounts of zero	19,002			16,374
Inventory	670,008			707,151
Deferred tax assets	73,014			73,014
Other current assets	136,674			131,988
Total current assets	4,349,477			3,747,823
Noncurrent Assets:
Restricted cash and marketable investment securities (Note 5)	133,872			132,435
Property and equipment, net of accumulated depreciation of $2,919,747 and $2,862,626, respectively (Note 7 and 8)	4,313,678			3,169,891
FCC authorizations (Note 7 and 8)	3,340,441			1,391,441
Marketable and other investment securities (Note 5)	121,349			112,132
Investment in DBSD North America (Note 8)	—			1,297,614
TerreStar Transaction (Note 8)	—			1,345,000
Other noncurrent assets, net	150,695			273,895
Total noncurrent assets	8,060,035			7,722,408
Total assets	$	12,409,512		$	11,470,231
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities:
Trade accounts payable - other	$	239,358		$	225,556
Trade accounts payable - EchoStar	284,407			229,852
Deferred revenue and other	832,676			832,390
Accrued programming	1,112,696			1,067,625
Litigation accrual (Note 11)	70,999			65,580
Other accrued expenses	995,003			763,863
Current portion of long-term debt and capital lease obligations (Note 9)	35,980			35,645
Total current liabilities	3,571,119			3,220,511
Long-Term Obligations, Net of Current Portion:
Long-term debt and capital lease obligations, net of current portion (Note 9)	7,474,426			7,458,134
Deferred tax liabilities	1,188,206			974,414
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities	231,344			236,175
Total long-term obligations, net of current portion	8,893,976			8,668,723
Total liabilities	12,465,095			11,889,234
Commitments and Contingencies (Note 11)
Stockholders’ Equity (Deficit):
Class A common stock, $.01 par value, 1,600,000,000 shares authorized, 265,123,445 and 264,732,074 shares issued, 209,005,185 and 208,613,814 shares outstanding, respectively	2,651			2,647
Class B common stock, $.01 par value, 800,000,000 shares authorized, 238,435,208 shares issued and outstanding	2,384			2,384
Class C common stock, $.01 par value, 800,000,000 shares authorized, none issued and outstanding	—			—
Additional paid-in capital	2,303,908			2,274,005
Accumulated other comprehensive income (loss)	55,430			82,043
Accumulated earnings (deficit)	(851,680		)	(1,211,990		)
Treasury stock, at cost	(1,569,459		)	(1,569,459		)
Total DISH Network stockholders’ equity (deficit)	(56,766		)	(420,370		)
Noncontrolling interest	1,183			1,367
Total stockholders’ equity (deficit)	(55,583		)	(419,003		)
Total liabilities and stockholders’ equity (deficit)	$	12,409,512		$	11,470,231

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

DISH NETWORK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

	For the Three Months
	Ended March 31,
	2012			2011
Revenue:
Subscriber-related revenue	$	3,224,465		$	3,199,099
Equipment and merchandise sales, rental and other revenue	350,737			16,001
Equipment sales, services and other revenue - EchoStar	6,667			9,031
Total revenue	3,581,869			3,224,131
Costs and Expenses (exclusive of depreciation shown separately below - Note 7):
Subscriber-related expenses	1,762,753			1,693,695
Satellite and transmission expenses:
EchoStar	109,854			108,913
Other	11,679			10,200
Cost of sales - equipment, merchandise, services, rental and other	142,262			22,267
Subscriber acquisition costs:
Cost of sales - subscriber promotion subsidies - EchoStar	82,274			54,426
Other subscriber promotion subsidies	226,389			226,841
Subscriber acquisition advertising	89,374			73,632
Total subscriber acquisition costs	398,037			354,899
General and administrative expenses - EchoStar	12,082			11,940
General and administrative expenses	364,093			149,844
Litigation expense (Note 11)	—			(340,677		)
Depreciation and amortization (Note 7)	208,698			229,697
Total costs and expenses	3,009,458			2,240,778
Operating income (loss)	572,411			983,353
Other Income (Expense):
Interest income	7,089			6,286
Interest expense, net of amounts capitalized	(138,013		)	(120,179		)
Other, net	110,282			11,633
Total other income (expense)	(20,642		)	(102,260		)
Income (loss) before income taxes	551,769			881,093
Income tax (provision) benefit, net	(191,643		)	(331,767		)
Net income (loss)	360,126			549,326
Less: Net income (loss) attributable to noncontrolling interest	(184		)	(68		)
Net income (loss) attributable to DISH Network	$	360,310		$	549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic	447,289			443,360
Diluted	449,880			448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.81		$	1.24
Diluted net income (loss) per share attributable to DISH Network	$	0.80		$	1.22
Comprehensive Income (Loss):
Net income (loss)	$	360,126		$	549,326
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	3,253			—
Unrealized holding gains (losses) on available-for-sale securities	51,021			67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss)	(80,887		)	(6,296		)
Deferred income tax (expense) benefit	—			—
Total other comprehensive income (loss), net of tax	(26,613		)	61,504
Comprehensive income (loss)	333,513			610,830
Less: Comprehensive income (loss) attributable to noncontrolling interest	(184		)	(68		)
Comprehensive income (loss) attributable to DISH Network	$	333,697		$	610,898

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

DISH NETWORK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three Months
	Ended March 31,
	2012			2011
Cash Flows From Operating Activities:
Net income (loss)	$	360,126		$	549,326
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	208,698			229,697
Realized and unrealized losses (gains) on investments	(110,062		)	(11,618		)
Non-cash, stock-based compensation	23,182			15,177
Deferred tax expense (benefit)	3,597			221,798
Other, net	6,273			3,826
Change in noncurrent assets	15,567			(4,175		)
Change in long-term deferred revenue, distribution and carriage payments and other long-term liabilities	(6,014		)	(8,738		)
Changes in current assets and current liabilities, net	357,183			(150,998		)
Net cash flows from operating activities	858,550			844,295
Cash Flows From Investing Activities:
Purchases of marketable investment securities	(289,168		)	(1,214,236		)
Sales and maturities of marketable investment securities	428,300			1,284,087
Purchases of property and equipment	(168,928		)	(232,952		)
Change in restricted cash and marketable investment securities	(1,581		)	(42,000		)
DBSD North America Transaction, less of cash acquired of $5,230 (Note 8)	(40,015		)	(85,125		)
TerreStar Transaction (Note 8)	(36,942		)	—
Purchase of other strategic investments	—			(37,675		)
Proceeds from sale of strategic investments	—			11,327
Other	(903		)	(291		)
Net cash flows from investing activities	(109,237		)	(316,865		)
Cash Flows From Financing Activities:
Repayment of long-term debt and capital lease obligations	(8,458		)	(8,498		)
Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan	5,751			3,596
Other	1,045			322
Net cash flows from financing activities	(1,662		)	(4,580		)
Effect of exchange rates on cash and cash equivalents	1,909			—
Net increase (decrease) in cash and cash equivalents	749,560			522,850
Cash and cash equivalents, beginning of period	609,108			640,672
Cash and cash equivalents, end of period	$	1,358,668		$	1,163,522
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (including capitalized interest)	$	114,226		$	114,752
Cash received for interest	$	10,108		$	7,363
Cash paid for income taxes	$	13,788		$	7,440

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Organization and Business Activities

Principal Business

DISH Network Corporation is a holding company.  Its subsidiaries (which together with DISH Network Corporation are referred to as “DISH Network,” the “Company,” “we,” “us” and/or “our”) operate three primary segments.

·DISH.  The DISH® branded direct broadcast satellite (“DBS”) pay-TV service had 14.071 million subscribers in the United States as of March 31, 2012.  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 owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a third-party leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations.

·Blockbuster.  On April 26, 2011, we completed the acquisition of most of the assets of Blockbuster, Inc. (the “Blockbuster Acquisition”).  The financial results of our Blockbuster operations are included in our financial results beginning April 26, 2011.  Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand® service.

·Wireless Spectrum.  In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  On March 9, 2012, we closed the acquisitions of 100% of the equity of reorganized DBSD North America, Inc. (“DBSD North America”) and substantially all of the assets of TerreStar Networks, Inc. (“TerreStar”), pursuant to which we acquired, among other things, 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for DBSD North America (the “DBSD Transaction”), $1.382 billion for TerreStar (the “TerreStar Transaction”), and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.  See Note 8 for further information.

We currently generate an immaterial amount of revenue and incur operating expenses associated with certain satellite operations and regulatory compliance from our wireless spectrum assets.  As we review our options for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have to make significant investments related to, among other things, research and development, wireless testing and construction of a wireless network.

On March 21, 2012, the FCC released a notice of proposed rule making (“NPRM”) that could result in the elimination of the Mobile-Satellite Service (“MSS”) “integrated service” and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  We cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.  See Note 11 for further information.

2.Summary of Significant Accounting Policies

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

4

DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

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, 2011 (“2011 10-K”).  Certain prior period amounts have been reclassified to conform to the current period presentation.

Principles of Consolidation

We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary.  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.

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, the useful lives and residual value surrounding our rental library inventory, estimated accruals related to revenue-sharing titles that are subject to performance guarantees, 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, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, asset retirement obligations, 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 Condensed Consolidated Financial Statements.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

Fair Value Measurements

We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.  Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs.  We apply the following hierarchy in determining fair value:

·Level 1, defined as observable inputs being quoted prices in active markets for identical assets;

·Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; 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.

5

DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

As of March 31, 2012 and December 31, 2011, the carrying value for cash and cash equivalents, marketable investment securities, 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 5.

Fair values for our publicly traded debt securities are based on quoted market prices.  The fair values of our private debt is 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 notes.  See Note 9 for the fair value of our long-term debt.

3.Basic and Diluted Net Income (Loss) Per Share

We present both basic earnings per share (“EPS”) and diluted EPS.  Basic EPS excludes potential dilution and is computed by dividing “Net income (loss) attributable to DISH Network” by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if stock awards were exercised.  The potential dilution from stock awards was computed using the treasury stock method based on the average market value of our Class A common stock.  The following table presents earnings per share amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation.

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands, except per share amounts)
Net income (loss) attributable to DISH Network	$	360,310	$	549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic	447,289		443,360
Dilutive impact of stock awards outstanding	2,591		5,490
Diluted	449,880		448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.81	$	1.24
Diluted net income (loss) per share attributable to DISH Network	$	0.80	$	1.22

As of March 31, 2012 and 2011, there were stock awards to purchase 3.4 million and 7.1 million shares, respectively, of Class A common stock outstanding, not included in the weighted-average common shares outstanding above, as their effect is antidilutive.

Vesting of options and rights to acquire shares of our Class A common stock granted pursuant to our performance-based stock incentive plans (“Restricted Performance Units”) is contingent upon meeting certain goals, some of which are not yet probable of being achieved.  As a consequence, the following are also not included in the diluted EPS calculation.

	As of March 31,
	2012	2011
	(In thousands)
Performance-based options	9,619	10,859
Restricted Performance Units and other	1,281	1,101
Total	10,900	11,960

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

4.Other Comprehensive Income Related Tax Effects

The following table presents the tax effects on each component of other comprehensive income.  A full valuation allowance has been established against any deferred tax assets that are capital in nature.

	For the Three Months
	Ended March 31,
	2012								2011
	Before			Tax		Net			Before			Tax		Net
	Tax			(Expense)		of Tax			Tax			(Expense)		of Tax
	Amount			Benefit		Amount			Amount			Benefit		Amount
	(In thousands)
Foreign currency translation adjustments	$	3,253		$	—	$	3,253		$	—		$	—	$	—
Unrealized holding gains (losses) on available-for-sale securities	51,021			—		51,021			67,800			—		67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss)	(80,887		)	—		(80,887		)	(6,296		)	—		(6,296		)
Other comprehensive income (loss)	$	(26,613	)	$	—	$	(26,613	)	$	61,504		$	—	$	61,504

5.Marketable Investment Securities, Restricted Cash  and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents and other investment securities consist of the following:

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Marketable investment securities:
Current marketable investment securities - VRDNs	$	185,005	$	160,555
Current marketable investment securities - strategic	452,082		360,052
Current marketable investment securities - other	697,459		911,138
Total current marketable investment securities	1,334,546		1,431,745
Restricted marketable investment securities (1)	76,700		65,843
Noncurrent marketable investment securities - ARS and MBS (2)	118,470		109,327
Total marketable investment securities	1,529,716		1,606,915
Restricted cash and cash equivalents (1)	57,172		66,592
Other investment securities:
Other investment securities - cost method (2)	2,879		2,805
Investment in DBSD North America (Note 8)	—		1,297,614
Total other investment securities	2,879		1,300,419
Total marketable investment securities, restricted cash and cash equivalents and other investment securities	$	1,589,767	$	2,973,926

(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)Noncurrent marketable investment securities — auction rate securities (“ARS”), mortgage backed securities (“MBS”) and other investment securities are included in “Marketable and other investment securities” on our Condensed Consolidated Balance Sheets.

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(Unaudited)

Marketable Investment Securities

Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale, except as specified below.

Current Marketable Investment Securities - VRDNs

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 of investments in many municipalities, which are backed by financial institutions or other highly rated companies 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.

Current Marketable Investment Securities - Strategic

Our current strategic marketable investment securities include strategic and financial investments in public companies that are highly speculative and have experienced and continue to experience volatility.  As of March 31, 2012, a significant portion of our strategic investment portfolio consisted of securities of several issuers, and a significant portion of the value of that portfolio depends on the value of those issuers.

Current Marketable Investment Securities - Other

Our current marketable investment securities portfolio includes investments in various debt instruments including corporate and government bonds.

Restricted Cash and Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, 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 (See Note 11).

Noncurrent Marketable Investment Securities — ARS and MBS

We have investments in ARS and MBS which are either classified as available-for-sale securities or are accounted for under the fair value method.  Previous events in the credit markets reduced or eliminated current liquidity for certain of our ARS and MBS investments.  As a result, we classify these investments as noncurrent assets, as we intend to hold these investments until they recover or mature.

The valuation of our ARS and MBS investments portfolio is subject to uncertainties that are difficult to estimate.  Due to the lack of observable market quotes for identical assets, we utilize analyses that rely on Level 2 and/or Level 3 inputs, as defined in “Fair Value Measurements.”  These inputs include, among other things, observed prices on similar assets as well as our assumptions and estimates related to the counterparty credit quality, default risk underlying the security and overall capital market liquidity.  These securities were also compared, when possible, to other observable market data for financial instruments with similar characteristics.

Fair Value Election.  As of March 31, 2012, our ARS and MBS noncurrent marketable investment securities portfolio of $118 million includes $69 million of securities accounted for under the fair value method.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

Other Investment Securities

We have strategic investments in certain debt and equity securities that are included in noncurrent “Marketable and other investment securities” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or fair value methods of accounting.

Our ability to realize value from our strategic investments in companies that are not publicly traded depends on the success of those companies’ businesses and their ability to obtain sufficient capital to execute their business plans.  Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.

Unrealized Gains (Losses) on Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, we had accumulated net unrealized gains of $61 million and $91 million, both net of related tax effect, respectively, as a part of “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit).”  A full valuation allowance has been established against any deferred taxes that are capital in nature.  The components of our available-for-sale investments are summarized in the table below.

	As of March 31, 2012										As of December 31, 2011
	Marketable										Marketable
	Investment		Unrealized								Investment		Unrealized
	Securities		Gains		Losses			Net			Securities		Gains		Losses			Net
	(In thousands)
Debt securities:
VRDNs	$	185,005	$	—	$	—		$	—		$	160,555	$	—	$	—		$	—
ARS and MBS	49,940		1,056		(10,630		)	(9,574		)	46,657		848		(14,486		)	(13,638		)
ARS fair value election	68,530		—		—			—			62,670		—		—			—
Other (including restricted)	858,719		10,066		(1,250		)	8,816			994,021		5,525		(6,565		)	(1,040		)
Equity securities:
Other	367,522		113,886		(51,813		)	62,073			343,012		89,044		(61,934		)	27,110
Subtotal	1,529,716		125,008		(63,693		)	61,315			1,606,915		95,417		(82,985		)	12,432
Investment in DBSD North America (1)	—		—		—			—			839,009		78,749		—			78,749
Total	$	1,529,716	$	125,008	$	(63,693	)	$	61,315		$	2,445,924	$	174,166	$	(82,985	)	$	91,181

(1)Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

As of March 31, 2012, restricted and non-restricted marketable investment securities include debt securities of $881 million with contractual maturities of one year or less and $281 million with contractual maturities greater than one year.  Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

Marketable Investment Securities in a Loss Position

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 March 31, 2012, the unrealized losses on our investments in equity securities represent investments in several companies in the telecommunications and technology industries.  We are not aware of any specific factors which indicate the unrealized losses in these investments are due to anything other than temporary market fluctuations.  As of March 31, 2012 and December 31, 2011, the unrealized losses on our investments in debt securities primarily represent investments in auction rate and mortgage backed securities.  We 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
	March 31, 2012					December 31, 2011
	Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	439,812	$	(796	)	$	694,199	$	(4,793	)
12 months or more	61,872		(11,084		)	98,240		(16,258		)
Equity Securities:
Less than 12 months	218,885		(51,813		)	247,683		(61,934		)
12 months or more	—		—					—
Total	$	720,569	$	(63,693	)	$	1,040,122	$	(82,985	)

Our investments measured at fair value on a recurring basis were as follows:

	As of
	March 31, 2012								December 31, 2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	1,146,565	$	46,748	$	1,099,817	$	—	$	397,777	$	46,371	$	351,406	$	—
Debt securities:
VRDNs	$	185,005	$	—	$	185,005	$	—	$	160,555	$	—	$	160,555	$	—
ARS and MBS	118,470		—		3,409		115,061		109,327		—		3,412		105,915
Other (including restricted)	858,719		—		858,719		—		994,021		—		994,021		—
Equity securities	367,522		367,522		—		—		343,012		343,012		—		—
Subtotal	1,529,716		367,522		1,047,133		115,061		1,606,915		343,012		1,157,988		105,915
Investment in DBSD North America (1)	—		—		—		—		839,009		—		—		839,009
Total	$	1,529,716	$	367,522	$	1,047,133	$	115,061	$	2,445,924	$	343,012	$	1,157,988	$	944,924

(1)   Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

As of March 31, 2012, our Level 3 investments consist predominately of ARS and MBS.  On a quarterly basis we evaluate the reasonableness of significant unobservable inputs used in those measurements.  The valuation models used for some of our ARS investments require an evaluation of the underlying instruments held by the trusts that issue these securities.  For our other ARS and MBS securities, our evaluation uses, among other

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

things, the terms of the underlying instruments, the credit ratings of the issuers, current market conditions, and other relevant factors.  Based on these factors, we assess the risk of realizing expected cash flows and we apply an observable discount rate that reflects this risk.  We may also reduce our valuations to reflect other claims to trust assets or to reflect a liquidity discount based on the lack of an active market for these securities.

Changes in Level 3 instruments are as follows:

	For the Three Months
	Ended March 31,
Level 3 Investment Securities	2012			2011
	(In thousands)
Balance as of December 31, 2011 and 2010	$	944,924		$	168,993
Net realized and unrealized gains (losses) included in earnings	84,726			3,314
Net realized and unrealized gains (losses) included in other comprehensive income (loss)	(74,929		)	57,803
Purchases	—			—
Settlements (1)	(839,660		)	(762		)
Issuances	—			—
Transfers from level 2 to level 3	—			—
Balance as of March 31, 2012 and 2011	$	115,061		$	229,348

(1)  For the three months ended March 31, 2012, this amount primarily relates to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009.  See Note 8 for further information.

Gains and Losses on Sales and Changes in Carrying Values of Investments

“Other, net” income and expense included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) includes other changes in the carrying amount of our marketable and non-marketable investments as follows:

	For the Three Months
	Ended March 31,
Other Income (Expense):	2012			2011
	(In thousands)
Marketable investment securities - gains (losses) on sales/exchanges	$	4,619		$	6,391
Marketable investment securities - unrealized gains (losses) on investments accounted for at fair value	8,479			(4,773		)
Marketable investment securities - gains (losses) on conversion of DBSD North America Notes (1)	99,445			—
Other investment securities - gains (losses) on sales/exchanges	—			10,000
Marketable investment securities - other-than-temporary impairments	(2,481		)	—
Other	220			15
Total	$	110,282		$	11,633

(1)During the three months ended March 31, 2012, we recognized a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction.  See Note 8 for further information.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

6.             Inventory

Inventory consists of the following:

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
DISH:
Finished goods - DBS	$	298,771	$	295,058
Raw materials	141,423		183,711
Work-in-process - used	38,160		29,228
Work-in-process - new	3,261		2,308
Total DISH inventory	481,615		510,305
Blockbuster:
Rental library	93,625		104,238
Merchandise	90,920		92,608
Total Blockbuster inventory	184,545		196,846
Wireless Spectrum:
Finished goods	3,848		—
Total Wireless Spectrum inventory	3,848		—
Total inventory	$	670,008	$	707,151

7.             Property and Equipment

“Property and equipment, net” on our Condensed Consolidated Balance Sheets totaled $4.314 billion as of March 31, 2012, a $1.144 billion increase compared to December 31, 2011.  This increase was primarily related to the closing of the DBSD Transaction and the TerreStar Transaction and the associated purchase price allocation to the assets acquired and the liabilities assumed.  See Note 8 for further information.

Depreciation and Amortization Expense

Depreciation and amortization expense consists of the following:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Equipment leased to customers	$	152,443	$	182,987
Satellites	33,837		32,091
Buildings, furniture, fixtures, equipment and other	22,418		14,619
Total depreciation and amortization	$	208,698	$	229,697

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.

DBS Satellites

We currently utilize 13 DBS satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we own and depreciate over the useful life of each satellite.  We currently utilize capacity on five DBS satellites from EchoStar, which are accounted for as operating leases.  See Note 13 for further discussion of our

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

satellite leases with EchoStar.  We also lease two DBS satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement.

S-band Satellites

As a result of the DBSD Transaction and the TerreStar Transaction, three S-band satellites were added to our satellite fleet, including two in-orbit satellites and one satellite under construction, discussed below.

EchoStar G1.  EchoStar G1 was launched in April 2008 by DBSD North America and is currently located at the 92.85 degree orbital location.  EchoStar G1 was designed to meet a minimum 15-year useful life.

EchoStar T1.  EchoStar T1 was launched in July 2009 by TerreStar and currently operates at the 111.1 degree orbital location.  EchoStar T1 was designed to meet a minimum 15-year useful life.  Prior to the TerreStar Transaction, this satellite experienced certain solar array anomalies.  While these anomalies did not reduce the estimated useful life of the satellite to less than 15 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

EchoStar T2.  In December 2007, TerreStar entered into an agreement with Space Systems/Loral, Inc. (“SS/L”) for the design and manufacture of EchoStar T2.  We expect EchoStar T2 to be completed during 2012.

Satellite Anomalies

Operation of our pay-TV service requires that we have adequate DBS satellite transmission capacity for the programming we offer.  Moreover, current competitive conditions require that we continue to expand our offering of new programming, particularly by expanding local high definition (“HD”) coverage and offering more HD national channels.  While we generally have had in-orbit DBS 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 2012, 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 further impact the remaining useful life and/or commercial operation of any of the satellites in our fleet.  See “Long-Lived DBS Satellite Assets” below 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 do not anticipate carrying insurance for any of the in-orbit satellites that we use, and we will bear the risk associated with any in-orbit satellite failures.  Recent developments with respect to certain of our satellites are discussed below.

Owned Satellites

EchoStar I.  EchoStar I was designed to meet a minimum 12 year useful life. During first quarter 2012, we determined that EchoStar I experienced a communications receiver anomaly.  While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its future commercial operation.  EchoStar I was fully depreciated during 2007.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

EchoStar XI.  EchoStar XI was designed to meet a minimum 12-year useful life.  During first quarter 2012, we determined that EchoStar XI experienced solar array anomalies that reduced the total power available for use by the spacecraft.  While these anomalies did not reduce the estimated useful life of the satellite to less than 12 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

EchoStar XIV.  EchoStar XIV was designed to meet a minimum 15-year useful life.  During third quarter 2011 and first quarter 2012, we determined that EchoStar XIV experienced solar array anomalies that reduced the total power available for use by the spacecraft.  While these anomalies did not reduce the estimated useful life of the satellite to less than 15 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

Leased Satellites

EchoStar VI.  Prior to 2012, EchoStar VI experienced solar array anomalies which impacted the commercial operation of the satellite.  EchoStar VI also previously experienced the loss of traveling wave tube amplifiers (“TWTAs”).  During first quarter 2012, EchoStar determined that EchoStar VI experienced the loss of two additional TWTAs increasing the total number of TWTAs lost to five.  While the recent loss of TWTAs did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its commercial operation.

Long-Lived DBS Satellite Assets.  We evaluate our DISH branded pay-TV DBS satellite fleet for impairment as one asset group and test for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  While certain of the anomalies discussed above, and previously disclosed, may be considered to represent a significant adverse change in the physical condition of an individual satellite, based on the redundancy designed within each satellite and considering the asset grouping, these anomalies are not considered to be significant events that would require evaluation for impairment recognition.  Unless and until a specific satellite is abandoned or otherwise determined to have no service potential, the net carrying amount related to the satellite would not be written off.

FCC Authorizations

“FCC authorizations” on our Condensed Consolidated Balance Sheets totaled $3.340 billion as of March 31, 2012, a $1.949 billion increase compared to December 31, 2011.  This increase was related to the closing of the DBSD Transaction and the TerreStar Transaction and the associated purchase price allocation to the assets acquired and the liabilities assumed.  See Note 8 for further discussion of the DBSD Transaction and the TerreStar Transaction.

We currently do not have any satellites positioned at the 148 degree orbital location as a result of the retirement of EchoStar V.  While we have requested the necessary approval from the FCC for the continued use of this orbital location, there can be no assurance that the FCC will determine that our proposed future use of this orbital location complies fully with all licensing requirements.  If the FCC decides to revoke this license, we may be required to write-off its $68 million carrying value.  We cannot predict the outcome or the timing of the FCC’s decision and any associated write-off as a result of the FCC’s decision.

8.             Acquisitions

DBSD North America and TerreStar Transactions

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  In addition, during the fourth quarter 2011, we and Sprint

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

Nextel Corporation (“Sprint”) entered into a mutual release and settlement agreement (the “Sprint Settlement Agreement”) pursuant to which all disputed issues relating to the DBSD Transaction and the TerreStar Transaction were resolved between us and Sprint, including, but not limited to, issues relating to costs allegedly incurred by Sprint to relocate users from the spectrum then licensed to DBSD North America and TerreStar.  Pursuant to the Sprint Settlement Agreement, we made a net payment of approximately $114 million to Sprint.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012.  While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

For the purposes of acquisition accounting, management determined that the DBSD Transaction and the TerreStar Transaction, together with the net payment pursuant to the Sprint Settlement Agreement, should be accounted for as a single transaction.  In reaching this conclusion, management considered, among other things, the fact that the transactions occurred in contemplation of one another and the expectation that the acquired assets will be utilized as a single integrated service.  The total consideration of approximately $2.860 billion in connection with the DBSD Transaction and the TerreStar Transaction included $2.761 billion in cash and a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009.  Of this non-cash gain, $78 million was included as a component of “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit),” on our Condensed Consolidated Balance Sheets as of December 31, 2011.  We have recognized the acquired assets and assumed liabilities based on our preliminary estimates of fair value at their acquisition date.  We expense all transaction costs related to the acquisition as incurred.

	Preliminary
	Purchase
	Price
	Allocation
	(In thousands)
Cash	$	5,230
Current assets	8,487
Property and equipment	1,207,000
Goodwill	31,000
FCC Authorizations	1,949,000
Current liabilities	(341,069		)
Total acquisition consideration	$	2,859,648

The determination of the fair value of the acquired assets and assumed liabilities requires significant analysis and judgment.  As of the date of issuance of these financial statements, we have not completed our valuation analysis and calculations in sufficient detail necessary to finalize our estimates.  The assets acquired in the DBSD Transaction and the TerreStar Transaction consist primarily of certain satellite assets and wireless spectrum licenses.  The fair value of satellite assets and wireless spectrum licenses are the most significant areas not yet finalized.  We expect to complete our final fair value determinations no later than the first quarter 2013.  Our final fair value determinations may be significantly different than those reflected in our Condensed Consolidated Financial Statements at March 31, 2012.

Pro forma revenue and earnings associated with the DBSD Transaction and the TerreStar Transaction are not included in this filing.  Due to the material ongoing modifications of the business, management has determined that insufficient information exists to accurately develop meaningful historical pro forma financial information.  Moreover, the historical results of operations of DBSD North America and TerreStar are not indicative of their potential prospective operations because DBSD North America and TerreStar were in bankruptcy proceedings and did not have significant operations in periods prior to the transactions.  As such, any historical pro forma information would not prove useful in assessing our post transaction earnings and cash flows.  We generated less than $1 million of revenue and incurred $8 million in operating expenses for the three months ended March 31, 2012 from our wireless spectrum assets.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

9.             Long-Term Debt

Fair Value of our Long-Term Debt

The following table summarizes the carrying and fair values of our debt facilities:

	As of
	March 31, 2012				December 31, 2011
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(In thousands)
7 % Senior Notes due 2013	$	500,000	$	535,625	$	500,000	$	535,000
6 5/8% Senior Notes due 2014	1,000,000		1,090,000		1,000,000		1,060,000
7 3/4% Senior Notes due 2015	750,000		851,970		750,000		817,500
7 1/8% Senior Notes due 2016	1,500,000		1,662,750		1,500,000		1,593,750
7 7/8% Senior Notes due 2019	1,400,000		1,610,000		1,400,000		1,589,000
6 3/4% Senior Notes due 2021	2,000,000		2,005,000		2,000,000		2,140,000
Mortgages and other notes payable	96,252		96,252		71,871		71,871
Subtotal	7,246,252		$	7,851,597	7,221,871		$	7,807,121
Capital lease obligations (1)	264,154		NA		271,908		NA
Total long-term debt and capital lease obligations (including current portion)	$	7,510,406			$	7,493,779

(1)Disclosure regarding fair value of capital leases is not required.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

10.          Stock-Based Compensation

Stock Incentive Plans

We maintain stock incentive plans to attract and retain officers, directors and key employees.  Stock awards under these plans include both performance and non-performance based stock incentives.  As of March 31, 2012, we had outstanding under these plans stock options to acquire 21.3 million shares of our Class A common stock and 1.3 million restricted stock units.  Stock options granted prior to and on March 31, 2012 were granted with exercise prices equal to or greater than the market value of our Class A common stock at the date of grant and with a maximum term of approximately ten years.  While historically we have 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 company-wide objectives.  As of March 31, 2012, we had 72.6 million shares of our Class A common stock available for future grant under our stock incentive plans.

During December 2011, we paid a dividend in cash of $2.00 per share on our 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 21.2 million stock options, affecting approximately 600 employees, was reduced by $2.00 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, we completed the distribution of our technology and set-top box business and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar.  DISH Network and EchoStar operate as separate publicly-traded companies, and neither entity has any ownership interest in the other. 

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However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, or by certain trusts established by Mr. Ergen for the benefit of his family.

In connection with the Spin-off, as permitted by our existing stock incentive plans and consistent with the Spin-off exchange ratio, each DISH Network stock option was converted into two stock options as follows:

·an adjusted DISH Network stock option for the same number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.831219.

·a new EchoStar stock option for one-fifth of the number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.843907.

Similarly, each holder of DISH Network restricted stock units retained his or her DISH Network restricted stock units and received one EchoStar restricted stock unit for every five DISH Network restricted stock units that they held.

Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award immediately following the Spin-off was equivalent to the fair value of such stock award immediately prior to the Spin-off.

The following stock awards were outstanding:

	As of March 31, 2012
	DISH Network Awards		EchoStar Awards
Stock Awards Outstanding	Stock Options	Restricted Stock Units	Stock Options	Restricted Stock Units
Held by DISH Network employees	18,762,631	1,186,376	791,554	53,620
Held by EchoStar employees	2,580,701	94,999	N/A	N/A
Total	21,343,332	1,281,375	791,554	53,620

We are 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 Condensed Consolidated Balance Sheets.

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Stock Award Activity

Our stock option activity was as follows:

	For the Three Months
	Ended March 31, 2012
	Options		Weighted- Average Exercise Price
Total options outstanding, beginning of period (1)	21,336,159		$	20.53
Granted	411,000		$	32.93
Exercised	(363,027	)	$	13.66
Forfeited and cancelled	(40,800	)	$	20.45
Total options outstanding, end of period	21,343,332		$	18.90
Performance-based options outstanding, end of period (2)	9,619,075		$	17.35
Exercisable at end of period	8,538,056		$	20.05

(1)The beginning of period weighted-average exercise price of $20.53 does not reflect the 2012 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 and other employee performance awards below.

We realized tax benefits from stock awards exercised as follows:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Tax benefit from stock awards exercised	$	1,743	$	795

Based on the closing market price of our Class A common stock on March 31, 2012, the aggregate intrinsic value of our stock options was as follows:

	As of March 31, 2012
	Options Outstanding		Options Exercisable
	(In thousands)
Aggregate intrinsic value	$	299,451	$	109,990

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Our restricted stock unit activity was as follows:

	For the Three Months
	Ended March 31, 2012
	Restricted Stock Units		Weighted- Average Grant Date Fair Value
Total restricted stock units outstanding, beginning of period	1,284,708		$	23.25
Granted	—		$	—
Vested	—		$	—
Forfeited and cancelled	(3,333	)	$	25.07
Total restricted stock units outstanding, end of period	1,281,375		$	23.24
Restricted Performance Units outstanding, end of period (1)	1,281,375		$	23.24

(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 and other employee performance awards below.

Long-Term Performance-Based Plans

2005 LTIP.  During 2005, we 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 company-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 management concludes achievement of the performance condition is probable.  Given the competitive nature of our 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 March 31, 2012, 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 we had determined that achievement of the goal was probable during the three months ended March 31, 2012, 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 Condensed 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 Network employees	$	38,172	$	30,587
EchoStar awards held by DISH Network employees	6,897		5,619
Total	$	45,069	$	36,206

(1)Represents the amount of this award that has met the foregoing vesting schedule and would therefore vest upon achievement of the performance condition.

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2008 LTIP.  During 2008, we adopted a long-term, performance-based stock incentive plan (the “2008 LTIP”).  The 2008 LTIP provides stock options and restricted stock units, either alone or in combination, which vest based on company-specific subscriber and financial goals.  Exercise of the stock awards is contingent on achieving these goals by December 31, 2015.

Although no awards vest until the Company attains the performance goals, compensation related to the 2008 LTIP will be recorded based on management’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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal.  See table below titled “Estimated Remaining Non-Cash, Stock-Based Compensation Expense.”

During the first quarter 2011, we determined that all of the 2008 LTIP performance goals are probable of achievement.  As of March 31, 2012, approximately 45% of the 2008 LTIP awards had vested.  We are recognizing the associated non-cash stock-based compensation expense on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period for vesting of the approximately 55% of the awards remaining, 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, we have other stock awards that vest based on certain other company-specific subscriber and 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 management’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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal.  See table below titled “Estimated Remaining Non-Cash, Stock-Based Compensation Expense.”

Although no awards vest until the performance goals are attained, we determined that certain goals were probable of achievement and, as a result, recorded non-cash, stock-based compensation expense for the three months ended March 31, 2012 and 2011, as indicated in the table below titled “Non-Cash, Stock-Based Compensation Expense Recognized.”

Given the competitive nature of our 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 company-specific subscriber and financial goals was not probable as of March 31, 2012, that assessment could change in the future.

The non-cash stock-based compensation expense associated with these awards is as follows:

	For the Three Months
	Ended March 31,
Non-Cash, Stock-Based Compensation Expense Recognized	2012		2011
	(In thousands)
2008 LTIP	$	5,839	$	12,804
Other employee performance awards	3,139		75
Total non-cash, stock-based compensation expense recognized for performance-based awards	$	8,978	$	12,879

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(Unaudited)

Estimated Remaining Non-Cash, Stock-Based Compensation Expense	2008 LTIP		Other Employee Performance Awards
	(In thousands)
Remaining expense estimated to be recognized during 2012	$	3,474	$	3,139
Estimated contingent expense subsequent to 2012	3,619		47,594
Total estimated remaining expense over the term of the plan	$	7,093	$	50,733

Of the 21.3 million stock options and 1.3 million restricted stock units outstanding under our stock incentive plans, the following awards were outstanding pursuant to our performance-based stock incentive plans:

	As of March 31, 2012
	Number of Awards	Weighted- Average Exercise Price
Performance-Based Stock Options
2005 LTIP	3,332,500	$	21.12
2008 LTIP	3,286,575	$	10.06
Other employee performance awards	3,000,000	$	21.16
Total	9,619,075	$	17.35
Restricted Performance Units and Other
2005 LTIP	359,830
2008 LTIP	21,545
Other employee performance awards	900,000
Total	1,281,375

Stock-Based Compensation

During the three months ended March 31, 2012, we incurred $14 million of additional non-cash, stock-based compensation expense in connection with the 2012 Stock Option Adjustment discussed previously.  This amount is included in the table below.  Total non-cash, stock-based compensation expense for all of our employees is shown in the following table and was allocated to the same expense categories as the base compensation for such employees:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Subscriber-related	$	837	$	977
General and administrative	22,345		14,200
Total non-cash, stock-based compensation	$	23,182	$	15,177

As of March 31, 2012, our total unrecognized compensation cost related to our non-performance based unvested stock awards was $29 million and includes compensation expense that we will recognize for EchoStar stock awards held by our employees as a result of the Spin-off.  This cost is based on an estimated future forfeiture rate of approximately 3.9% 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.

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Valuation

The fair value of each stock option for the three months ended March 31, 2012 and 2011 was originally estimated at the date of the grant using a Black-Scholes option valuation model with the following assumptions:

	For the Three Months
	Ended March 31,
Stock Options	2012	2011
Risk-free interest rate	0.51% - 1.29%	2.24% - 2.68%
Volatility factor	38.80% - 39.34%	35.82% - 39.59%
Expected term of options in years	3.4 - 5.9	4.9 - 6.3
Weighted-average fair value of options granted	$9.49 - $12.69	$9.16 - $9.81

On December 1, 2011, we paid a $2.00 cash dividend per share on our outstanding Class A and Class B common stock.  While we currently do not intend to declare additional dividends on our common stock, we may elect to do so from time to time.  Accordingly, the dividend yield percentage used in the Black-Scholes option valuation model is 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 the 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 our stock options as new events or changes in circumstances become known.

11.Commitments and Contingencies

Wireless Spectrum

In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  To commercialize these licenses and satisfy the associated FCC build-out requirements, we will be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to these licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly, which may affect our future financial condition or results of operations.  Part or all of these licenses may be terminated if the associated FCC build-out requirements are not satisfied.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these investments and profitably deploy the spectrum represented by the 700 MHz licenses.

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we

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(Unaudited)

cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012. While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

Guarantees

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 $169 million over approximately the next three years.

In addition, 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 also guarantee a certain portion of its payment obligations under this agreement through 2019.  As of March 31, 2012, the remaining payment obligations under this agreement are the guarantee of $486 million.

As of March 31, 2012, we have not recorded a liability on the balance sheet for any of these guarantees.

Contingencies

Separation Agreement

In connection with the Spin-off, we 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 we 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.

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Litigation

We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities.  Many of these proceedings are at preliminary stages, and many of these proceedings seek an indeterminate amount of damages.  We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate.  If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.

For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties (as with many patent-related cases).  For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Channel Bundling Class Action

During 2007, a purported class of cable and satellite subscribers filed an antitrust action against our wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Central District of California.  The suit also names as defendants DirecTV, Comcast, Cablevision, Cox, Charter, Time Warner, Inc., Time Warner Cable, NBC Universal, Viacom, Fox Entertainment Group and Walt Disney Company.  The suit alleges, among other things, that the defendants engaged in a conspiracy to provide customers with access only to bundled channel offerings as opposed to giving customers the ability to purchase channels on an “a la carte” basis.  On October 16, 2009, the District Court entered an order granting the defendants’ motion to dismiss with prejudice.  On June 3, 2011, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s order.  The plaintiff class sought rehearing en banc.  On October 31, 2011, the Ninth Circuit issued an order vacating the previous June 3, 2011 order, directing that a 3-judge panel be reconstituted, and denying the plaintiff class’ motion for rehearing.  On March 30, 2012, the reconstituted panel of the Ninth Circuit again affirmed the District Court’s order.  On April 10, 2012, the plaintiff class again filed a petition for rehearing en banc, which was denied on May 4, 2012.  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.

Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC)

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.”  On November 18, 2011, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed an amended complaint making the same claim.  DirecTV was dismissed from the case on January 4, 2012.

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.

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(Unaudited)

ESPN

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 high-definition feeds of the Disney Channel, ESPN News, Toon and ABC Family.  In October 2011, the jury returned a verdict in favor of the defendants.  We intend to appeal.

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 is disputed.  On December 29, 2010, the New York State Supreme Court, Appellate Division, First Department affirmed the partial grant of ESPN’s motion 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 affirmed the prior grant of ESPN’s motion and ruled that we owe the full amount of approximately $66 million under the applicable affiliation agreement.  As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Condensed Consolidated Balance Sheets.

On June 21, 2011, the First Department affirmed the New York 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, during 2011, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss).  On February 6, 2012, ESPN filed a motion seeking $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim, which we have opposed.  As a result, during the three months ended March 31, 2012, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million as of March 31, 2012.  This reflects our estimated exposure for ESPN’s counterclaim.  We intend to vigorously prosecute and defend this case.

Norman IP Holdings, Inc.

On September 15, 2011, Norman IP Holdings, Inc. (“Norman”) filed a patent infringement complaint against Brother International Corporation and Lexmark International Corporation in the United States District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 5,592,555 (the “‘555 patent”)  and U.S. Patent No. 5,502,689 (the “‘689 patent”).  On December 9, 2011, Norman filed a first amended complaint that added Ricoh Americas Corporation and dropped Brother International Corporation as defendants.  On January 27, 2012, Norman filed a second amended complaint that added us as a defendant, in addition to adding Belkin International, Inc., BMW of North America LLC, Daimler North America Corporation, Mercedes-Benz USA, LLC, D-Link Systems, Inc., Ford Motor Company, Garmin International, Inc., Garmin USA, Inc., General Electric Company, General Motors Company, JVC Americas Corporation, Novatel Wireless, Inc., Novatel Wireless Solutions, Inc., Novatel Wireless Technology, Inc., TomTom, Inc., ViewSonic Corporation, Vizio, Inc., Volkswagen Group of America, Inc., Xerox Corporation, ZTE USA, Inc., and ZTE Solutions, Inc.  The ‘555 patent relates to a wireless communications privacy method and system and the ‘689 patent relates to a clock generator capable of shut-down mode and clock generation method.  Norman 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 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.

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(Unaudited)

NorthPoint Technology, Ltd.

On July 2, 2009, NorthPoint Technology, Ltd. (“NorthPoint”) filed suit against us, EchoStar and DirecTV in the United States District Court for the Western District of Texas alleging infringement of United States Patent No. 6,208,636 (the “‘636 patent”).  The ‘636 patent relates to the use of multiple low-noise block converter feedhorns, or LNBFs, which are antennas used for satellite reception.  On April 21, 2011, the U.S. Patent and Trademark Office issued an order granting reexamination of the ‘636 patent.  On June 21, 2011, the District Court entered summary judgment in our favor, finding that all asserted claims of the ‘636 patent are invalid.  NorthPoint has appealed.

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.

Olympic Developments AG, LLC

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 4, 2011, the case was stayed pending reexamination by the U.S. Patent and Trademark Office.

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.

Personalized Media Communications, Inc.

During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against us, EchoStar and Motorola Inc. in the United States District Court for the Eastern District of Texas alleging infringement of United States Patent Nos. 4,694,490, 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 EchoStar and us as defendants.  Trial is currently set for August 2012.

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 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.

Preservation Technologies, LLC

In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against us in the United States District Court for the Central District of California.  In the Operative Fourth Amended Complaint, filed on March 28, 2012, Preservation Technologies alleges that our BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services infringe U.S. Patent Nos. 5,813,014, 5,832,499, 6,092,080, 6,353,831,

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(Unaudited)

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 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.

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 alleges 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, one of which is subject to a reexamination request before the U.S. Patent and Trademark Office, which was filed on February 13, 2012.

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 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.

Technology Development and Licensing L.L.C.

On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against us 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 our motion to stay the case pending two reexamination petitions before the Patent and Trademark Office.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

TQP Development, LLC

On April 4, 2012, TQP Development, LLC (“TQP Development”) 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 titled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.”  TQP Development is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted 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.

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(Unaudited)

Vigilos, LLC

On February 23, 2011, Vigilos, LLC filed suit against EchoStar, two EchoStar subsidiaries, Sling Media, Inc. and EchoStar Technologies L.L.C., and Monsoon Multimedia, Inc. in the U.S. District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 6,839,731, which is entitled “System and Method for Providing Data Communication in a Device Network.”  Subsequently in 2011, Vigilos added DISH Network L.L.C., our wholly owned subsidiary, as a defendant in its First Amended Complaint and the case was transferred to the Northern District of California.  Later in 2011, Vigilos filed a Second Amended Complaint that added claims for infringement of a second patent, U.S. Patent No. 7,370,074, which is entitled “System and Method for Implementing Open-Protocol Remote Device Control.”  Vigilos is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

Voom HD Holdings

In January 2008, Voom HD Holdings (“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.  At that time, Voom also sought a preliminary injunction to prevent us from terminating the agreement.  The Court denied Voom’s request, finding, among other things, that Voom had not demonstrated that it was likely to prevail on the merits.  In April 2010, we and Voom each filed motions for summary judgment.  Voom later filed two motions seeking discovery sanctions.  On November 9, 2010, the Court issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery sanctions.  The Court’s decision provides for an adverse inference jury instruction at trial and precludes our damages expert from testifying at trial.  We appealed the grant of Voom’s motion for discovery sanctions to the New York State Supreme Court, Appellate Division, First Department.  On February 15, 2011, the appellate court granted our motion to stay the trial pending our appeal.  On January 31, 2012, the appellate court affirmed the order imposing discovery sanctions and precluding our damages expert from testifying at trial.  We sought leave to appeal to New York’s highest state court, the Court of Appeals, but that motion was denied on April 26, 2012.  A trial date has not been set.  Voom is claiming over $2.5 billion in damages.  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.

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 position, 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.

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12.Segment Reporting

Operating segments are components of an enterprise for which separate financial information is available and regularly evaluated by the chief operating decision maker(s) of an enterprise.  Under this definition, we operated three primary segments during the three months ended March 31, 2012.

·DISH.  The DISH branded pay-TV service had 14.071 million subscribers in the United States as of March 31, 2012.  The DISH branded pay-TV service consists of FCC licenses authorizing us to use DBS and FSS spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a third-party leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations.

·Blockbuster.  On April 26, 2011, we completed the Blockbuster Acquisition.  The financial results of our Blockbuster operations are included in our financial results beginning April 26, 2011.  Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand® service.

·Wireless Spectrum.  In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.  See Note 8 for further information.

We currently generate an immaterial amount of revenue and incur operating expenses associated with certain satellite operations and regulatory compliance from our wireless spectrum assets.  As we review our options for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have to make significant investments related to, among other things, research and development, wireless testing and construction of a wireless network.

On March 21, 2012, the FCC released an NPRM that could result in the elimination of the MSS “integrated service” and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  We cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.  See Note 11 for further information.

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(Unaudited)

The total assets, revenue and operating income by segment are as follows:

	As of
	March 31,			December 31,
	2012			2011
	(In thousands)
Total assets:
DISH (1)	$	8,822,873		$	11,104,003
Blockbuster	450,804			453,661
Wireless Spectrum (1)	3,858,905			—
Eliminations	(723,070		)	(87,433		)
Total assets	$	12,409,512		$	11,470,231

	For the Three Months
	Ended March 31,
	2012			2011
	(In thousands)
Revenue:
DISH	$	3,252,922		$	3,224,131
Blockbuster (2)	333,991			—
Wireless Spectrum	33			—
Eliminations	(5,077		)	—
Total revenue	$	3,581,869		$	3,224,131
Operating income (loss):
DISH	$	566,545		$	983,353
Blockbuster (2)	13,957			—
Wireless Spectrum	(8,091		)	—
Total operating income (loss)	$	572,411		$	983,353

(1)The decrease in DISH total assets resulted from the reclassification of assets to the wireless spectrum segment.

(2)Our Blockbuster operations are included in our financial results beginning April 26, 2011.

Geographic Information.  Revenues are attributed to geographic regions based upon the location where the products are delivered and services are provided.  During the three months ended March 31, 2012, our international revenue includes transactions with Blockbuster customers in the United Kingdom, Mexico and Denmark totaling $71 million, $41 million and $13 million, respectively.  During the three months ended March 31, 2011, we did not have any international revenue as our Blockbuster operations are included in our financial results beginning April 26, 2011.

13.Related Party Transactions

Related Party Transactions with 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, or by certain trusts established by Mr. Ergen for the benefit of his family.

EchoStar is our primary supplier of set-top boxes and digital broadcast operations and our key supplier of transponder capacity.  Generally, the amounts we pay EchoStar for products and services are based on pricing equal

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(Unaudited)

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.

Since 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 position and results of operations.

“Equipment sales - EchoStar”

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 2011, we and EchoStar extended this agreement until December 31, 2012.  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.

“Services and other revenue - EchoStar”

Professional Services Agreement.  Prior to 2010, in connection with the Spin-off, we 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, we and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to receive the following services from us, 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, we and EchoStar agreed that we shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for us (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement).  The Professional Services Agreement automatically renewed on January 1, 2012 for an additional one-year period until January 1, 2013 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.

Management Services Agreement.  We have a Management Services Agreement with EchoStar pursuant to which we make certain of our officers available to provide services (which are primarily legal and accounting services) to EchoStar.  Specifically, Paul W. Orban remains employed by us, 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.  EchoStar makes payments to us based upon an allocable portion of the personnel costs and expenses incurred by us with respect to such officers (taking into account wages and fringe benefits).  These allocations are based upon the estimated percentages of time to be spent by our executive officers performing services for EchoStar under the Management Services Agreement.  EchoStar also reimburses us for direct out-of-pocket costs incurred by us for management services provided to EchoStar.  We and EchoStar evaluate all charges for reasonableness at least annually and make any adjustments to these charges as we and EchoStar mutually agree upon.

The Management Services Agreement automatically renewed on January 1, 2012 for an additional one-year period until January 1, 2013 and renews automatically for successive one-year periods thereafter, unless terminated earlier:  (i) by EchoStar at any time upon at least 30 days notice; (ii) by us at the end of any renewal term, upon at least 180 days notice; or (iii) by us upon notice to EchoStar, following certain changes in control.

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(Unaudited)

Satellite Capacity Leased to EchoStar.  During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leases certain satellite capacity from us on EchoStar I.  The fee for the services provided under this satellite capacity agreement depends, among other things, upon the orbital location of the satellite and the length of the lease.  The lease generally terminates upon the earlier of:  (i) the end of life or replacement of the satellite (unless EchoStar determines to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponder on which service is being provided fails; or (iv) a certain date, which depends, among other things, upon 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.  EchoStar generally has the option to renew this 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.

Real Estate Lease Agreement.  During 2008, we entered into a sublease for space at 185 Varick Street, New York, New York to EchoStar for a period of approximately seven years.  The rent on a per square foot basis for this sublease was comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the sublease, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises.

“Satellite and transmission expenses — EchoStar”

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.

Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar will continue to provide 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.

Broadcast Agreement for Certain Sports Related Programming.  During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming.  The term of this agreement is for ten years.  If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate.  The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services.

Satellite Capacity Leased from EchoStar.  Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain satellite capacity on certain satellites owned or leased by EchoStar.

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(Unaudited)

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:

EchoStar VI, VIII and XII.  We lease certain satellite capacity from EchoStar on EchoStar VI, VIII and XII.  The leases 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.

EchoStar IX.  We lease certain satellite capacity from EchoStar on EchoStar IX.  Subject to availability, we generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-month basis.

EchoStar XVI.  We will lease certain satellite capacity from EchoStar on EchoStar XVI after its service commencement date and this lease generally terminates 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) ten years following the actual service commencement date.  Upon expiration of the initial term, we have the option to renew on a year-to-year basis through the end of life of the satellite.  There can be no assurance that any options to renew this agreement will be exercised.  EchoStar XVI is expected to be launched during the second half of 2012.

EchoStar XV.  EchoStar XV is owned by us and is operated at the 61.5 degree orbital location.  The FCC has granted EchoStar an authorization to operate the satellite at the 61.5 degree orbital location.  For so long as EchoStar XV remains in service at the 61.5 degree orbital location, we are obligated to pay EchoStar a fee, which varies depending on the number of frequencies being used by EchoStar XV.

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.  We have also guaranteed certain obligations of EchoStar under the Telesat Transponder Agreement.  See discussion under “Guarantees” in Note 11.

Under the terms of the DISH Nimiq 5 Agreement, we make certain monthly payments to EchoStar that commenced in 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 it was placed into service.  Upon expiration of the initial term we have the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end of life of the Nimiq 5 satellite.  Upon in-orbit failure or end of life of the Nimiq 5 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite.  There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite.

QuetzSat-1 Lease Agreement.  During 2008, EchoStar entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provides, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite.  During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we will receive service from EchoStar on 24 of the DBS transponders.  The QuetzSat-1 Transponder Agreement will be accounted for as an operating lease.  QuetzSat-1 was launched on September 29, 2011 and was placed into service during the fourth quarter 2011

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(Unaudited)

at the 67.1 degree orbital location while we and EchoStar explore alternative uses for the QuetzSat-1 satellite.  In the interim, EchoStar is providing us with alternate capacity at the 77 degree orbital location.

Under the terms of the QuetzSat-1 Transponder Agreement, we will make certain monthly payments to EchoStar commencing when the QuetzSat-1 satellite is placed into service at the 77 degree orbital location and continuing through the remainder of the service term.  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.  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 TT&C agreement pursuant to which we will continue to 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.

DBSD North America Agreement.  On March 9, 2012, we completed the DBSD Transaction.  During the second quarter 2011, EchoStar acquired Hughes Communications, Inc. (“Hughes”).  Prior to our acquisition of DBSD North America and EchoStar’s acquisition of Hughes, DBSD North America and Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of Hughes, entered into an agreement pursuant to which HNS provides, among other things, hosting, operations and maintenance services for DBSD North America’s satellite gateway and associated ground infrastructure.  This agreement was renewed for a one year period ending on February 15, 2013, and renews for four successive one-year periods unless terminated by DBSD North America upon at least 30 days notice prior to the expiration of any renewal term.

TerreStar Agreement.  On March 9, 2012, we completed the TerreStar Transaction.  Prior to our acquisition of substantially all the assets of TerreStar and EchoStar’s acquisition of Hughes, TerreStar and HNS entered into various agreements pursuant to which Hughes provides, among other things, hosting, operations and maintenance services for TerreStar’s satellite gateway and associated ground infrastructure.  These agreements generally may be terminated by us at any time for convenience.

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 entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which Hughes provides certain portions of the equipment and broadband service used to implement our RUS program.  The initial term of the RUS Agreement shall continue until the earlier of: (i) September 24, 2013; or (ii) the date that the Grant Funds have been exhausted.  In addition, DISH Broadband may terminate the RUS Agreement for convenience upon 45 days’ prior written notice to Hughes.

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(Unaudited)

“Cost of sales — subscriber promotion subsidies — EchoStar”

Receiver Agreement.  EchoStar is currently our sole supplier of set-top box receivers.  The table below indicates the dollar value of set-top boxes and other equipment that we purchased from EchoStar as well as the amount of purchases that are included in “Cost of sales — subscriber promotion subsidies — EchoStar” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).  The remaining amount is included in “Inventory” and “Property and equipment, net” on our Condensed Consolidated Balance Sheets.

	For the Three Months
	Ended March 31,
Purchases from EchoStar	2012		2011
	(In thousands)
Set-top boxes and other equipment	$	237,365	$	272,126
Set-top boxes and other equipment included in “Cost of sales – subscriber promotion subsidies – EchoStar”	$	82,274	$	54,426

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.

Effective January 1, 2012, we and EchoStar entered into a new agreement (the “2012 Receiver Agreement”) pursuant to which we continue to 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.

“General and administrative expenses — EchoStar”

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.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

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 of the leases is set forth below:

·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.

·Meridian Lease Agreement.  The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016.

·Santa Fe Lease Agreement.  The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016 with a renewal option for one additional year.

·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.

·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.

·Cheyenne Lease Agreement.  Effective January 1, 2012, we and EchoStar entered into a lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming for a period ending on December 31, 2031.

DISHOnline.com Services Agreement.  Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we will 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 2011, we exercised our right to renew this agreement for a one-year period ending on December 31, 2012.

DISH Remote Access Services Agreement.  Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we will 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 and may be terminated for any reason upon at least 120 days notice to EchoStar.

SlingService Services Agreement.  Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we will receive certain place-shifting 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 and may be terminated for any reason upon at least 120 days notice to EchoStar.

Blockbuster.  On April 26, 2011, we completed the Blockbuster Acquisition.  During the second quarter 2011, EchoStar acquired Hughes.  Blockbuster purchased certain broadband products and services from Hughes pursuant to an agreement that was entered into prior to the Blockbuster Acquisition and EchoStar’s acquisition of Hughes.  Subsequent to these transactions, Blockbuster entered into a new agreement with Hughes which extends for a period through October 31, 2014, pursuant to which Blockbuster may continue to purchase certain broadband products and services from Hughes.  Blockbuster has the option to renew the agreement for an additional one year period.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

Additionally, on August 5, 2011, we entered into a letter agreement with EchoStar pursuant to which certain assets used to support Blockbuster’s website were transferred to EchoStar and they agreed to provide certain technical and infrastructure support for the Blockbuster website to us.  The fees for the services provided under the letter agreement are calculated at cost plus a fixed margin, which varies depending upon the nature of the services provided.  The letter agreement provides that it shall continue in effect until the completion of a definitive agreement between EchoStar and us setting forth the terms of the support of the Blockbuster website.  In addition to the services expensed, during the three months ended March 31, 2012, we capitalized $4 million of these services which are included in “Property and equipment, net” and “Other noncurrent assets” on our Condensed Consolidated Balance Sheets.

Move Networks Services Agreement.  In the fourth quarter 2011, EchoStar granted us the right to use Move Network’s software and video publishing systems, which facilitate the streaming, downloading and distribution of audio and video content to set-top boxes via the Internet.  The fees for the services provided under this agreement are based upon a fixed fee which varies based upon the number of set-top boxes in a given month that access Move Network’s software.  This agreement has a term of five years with automatic renewal for successive one year terms and may be terminated for any reason upon at least 180 days notice to EchoStar.

Other Agreements — EchoStar

Tax Sharing Agreement.  In connection with the Spin-off, we 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 us, and we will indemnify EchoStar for such taxes.  However, we are 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 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 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 us 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, we and EchoStar entered into a settlement agreement with TiVo, Inc. (“TiVo”).  The settlement resolved all pending litigation between us 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, which litigation is described in our Annual Report on Form 10-K for the year ended December 31, 2011 under the caption “Item 3.  Legal Proceedings — TiVo Inc.”

Under the settlement agreement, all pending litigation has been dismissed with prejudice and all injunctions that permanently restrain, enjoin or compel any action by us or EchoStar have been dissolved.  We 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 us, we 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 us and EchoStar based on historical sales of certain licensed products, with us being responsible for 95% of each annual payment.

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DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

We and EchoStar, on the one hand, and TiVo, on the other hand, have 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.

Because both we and EchoStar were defendants in the TiVo lawsuit, we 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, we determined that we were 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.  We and EchoStar further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to us for other intellectual property claims that may arise under the receiver agreement.  We and EchoStar also agreed that we 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.

Patent Cross-License Agreements.  During December 2011, we 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) we and such third party licensed our 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, we and EchoStar may elect to extend our 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 us and EchoStar, we and EchoStar agreed to allocate our respective payments to such third party based on our respective percentage of combined total revenue.

Sprint Settlement Agreement.  On November 3, 2011, we 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 us 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, we made a net payment of approximately $114 million to Sprint.

Other Agreements

In November 2009, Mr. Roger Lynch became employed by both us 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.

39

DISH NETWORK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — Continued

(Unaudited)

Related Party Transactions with NagraStar L.L.C.

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.

The table below summarizes our transactions with NagraStar.

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Purchases (including fees):
Purchases from NagraStar	$	17,484	$	20,729

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Amounts Payable and Commitments:
Amounts payable to NagraStar	$	12,925	$	5,853

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Youshould read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.  This management’s discussion and analysis is intended to help provide an understanding of our financial condition, changes in financial condition and results of our operations and contains forward-looking statements that involve risks and uncertainties.  The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results.  Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in our Annual Report on Form 10-K for the year ended December 31, 2011 and this Quarterly Report on Form 10-Q under the caption “Item 1A.  Risk Factors.”

EXECUTIVE SUMMARY

Overview

DISH added approximately 104,000 net subscribers during the three months ended March 31, 2012, compared to approximately 58,000 net subscriber additions during the same period in 2011.  The increase versus the same period in 2011 primarily resulted from a decrease in our churn rate.  Our average monthly subscriber churn rate for the three months ended March 31, 2012 was 1.35% compared to 1.47% for the same period in 2011.  During the three months ended March 31, 2012, DISH added approximately 673,000 gross new subscribers compared to approximately 681,000 gross new subscribers during the same period in 2011, a decrease of 1.2%.

Our churn rate for the three months ended March 31, 2012 was positively impacted versus the same period in 2011 because we did not have a programming package price increase in the first quarter 2012, but did during the same period in 2011.  While churn improved compared to the same period in 2011, increased competitive pressures could increase churn in the future.  Furthermore, our churn has historically been lower in the first quarter.  In addition to these factors, our churn rate is impacted by, among other things, the credit quality of previously acquired subscribers, our ability to consistently provide outstanding customer service, and our ability to control piracy.

Our gross new subscriber activations continue to be negatively impacted by increased competitive pressures, including aggressive marketing and discounted promotional offers.  In addition, telecommunications companies continue to grow their customer bases.  Our gross new subscriber activations continue to be adversely affected by sustained economic weakness and uncertainty, including, among other things, the weak housing market and lower discretionary spending.

“Net income (loss) attributable to DISH Network” for the three months ended March 31, 2012 was $360 million compared to $549 million for the same period in 2011.  During the three months ended March 31, 2012, “Net income (loss) attributable to DISH Network” decreased primarily due to a reduction in our accrued expenses related to the TiVo Inc. settlement during 2011, partially offset by the non-cash gain during 2012 related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction.  See Note 8 in the Notes to the Condensed Consolidated Financial Statements.

Programming costs represent a large percentage of our “Subscriber-related expenses.”  Going forward, our margins may face pressure if we are unable to renew our long-term programming contracts on favorable pricing and other economic terms.  Additionally, our gross new subscriber activations and subscriber churn rate may be negatively impacted if we are unable to renew our long-term programming contracts before they expire.

As the pay-TV industry matures, we and our competitors increasingly must seek to attract a greater proportion of new subscribers from each other’s existing subscriber bases rather than from first-time purchasers of pay-TV services.  Some of our competitors have been especially aggressive by offering discounted programming and services for both new and existing subscribers.  In addition, programming offered over the Internet has become more prevalent as the speed and quality of broadband networks have improved.  Significant changes in consumer behavior with regard to the means by which they obtain video entertainment and information in response to digital media competition could materially adversely affect our business, results of operations and financial condition or otherwise disrupt our business.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

While economic factors have impacted the entire pay-TV industry, our relative performance has also been driven by issues specific to DISH.  In the past, our subscriber growth has been adversely affected by signal theft and other forms of fraud and by operational inefficiencies at DISH.  To combat signal theft and improve the security of our broadcast system, we completed the replacement of our security access devices to re-secure our system during 2009.  We expect that additional future replacements of these devices will be necessary to keep our system secure.  To combat other forms of fraud, we continue to expect that our third party distributors and retailers will adhere to our business rules.

While we have made improvements in responding to and dealing with customer service issues, we continue to focus on the prevention of these issues, which is critical to our business, financial position and results of operations.  We implemented a new billing system as well as new sales and customer care systems in the first quarter 2012.  To improve our operational performance, we continue to make significant investments in staffing, training, information systems, and other initiatives, primarily in our call center and in-home service operations.  These investments are intended to help combat inefficiencies introduced by the increasing complexity of our business, improve customer satisfaction, reduce churn, increase productivity, and allow us to scale better over the long run.  We cannot, however, be certain that our spending will ultimately be successful in improving our operational performance.

We have been deploying receivers that utilize 8PSK modulation technology and receivers that utilize MPEG-4 compression technology for several years.  These technologies, when fully deployed, will allow more programming channels to be carried over our existing satellites.  Many of our customers today, however, do not have receivers that use MPEG-4 compression and a smaller but still significant percentage do not have receivers that use 8PSK modulation.  We may choose to invest significant capital to accelerate the conversion of customers to MPEG-4 and/or 8PSK to realize the bandwidth benefits sooner.  In addition, given that all of our HD content is broadcast in MPEG-4, any growth in HD penetration will naturally accelerate our transition to these newer technologies and may increase our subscriber acquisition and retention costs.  All new receivers that we purchase from EchoStar have MPEG-4 technology.  Although we continue to refurbish and redeploy MPEG-2 receivers, as a result of our HD initiatives and current promotions, we currently activate most new customers with higher priced MPEG-4 technology.  This limits our ability to redeploy MPEG-2 receivers and, to the extent that our promotions are successful, will accelerate the transition to MPEG-4 technology, resulting in an adverse effect on our average subscriber acquisition costs per new subscriber activation.

From time to time, we change equipment for certain subscribers to make more efficient use of transponder capacity in support of HD and other initiatives.  We believe that the benefit from the increase in available transponder capacity outweighs the short-term cost of these equipment changes.

To maintain and enhance our competitiveness over the long term, we recently introduced the Hopper™ receiver that allows, among other things, recorded programming to be viewed in HD in multiple rooms.  We are also promoting a suite of integrated products designed to maximize the convenience and ease of watching TV anytime and anywhere, which we refer to as TV Everywhere™ which utilizes, among other things, online access and Slingbox “placeshifting” technology.  There can be no assurance that these integrated products will positively affect our results of operations or our gross new subscriber activations.

Blockbuster

On April 26, 2011, we completed the Blockbuster Acquisition.  We acquired Blockbuster operations in the United States and in certain foreign countries.  Our winning bid in the bankruptcy court auction was valued at $321 million.  We paid $238 million, including $226 million in cash and $12 million in certain assumed liabilities.  Of the $226 million paid in cash, $20 million was placed in escrow.  Subsequent to this payment, we received a $4 million refund from escrow, resulting in a net purchase price of $234 million.  This transaction was accounted for as a business combination and therefore the purchase price was allocated to the assets acquired based on their estimated fair value.  Since the purchase prices of future inventory are expected to be higher than the fair value of the inventory acquired, our cost of sales as a percentage of revenue will be higher in the future.

Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand® service.  The Blockbuster Acquisition complements our core business of delivering high-quality video entertainment

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

to consumers.  We are promoting our new Blockbuster offerings including the Blockbuster@Home™ service which provides movies, games and TV shows through Internet streaming, mail and in-store exchanges and online.  This offering is only available to DISH subscribers.

During the three months ended March 31, 2012, Blockbuster operations contributed $334 million in revenue and $14 million in operating income.  The operating income during the three months ended March 31, 2012 was slightly higher than recent quarters as we benefitted from the sale of inventory from domestic retail stores that were closed in the first quarter 2012.  In total, we closed approximately 500 domestic stores during the three months ended March 31, 2012, leaving us with approximately 1,000 domestic stores.  We plan to close approximately 100 additional domestic stores in the second quarter 2012.  We continue to evaluate the impact of certain factors, including, among other things, competitive pressures, the scale of our Blockbuster retail operations and other issues impacting the store-level financial performance of our Blockbuster retail stores.  These factors, or other reasons, could lead us to close additional Blockbuster retail stores.

Wireless Spectrum

In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  On March 9, 2012, we closed the acquisitions of 100% of the equity of reorganized DBSD North America, Inc. (“DBSD North America”) and substantially all of the assets of TerreStar Networks, Inc. (“TerreStar”), pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  In addition, during the fourth quarter 2011, we and Sprint Nextel Corporation (“Sprint”) entered into a mutual release and settlement agreement (the “Sprint Settlement Agreement”) pursuant to which all disputed issues relating to the acquisitions of DBSD North America and TerreStar were resolved between us and Sprint, including, but not limited to, issues relating to costs allegedly incurred by Sprint to relocate users from the spectrum then licensed to DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for DBSD North America (the “DBSD Transaction”), $1.382 billion for TerreStar (the “TerreStar Transaction”), and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.  The financial results of DBSD North America and TerreStar were included in our results as of March 9, 2012.

We generated less than $1 million of revenue and incurred $8 million in operating expenses for the three months ended March 31, 2012 from our wireless spectrum assets.  We incurred general and administrative expenses associated with certain satellite operations and regulatory compliance from our wireless spectrum assets.  We also incurred depreciation and amortization expenses associated with certain assets of DBSD North America and TerreStar.  This depreciation and amortization expense is based on our initial estimate of the fair value of these assets as disclosed in Note 8 in the Notes to the Condensed Consolidated Financial Statements.  As we review our options for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have to make significant investments related to, among other things, research and development, wireless testing and construction of a wireless network.

Operational Liquidity

Like many companies, we make general investments in property such as satellites, set-top boxes, information technology and facilities that support our overall business.  As a subscriber-based company, however, we also make subscriber-specific investments to acquire new subscribers and retain existing subscribers.  While the general investments may be deferred without impacting the business in the short-term, the subscriber-specific investments are less discretionary.  Our overall objective is to generate sufficient cash flow over the life of each subscriber to provide an adequate return against the upfront investment.  Once the upfront investment has been made for each subscriber, the subsequent cash flow is generally positive.

There are a number of factors that impact our future cash flow compared to the cash flow we generate at a given point in time.  The first factor is how successful we are at retaining our current subscribers.  As we lose subscribers from our existing base, the positive cash flow from that base is correspondingly reduced.  The second factor is how successful we are at maintaining our subscriber-related margins.  To the extent our “Subscriber-related expenses” grow faster than our “Subscriber-related revenue,” the amount of cash flow that is generated per existing subscriber

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

is reduced.  The third factor is the rate at which we acquire new subscribers.  The faster we acquire new subscribers, the more our positive ongoing cash flow from existing subscribers is offset by the negative upfront cash flow associated with new subscribers.  Finally, our future cash flow is impacted by the rate at which we make general investments and any cash flow from financing activities.

Our subscriber-specific investments to acquire new subscribers have a significant impact on our cash flow.  While fewer subscribers might translate into lower ongoing cash flow in the long-term, cash flow is actually aided, in the short-term, by the reduction in subscriber-specific investment spending.  As a result, a slow down in our business due to external or internal factors does not introduce the same level of short-term liquidity risk as it might in other industries.

Availability of Credit and Effect on Liquidity

The ability to raise capital has generally existed for us despite the weak economic conditions.  Modest fluctuations in the cost of capital will not likely impact our current operational plans.

Future Liquidity

Wireless Spectrum

In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  To commercialize these licenses and satisfy the associated FCC build-out requirements, we will be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to these licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly, which may affect our future financial condition or results of operations.  Part or all of these licenses may be terminated if the associated FCC build-out requirements are not satisfied.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these investments and profitably deploy the spectrum represented by the 700 MHz licenses.

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released a notice of proposed rule making (“NPRM”) that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012. While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

Voom HD Holdings

If Voom HD Holdings (“Voom”) prevails in its breach of contract suit against us, we could be required to pay substantial damages, which would have a material adverse affect on our financial position and results of operations.  In January 2008, 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 At that time, Voom also sought a preliminary injunction to prevent us from terminating the agreement.  The Court denied Voom’s request, finding, among other things, that Voom had not demonstrated that it was likely to prevail on the merits.  In April 2010, we and Voom each filed motions for summary judgment.  Voom later filed two motions seeking discovery sanctions.  On November 9, 2010, the Court issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery sanctions.  The Court’s decision provides for an adverse inference jury instruction at trial and precludes our damages expert from testifying at trial.  We appealed the grant of Voom’s motion for discovery sanctions to the New York State Supreme Court, Appellate Division, First Department.  On February 15, 2011, the appellate court granted our motion to stay the trial pending our appeal.  On January 31, 2012, the appellate court affirmed the order imposing discovery sanctions and precluding our damages expert from testifying at trial.  We sought leave to appeal to New York’s highest state court, the Court of Appeals, but that motion was denied on April 26, 2012.  A trial date has not been set.  Voom is claiming over $2.5 billion in damages.

EXPLANATION OF KEY METRICS AND OTHER ITEMS

Subscriber-related revenue.  “Subscriber-related revenue” consists principally of revenue from basic, premium movie, local, HD programming, pay-per-view, Latino and international subscription television services, equipment rental fees 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, fees earned from our in-home service operations and other subscriber revenue.  Certain of the amounts included in “Subscriber-related revenue” are not recurring on a monthly basis.

Equipment and merchandise sales, rental and other revenue.  “Equipment and merchandise sales, rental and other revenue” principally includes the non-subsidized sales of DBS accessories to retailers and other third-party distributors of our equipment domestically and to DISH subscribers.  Effective April 26, 2011, revenue from merchandise sold to customers including movies, video games and other items, and revenue from the rental of movies and video games and the sale of previously rented titles related to our Blockbuster operations are included in this category.  Effective March 9, 2012, revenue related to our wireless spectrum operations is included in this category.

Equipment sales, services and other revenue — EchoStar.  “Equipment sales, services and other revenue — EchoStar” includes revenue related to equipment sales, services, and other agreements with EchoStar.

Subscriber-related expenses.  “Subscriber-related expenses” principally include programming expenses, which represent a substantial majority of these expenses.  “Subscriber-related expenses” also include costs 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.

Satellite and transmission expenses — EchoStar.  “Satellite and transmission expenses — EchoStar” includes the cost of leasing satellite and transponder capacity from EchoStar and the cost of digital broadcast operations provided to us by EchoStar, including satellite uplinking/downlinking, signal processing, conditional access management, telemetry, tracking and control, and other professional services.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Satellite and transmission expenses — other.  “Satellite and transmission expenses — other” includes executory costs associated with capital leases and costs associated with transponder leases and other related services.  Effective March 9, 2012, expenses related to our wireless spectrum operations are included in this category.

Cost of sales - equipment, merchandise, services, rental and other.  “Cost of sales - equipment, merchandise, services, rental and other” principally includes the cost of non-subsidized sales of DBS accessories to retailers and other third-party distributors of our equipment domestically and to DISH subscribers.  Effective April 26, 2011, the cost of movies and video games including rental title purchases or revenue sharing to studios, packaging and online delivery costs and cost of merchandise sold including movies, video games and other items related to our Blockbuster operations are included in this category.  In addition, “Cost of sales - equipment, merchandise, services, rental and other” includes costs related to equipment sales, services, and other agreements with EchoStar.

Subscriber acquisition costs.In addition to leasing receivers, we generally subsidize installation and all or a portion of the cost of our receiver systems to attract new DISH subscribers.  Our “Subscriber acquisition costs” include the cost of subsidized sales of receiver systems to retailers and other third-party distributors of our equipment, the cost of subsidized sales of receiver systems directly by us to subscribers, including net costs related to our promotional incentives, costs related to our direct sales efforts and costs related to installation and acquisition advertising.  We exclude the value of equipment capitalized under our lease program for new subscribers from “Subscriber acquisition costs.”

SAC.  Subscriber acquisition cost measures are commonly used by those evaluating companies in the pay-TV industry.  We are not aware of any uniform standards for calculating the “average subscriber acquisition costs per new subscriber activation,” or SAC, and we believe presentations of SAC may not be calculated consistently by different companies in the same or similar businesses.  Our SAC is calculated as “Subscriber acquisition costs,” plus the value of equipment capitalized under our lease program for new subscribers, divided by gross new subscriber activations.  We include all the costs of acquiring subscribers (e.g., subsidized and capitalized equipment) as we believe it is a more comprehensive measure of how much we are spending to acquire subscribers.  We also include all new DISH subscribers in our calculation, including DISH subscribers added with little or no subscriber acquisition costs.

General and administrative expenses.  “General and administrative expenses” consists primarily of employee-related costs associated with administrative services such as legal, information systems, accounting and finance, including non-cash, stock-based compensation expense.  It also includes outside professional fees (e.g., legal, information systems and accounting services) and other items associated with facilities and administration.

Litigation expense.  “Litigation expense” primarily consists of legal settlements, judgments or accruals associated with certain significant litigation.

Interest expense, net of amounts capitalized.“Interest expense, net of amounts capitalized” primarily includes interest expense, prepayment premiums and amortization of debt issuance costs associated with our senior debt (net of capitalized interest), and interest expense associated with our capital lease obligations.

Other, net.The main components of “Other, net” are gains and losses realized on the sale of investments, impairment of marketable and non-marketable investment securities, unrealized gains and losses from changes in fair value of marketable and non-marketable strategic investments accounted for at fair value, and equity in earnings and losses of our affiliates.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”).  EBITDA is defined as “Net income (loss) attributable to DISH Network” plus “Interest expense, net of amounts capitalized” net of “Interest income,” “Taxes” and “Depreciation and amortization.”  This “non-GAAP measure” is reconciled to “Net income (loss) attributable to DISH Network” in our discussion of “Results of Operations” below.

DISH subscribers.  We include customers obtained through direct sales, third-party retailers and other third-party distribution relationships in our DISH subscriber count.  We also provide DISH service to hotels, motels and other commercial accounts.  For certain of these commercial accounts, we divide our total revenue for these commercial accounts by an amount approximately equal to the retail price of our DISH America programming package, and

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

include the resulting number, which is substantially smaller than the actual number of commercial units served, in our DISH subscriber count.  Effective during the first quarter 2011, we made two changes to this calculation methodology compared to prior periods.  Beginning February 1, 2011, the retail price of our DISH America programming package was used in the calculation rather than America’s Top 120 programming package, which had been used in prior periods.  We also determined that two of our commercial business lines, which had previously been included in the described calculation, could be more accurately reflected through actual subscriber counts.  The net impact of these two changes was to increase our subscriber count by approximately 6,000 subscribers in the first quarter 2011.  Prior period DISH subscriber counts have not been adjusted for this revised commercial accounts calculation as the impacts were immaterial.

Average monthly revenue per subscriber.  We are not aware of any uniform standards for calculating ARPU and believe presentations of ARPU may not be calculated consistently by other companies in the same or similar businesses.  We calculate average monthly revenue per subscriber, or ARPU, by dividing average monthly “Subscriber-related revenue” for the period (total “Subscriber-related revenue” during the period divided by the number of months in the period) by our average number of DISH subscribers for the period.  The average number of DISH subscribers is calculated for the period by adding the average number of DISH subscribers for each month and dividing by the number of months in the period.  The average number of DISH subscribers for each month is calculated by adding the beginning and ending DISH subscribers for the month and dividing by two.

Average monthly subscriber churn rate.  We are not aware of any uniform standards for calculating subscriber churn rate and believe presentations of subscriber churn rates may not be calculated consistently by different companies in the same or similar businesses.  We calculate subscriber churn rate for any period by dividing the number of DISH subscribers who terminated service during the period by the average number of DISH subscribers for the same period, and further dividing by the number of months in the period.  When calculating subscriber churn, the same methodology for calculating average number of DISH subscribers is used as when calculating ARPU.

Free cash flow.  We define free cash flow as “Net cash flows from operating activities” less “Purchases of property and equipment,” as shown on our Condensed Consolidated Statements of Cash Flows.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

RESULTS OF OPERATIONS

Three Months Ended March 31, 2012 Compared to the Three Months Ended March 31, 2011.

	For the Three Months
	Ended March 31,						Variance
Statements of Operations Data	2012			2011			Amount			%
	(In thousands)
Revenue:
Subscriber-related revenue	$	3,224,465		$	3,199,099		$	25,366		0.8
Equipment and merchandise sales, rental and other revenue	350,737			16,001			334,736			NM
Equipment sales, services and other revenue - EchoStar	6,667			9,031			(2,364		)	(26.2	)
Total revenue	3,581,869			3,224,131			357,738			11.1
Costs and Expenses:
Subscriber-related expenses	1,762,753			1,693,695			69,058			4.1
% of Subscriber-related revenue	54.7		%	52.9		%
Satellite and transmission expenses - EchoStar	109,854			108,913			941			0.9
% of Subscriber-related revenue	3.4		%	3.4		%
Satellite and transmission expenses - Other	11,679			10,200			1,479			14.5
% of Subscriber-related revenue	0.4		%	0.3		%
Cost of sales - equipment, merchandise, services, rental and other	142,262			22,267			119,995			NM
Subscriber acquisition costs	398,037			354,899			43,138			12.2
General and administrative expenses	376,175			161,784			214,391			NM
% of Total revenue	10.5		%	5.0		%
Litigation expense	—			(340,677		)	340,677			100.0
Depreciation and amortization	208,698			229,697			(20,999		)	(9.1	)
Total costs and expenses	3,009,458			2,240,778			768,680			34.3
Operating income (loss)	572,411			983,353			(410,942		)	(41.8	)
Other Income (Expense):
Interest income	7,089			6,286			803			12.8
Interest expense, net of amounts capitalized	(138,013		)	(120,179		)	(17,834		)	(14.8	)
Other, net	110,282			11,633			98,649			NM
Total other income (expense)	(20,642		)	(102,260		)	81,618			79.8
Income (loss) before income taxes	551,769			881,093			(329,324		)	(37.4	)
Income tax (provision) benefit, net	(191,643		)	(331,767		)	140,124			42.2
Effective tax rate	34.7		%	37.7		%
Net income (loss)	360,126			549,326			(189,200		)	(34.4	)
Less: Net income (loss) attributable to noncontrolling interest	(184		)	(68		)	(116		)	NM
Net income (loss) attributable to DISH Network	$	360,310		$	549,394		$	(189,084	)	(34.4	)
Other Data:
DISH Network subscribers, as of period end (in millions)	14.071			14.191			(0.120		)	(0.8	)
DISH Network subscriber additions, gross (in millions)	0.673			0.681			(0.008		)	(1.2	)
DISH Network subscriber additions, net (in millions)	0.104			0.058			0.046			79.3
Average monthly subscriber churn rate	1.35		%	1.47		%	(0.12		)%	(8.2	)
Average monthly revenue per subscriber (“ARPU”)	$	76.71		$	75.39		$	1.32		1.8
Average subscriber acquisition cost per subscriber (“SAC”)	$	751		$	725		$	26		3.6
EBITDA	$	891,575		$	1,224,751		$	(333,176	)	(27.2	)

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

DISH subscribers.  DISH added approximately 104,000 net subscribers during the three months ended March 31, 2012, compared to approximately 58,000 net subscriber additions during the same period in 2011.  The increase versus the same period in 2011 primarily resulted from a decrease in our churn rate.  Our average monthly subscriber churn rate for the three months ended March 31, 2012 was 1.35% compared to 1.47% for the same period in 2011.  During the three months ended March 31, 2012, DISH added approximately 673,000 gross new subscribers compared to approximately 681,000 gross new subscribers during the same period in 2011, a decrease of 1.2%.

Our churn rate for the three months ended March 31, 2012 was positively impacted versus the same period in 2011 because we did not have a programming package price increase in the first quarter 2012, but did during the same period in 2011.  While churn improved compared to the same period in 2011, increased competitive pressures could increase churn in the future.  Furthermore, our churn has historically been lower in the first quarter.  In addition to these factors, our churn rate is impacted by the credit quality of previously acquired subscribers, our ability to consistently provide outstanding customer service, and our ability to control piracy.

Our gross new subscriber activations continue to be negatively impacted by increased competitive pressures, including aggressive marketing and discounted promotional offers.  In addition, telecommunications companies continue to grow their customer bases.  Our gross new subscriber activations continue to be adversely affected by sustained economic weakness and uncertainty, including, among other things, the weak housing market and lower discretionary spending.

We have not always met our own standards for performing high-quality installations, effectively resolving subscriber issues when they arise, answering subscriber calls in an acceptable timeframe, effectively communicating with our subscriber base, reducing calls driven by the complexity of our business, improving the reliability of certain systems and subscriber equipment, and aligning the interests of certain third party retailers and installers to provide high-quality service.  Most of these factors have affected both gross new subscriber activations as well as existing subscriber churn.  Our future gross new subscriber activations and subscriber churn may be negatively impacted by these factors, which could in turn adversely affect our revenue growth.

Subscriber-related revenue.  DISH “Subscriber-related revenue” totaled $3.224 billion for the three months ended March 31, 2012, an increase of $25 million or 0.8% compared to the same period in 2011.  This change was primarily related to the increase in “ARPU” discussed below.

ARPU.  “Average monthly revenue per subscriber” was $76.71 during the three months ended March 31, 2012 versus $75.39 during the same period in 2011.  The $1.32 or 1.8% increase in ARPU was primarily attributable to our price increase in February 2011 and higher hardware related revenue, partially offset by decreases in premium and pay per view revenue.

Equipment and merchandise sales, rental and other revenue.  “Equipment and merchandise sales, rental and other revenue” totaled $351 million for the three months ended March 31, 2012, an increase of $335 million compared to the same period in 2011.  This increase was primarily driven by revenue from the rental of movies and video games, the sale of previously rented titles, and other merchandise sold to customers including movies, video games and other items related to our Blockbuster operations which are included in our financial results beginning April 26, 2011.

Subscriber-related expenses.  “Subscriber-related expenses” totaled $1.763 billion during the three months ended March 31, 2012, an increase of $69 million or 4.1% compared to the same period in 2011.  The increase in “Subscriber-related expenses” was primarily attributable to higher programming costs, partially offset by a decrease in customer retention expense.  The increase in programming costs was driven by rate increases in certain of our programming contracts, including the renewal of certain contracts at higher rates. “Subscriber-related expenses” represented 54.7% and 52.9% of “Subscriber-related revenue” during the three months ended March 31, 2012 and 2011, respectively.  The change in this expense to revenue ratio primarily resulted from higher programming costs, discussed above.

In the normal course of business, we enter into contracts to purchase programming content in which our payment obligations are fully contingent on the number of subscribers to whom we provide the respective content.  Our programming expenses will continue to increase to the extent we are successful in growing our subscriber base.  In

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

addition, our “Subscriber-related expenses” may face further upward pressure from price increases and the renewal of long-term programming contracts on less favorable pricing terms.

Cost of sales — equipment, merchandise, services, rental and other.  “Cost of sales — equipment, merchandise, services, rental and other” totaled $142 million for the three months ended March 31, 2012, an increase of $120 million compared to the same period in 2011.  This increase is primarily associated with the cost of rental title purchases or revenue sharing to studios, packaging and on-line delivery costs as well as the cost of merchandise sold such as movies, video games and other items related to our Blockbuster operations which are included in our financial results beginning April 26, 2011.

Subscriber acquisition costs.  “Subscriber acquisition costs” totaled $398 million for the three months ended March 31, 2012, an increase of $43 million or 12.2% compared to the same period in 2011.  This increase was primarily attributable to an increase in SAC described below.

SAC.  SAC was $751 during the three months ended March 31, 2012 compared to $725 during the same period in 2011, an increase of $26 or 3.6%.  This increase was primarily attributable to higher acquisition advertising expenses.

During the three months ended March 31, 2012 and 2011, the amount of equipment capitalized under our lease program for new subscribers totaled $107 million and $139 million, respectively.  This decrease in capital expenditures under our lease program for new subscribers resulted primarily from an increase in the percentage of redeployed receivers that were installed.  To remain competitive we upgrade or replace subscriber equipment periodically as technology changes, and the costs associated with these upgrades may be substantial.  To the extent technological changes render a portion of our existing equipment obsolete, we would be unable to redeploy all returned equipment and consequently would realize less benefit from the SAC reduction associated with redeployment of that returned lease equipment.

Our SAC calculation does not reflect any benefit from payments we received in connection with equipment not returned to us from disconnecting lease subscribers and returned equipment that is made available for sale or used in our existing customer lease program rather than being redeployed through our new customer lease program.  During the three months ended March 31, 2012 and 2011, these amounts totaled $30 million and $21 million, respectively.

We have been deploying receivers that utilize 8PSK modulation technology and receivers that utilize MPEG-4 compression technology for several years.  These technologies, when fully deployed, will allow more programming channels to be carried over our existing satellites.  Many of our customers today, however, do not have receivers that use MPEG-4 compression and a smaller but still significant percentage do not have receivers that use 8PSK modulation.  We may choose to invest significant capital to accelerate the conversion of customers to MPEG-4 and/or 8PSK to realize the bandwidth benefits sooner.  In addition, given that all of our HD content is broadcast in MPEG-4, any growth in HD penetration will naturally accelerate our transition to these newer technologies and may increase our subscriber acquisition and retention costs.  All new receivers that we purchase from EchoStar have MPEG-4 technology.  Although we continue to refurbish and redeploy MPEG-2 receivers, as a result of our HD initiatives and current promotions, we currently activate most new customers with higher priced MPEG-4 technology.  This limits our ability to redeploy MPEG-2 receivers and, to the extent that our promotions are successful, will accelerate the transition to MPEG-4 technology, resulting in an adverse effect on our SAC.

Our “Subscriber acquisition costs” and “SAC” may materially increase in the future to the extent that we transition to newer technologies, introduce more aggressive promotions, or provide greater equipment subsidies.  See further discussion under “Liquidity and Capital Resources — Subscriber Acquisition and Retention Costs.”

General and administrative expenses. “General and administrative expenses” totaled $376 million during the three months ended March 31, 2012, a $214 million increase compared to the same period in 2011.  This increase was primarily due to an increase in personnel, building and maintenance and other administrative costs associated with our Blockbuster operations which are included in our financial results beginning April 26, 2011.

Litigation expense.  “Litigation expense” totaled zero during the three months ended March 31, 2012.  During the three months ended March 31, 2011, we reversed $341 million related to the April 29, 2011 settlement agreement with TiVo, which was previously recorded as an expense. See Note 13 for further discussion.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Depreciation and amortization.  “Depreciation and amortization” expense totaled $209 million during the three months ended March 31, 2012, a $21 million or 9.1% decrease compared to the same period in 2011.  This change in “Depreciation and amortization” expense was primarily due to a decrease in depreciation on equipment leased to subscribers principally related to less equipment capitalization during the preceding 12 months and less equipment write-offs from disconnecting subscribers.

Interest expense, net of amounts capitalized.  “Interest expense, net of amounts capitalized” totaled $138 million during the three months ended March 31, 2012, an increase of $18 million or 14.8% compared to the same period in 2011.  This change primarily resulted from an increase in interest expense related to the issuance of our 6 3/4% Senior Notes due 2021 during the second quarter 2011, partially offset by a decrease in interest expense as a result of the repurchases and redemptions in 2011 of our 6 3/8% Senior Notes due 2011.

Other, net.  “Other, net” income totaled $110 million during the three months ended March 31, 2012, an increase of $99 million compared to the same period in 2011.  This increase resulted from a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction.  See Note 8 in the Notes to the Condensed Consolidated Financial Statements.

Earnings before interest, taxes, depreciation and amortization.EBITDA was $892 million during the three months ended March 31, 2012, a decrease of $333 million or 27.2% compared to the same period in 2011. EBITDA for the three months ended March 31, 2011 was favorably impacted by the reversal of $341 million of “Litigation expense” related to the April 29, 2011 settlement agreement with TiVo, which had been previously recorded as an expense prior to the first quarter 2011. EBITDA for the three months ended March 31, 2012 was impacted by a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction. The following table reconciles EBITDA to the accompanying financial statements.

	For the Three Months
	Ended March 31,
	2012			2011
	(In thousands)
EBITDA	$	891,575		$	1,224,751
Interest expense, net	(130,924		)	(113,893		)
Income tax (provision) benefit, net	(191,643		)	(331,767		)
Depreciation and amortization	(208,698		)	(229,697		)
Net income (loss) attributable to DISH Network	$	360,310		$	549,394

EBITDA is not a measure determined in accordance with accounting principles generally accepted in the United States (“GAAP”) and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP.  EBITDA is used as a measurement of operating efficiency and overall financial performance and we believe it to be a helpful measure for those evaluating companies in the pay-TV industry.  Conceptually, EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures.  EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Income tax (provision) benefit, net.  Our income tax provision was $192 million during the three months ended March 31, 2012, a decrease of $140 million compared to the same period in 2011.  The decrease in the provision was primarily related to the decrease in “Income (loss) before income taxes” and a decrease in our effective tax rate.  Our effective tax rate was positively impacted by the change in our valuation allowances against certain deferred tax assets that are capital in nature.

Net income (loss) attributable to DISH Network. “Net income (loss) attributable to DISH Network” was $360 million during the three months ended March 31, 2012, a decrease of $189 million compared to $549 million for the same period in 2011.  This decrease was primarily attributable to the changes in revenue and expenses discussed above.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

LIQUIDITY AND CAPITAL RESOURCES

Cash, Cash Equivalents and Current Marketable Investment Securities

We consider all liquid investments purchased within 90 days of their maturity to be cash equivalents.  See “Item 3. — Quantitative and Qualitative Disclosures About Market Risk” for further discussion regarding our marketable investment securities.  As of March 31, 2012, our cash, cash equivalents and current marketable investment securities totaled $2.693 billion compared to $2.041 billion as of December 31, 2011, an increase of $652 million.  This increase in cash, cash equivalents and current marketable investment securities was primarily related to cash generated from operations of $859 million and net sales of marketable investment securities of $139 million, partially offset by capital expenditures of $169 million, net payments in connection with the DBSD Transaction of $40 million, payments in connection with the TerreStar Transaction of $37 million, and other changes in working capital.

We have investments in various debt and equity instruments including corporate bonds, corporate equity securities, government bonds and variable rate demand notes (“VRDNs”).  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 of investments in many municipalities, which are backed by financial institutions or other highly rated companies 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 March 31, 2012 and December 31, 2011, we held VRDNs, within our current marketable investment securities portfolio, with fair values of $185 million and $161 million, respectively.

The following discussion highlights our cash flow activities during the three months ended March 31, 2012.

Cash Flow

Cash flows from operating activities

For the three months ended March 31, 2012, we reported “Net cash flows from operating activities” of $859 million primarily attributable to $459 million of net income adjusted to exclude non-cash charges for “Depreciation and amortization” expense and “Realized and unrealized losses (gains) on investments,” as well as changes in operating assets and liabilities related to timing differences between book expense and cash payments.

On December 17, 2010, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was enacted, which provides for a bonus depreciation deduction of 100% of the cost of our qualified capital expenditures from September 8, 2010 through December 31, 2011.  Our “Deferred income tax expense (benefit)” for the three months ended March 31, 2011 was positively impacted by the 100% bonus depreciation deduction in 2011.  In 2012, the bonus depreciation deduction was lowered to 50% of the cost of our qualified capital expenditures.

Cash flows from investing activities

For the three months ended March 31, 2012, we reported net cash outflows from investing activities of $109 million primarily related to capital expenditures of $169 million, purchases of strategic investments of $77 million, partially offset by net sales of marketable investment securities of $139 million.  The capital expenditures included $150 million associated with our subscriber acquisition and retention lease programs, and $19 million of other corporate capital expenditures.  The purchases of strategic investments included net payments in connection with the DBSD Transaction of $40 million, and the TerreStar Transaction of $37 million.

Cash flows from financing activities

For the three months ended March 31, 2012, we reported net cash outflows from financing activities of $2 million primarily related to debt repayments of $8 million, partially offset by stock options exercises.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Free Cash Flow

We define free cash flow as “Net cash flows from operating activities” less “Purchases of property and equipment,” as shown on our Condensed Consolidated Statements of Cash Flows.  We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments, fund acquisitions and for certain other activities.  Free cash flow is not a measure determined in accordance with GAAP and should not be considered a substitute for “Operating income,” “Net income,” “Net cash flows from operating activities” or any other measure determined in accordance with GAAP.  Since free cash flow includes investments in operating assets, we believe this non-GAAP liquidity measure is useful in addition to the most directly comparable GAAP measure “Net cash flows from operating activities.”

During the three months ended March 31, 2012 and 2011, free cash flow was significantly impacted by changes in operating assets and liabilities and in “Purchases of property and equipment” as shown in the “Net cash flows from operating activities” and “Net cash flows from investing” sections, respectively, of our Condensed Consolidated Statements of Cash Flows included herein.  Operating asset and liability balances can fluctuate significantly from period to period and there can be no assurance that free cash flow will not be negatively impacted by material changes in operating assets and liabilities in future periods, since these changes depend upon, among other things, management’s timing of payments and control of inventory levels, and cash receipts.  In addition to fluctuations resulting from changes in operating assets and liabilities, free cash flow can vary significantly from period to period depending upon, among other things, subscriber growth, subscriber revenue, subscriber churn, subscriber acquisition costs including amounts capitalized under our equipment lease programs, operating efficiencies, increases or decreases in purchases of property and equipment, and other factors.

The following table reconciles free cash flow to “Net cash flows from operating activities.”

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Free cash flow	$	689,622	$	611,343
Add back:
Purchases of property and equipment	168,928		232,952
Net cash flows from operating activities	$	858,550	$	844,295

Subscriber Base

DISH added approximately 104,000 net subscribers for the three months ended March 31, 2012, compared to approximately 58,000 net subscribers for the same period in 2011.  The increase versus the same period in 2011 primarily resulted from a decrease in our churn rate.  See “Results of Operations” above for further discussion.  There are a number of factors that impact our future cash flow compared to the cash flow we generate at any given point in time, including subscriber churn and how successful we are at retaining our current subscribers.  As we lose subscribers from our existing base, the positive cash flow from that base is correspondingly reduced.

Satellites

Operation of our subscription television 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, particularly by expanding local HD coverage and offering more national HD channels.  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 loss or 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 cause us to expend a significant portion of our cash to acquire or lease additional satellite capacity.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Security Systems

Increases in theft of our signal or our competitors’ signals could, in addition to reducing new subscriber activations, also cause subscriber churn to increase.  We use microchips embedded in credit card-sized access cards, called “smart cards,” or security chips in our receiver systems to control access to authorized programming content (“Security Access Devices”).  Our signal encryption has been compromised in the past and may be compromised in the future even though we continue to respond with significant investment in security measures, such as Security Access Device replacement programs and updates in security software, that are intended to make signal theft more difficult.  It has been our prior experience that security measures may only be effective for short periods of time or not at all and that we remain susceptible to additional signal theft.  During 2009, we completed the replacement of our Security Access Devices and re-secured our system.  We expect additional future replacements of these devices will be necessary to keep our system secure.  We cannot ensure that we will be successful in reducing or controlling theft of our programming content and we may incur additional costs in the future if our system’s security is compromised.

Stock Repurchases

Our Board of Directors previously authorized the repurchase of up to $1.0 billion of our Class A common stock.  On November 1, 2011, our Board of Directors extended the plan and authorized an increase in the maximum dollar value of shares that may be repurchased under the plan, such that we are currently authorized to repurchase up to $1.0 billion of outstanding shares of our Class A common stock through and including December 31, 2012.  As of March 31, 2012, we may repurchase up to $1.0 billion under this plan.

Subscriber Acquisition and Retention Costs

We incur significant upfront costs to acquire subscribers, including advertising, retailer incentives, equipment subsidies, installation services, and new customer promotions.  While we attempt to recoup these upfront costs over the lives of their subscription, there can be no assurance that we will.  We employ business rules such as minimum credit requirements and we strive to provide outstanding customer service, to increase the likelihood of customers keeping their DISH service over longer periods of time.  Our subscriber acquisition costs may vary significantly from period to period.

We incur significant costs to retain our existing customers, mostly by upgrading their equipment to HD and DVR receivers.  As with our subscriber acquisition costs, our retention spending includes the cost of equipment and installation services.  In certain circumstances, we also offer free programming and/or promotional pricing for limited periods for existing customers in exchange for a commitment to receive service for a minimum term.  A component of our retention efforts includes the installation of equipment for customers who move.  Our subscriber retention costs may vary significantly from period to period.

Seasonality

Historically, the first half of the year generally produces fewer gross new subscriber activations than the second half of the year, as is typical in the pay-TV service industry.  In addition, the first and fourth quarter generally produce a lower churn rate than the second and third quarter.  However, we can not provide assurance that this will continue in the future.

Covenants and Restrictions Related to our Senior Notes

The indentures related to our outstanding senior notes contain restrictive covenants that, among other things, impose limitations on the ability of DISH DBS Corporation (“DISH DBS”) and its restricted subsidiaries to:  (i) incur additional indebtedness; (ii) enter into sale and leaseback transactions; (iii) pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock; (iv) make certain investments; (v) create liens; (vi) enter into certain transactions with affiliates; (vii) merge or consolidate with another company; and (viii) transfer or sell assets.  Should we fail to comply with these covenants, all or a portion of the debt under the senior notes could become immediately payable.  The senior notes also provide that the debt may be required to be prepaid if certain change-in-control events occur.  As of the date of filing, DISH DBS was in compliance with the covenants.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Other

We are also vulnerable to fraud, particularly in the acquisition of new subscribers.  While we are addressing the impact of subscriber fraud through a number of actions, there can be no assurance that we will not continue to experience fraud, which could impact our subscriber growth and churn.  Sustained economic weakness may create greater incentive for signal theft and subscriber fraud, which could lead to higher subscriber churn and reduced revenue.

Obligations and Future Capital Requirements

Future Capital Requirements

Wireless Spectrum

In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  To commercialize these licenses and satisfy the associated FCC build-out requirements, we will be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to these licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly, which may affect our future financial condition or results of operations.  Part or all of these licenses may be terminated if the associated FCC build-out requirements are not satisfied.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these investments and profitably deploy the spectrum represented by the 700 MHz licenses.

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012. While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Continued

Voom HD Holdings

If Voom prevails in its breach of contract suit against us, we could be required to pay substantial damages, which would have a material adverse affect on our financial position and results of operations.  In January 2008, Voom filed a lawsuit against us 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.  At that time, Voom also sought a preliminary injunction to prevent us from terminating the agreement.  The Court denied Voom’s request, finding, among other things, that Voom had not demonstrated that it was likely to prevail on the merits.  In April 2010, we and Voom each filed motions for summary judgment.  Voom later filed two motions seeking discovery sanctions.  On November 9, 2010, the Court issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery sanctions.  The Court’s decision provides for an adverse inference jury instruction at trial and precludes our damages expert from testifying at trial.  We appealed the grant of Voom’s motion for discovery sanctions to the New York State Supreme Court, Appellate Division, First Department.  On February 15, 2011, the appellate court granted our motion to stay the trial pending our appeal.  On January 31, 2012, the appellate court affirmed the order imposing discovery sanctions and precluding our damages expert from testifying at trial.  We sought leave to appeal to New York’s highest state court, the Court of Appeals, but that motion was denied on April 26, 2012.  A trial date has not been set.  Voom is claiming over $2.5 billion in damages.

Strategic Investments or Acquisitions

From time to time we evaluate opportunities for strategic investments or acquisitions that may complement our current services and products, enhance our technical capabilities, improve or sustain our competitive position, or otherwise offer growth opportunities.  We may make investments in or partner with others to expand our business into mobile and portable video, IPTV, data and voice services.  Future material investments or acquisitions may require that we obtain additional capital, assume third party debt or incur other long-term obligations.

Investments in ARS/MBS

A portion of our investment portfolio is invested in auction rate securities (“ARS”), mortgage backed securities (“MBS”), and strategic investments, and as a result a portion of our portfolio has restricted liquidity.  Liquidity in the markets for these investments has been adversely impacted.  If the credit ratings of these securities deteriorate or the lack of liquidity in the marketplace continues, we may be required to record impairment charges.  Moreover, the sustained uncertainty of domestic and global financial markets has greatly affected the volatility and value of our marketable investment securities.  To the extent we require access to funds, we may need to sell these securities under unfavorable market conditions, record further impairment charges and fall short of our financing needs.

Off-Balance Sheet Arrangements

Other than the “Guarantees” disclosed in Note 11 in the Notes to our Condensed Consolidated Financial Statements, we generally do not engage in off-balance sheet financing activities.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks Associated With Financial Instruments

Our investments and debt are exposed to market risks, discussed below.

Cash, Cash Equivalents and Current Marketable Investment Securities

As of March 31, 2012, our cash, cash equivalents and current marketable investment securities had a fair value of $2.693 billion.  Of that amount, a total of $2.241 billion was invested in:  (a) cash; (b) VRDNs convertible into cash at par value plus accrued interest generally in five business days or less; (c) debt instruments of the United States Government and its agencies; (d) commercial paper and corporate notes with an overall average maturity of less than one year and rated in one of the four highest rating categories by at least two nationally recognized statistical rating organizations; and/or (e) instruments with similar risk, duration and credit quality characteristics to the commercial paper and corporate obligations described above.  The primary purpose of these investing activities has been to preserve principal until the cash is required to, among other things, fund operations, make strategic investments and expand the business.  Consequently, the size of this portfolio fluctuates significantly as cash is received and used in our business.  The value of this portfolio is negatively impacted by credit losses; however, this risk is mitigated through diversification that limits our exposure to any one issuer.

Interest Rate Risk

A change in interest rates would affect the fair value of our cash, cash equivalents and current marketable investment securities portfolio, however, we normally hold these investments to maturity.  Based on our March 31, 2012 current non-strategic investment portfolio of $2.241 billion, a hypothetical 10% change in average interest rates would not have a material impact on the fair value due to the limited duration of our investments.

Our cash, cash equivalents and current marketable investment securities had an average annual rate of return for the three months ended March 31, 2012 of 0.7%.  A change in interest rates would affect our future annual interest income from this portfolio, since funds would be re-invested at different rates as the instruments mature.  A hypothetical 10% decrease in average interest rates during 2012 would result in a decrease of approximately $2 million in annual interest income.

Strategic Marketable Investment Securities

As of March 31, 2012, we held strategic and financial debt and equity investments of public companies with a fair value of $452 million.  These investments, which are held for strategic and financial purposes, are concentrated in several companies, are highly speculative and have experienced and continue to experience volatility.  The fair value of our strategic and financial debt and equity investments can be significantly impacted by the risk of adverse changes in securities markets generally, as well as risks related to the performance of the companies whose securities we have invested in, risks associated with specific industries, and other factors.  These investments are subject to significant fluctuations in fair value due to the volatility of the securities markets and of the underlying businesses.  In general, the debt instruments held in our strategic marketable investment securities portfolio are not significantly impacted by interest rate fluctuations as their value is more closely related to factors specific to the underlying business.  A hypothetical 10% adverse change in the price of our public strategic debt and equity investments would result in a decrease of approximately $45 million in the fair value of these investments.

Restricted Cash and Marketable Investment Securities and Noncurrent Marketable and Other Investment Securities

Restricted Cash and Marketable Investment Securities

As of March 31, 2012, we had $134 million of restricted cash and marketable investment securities invested in:  (a) cash;  (b) VRDNs convertible into cash at par value plus accrued interest generally in five business days or less; (c) debt instruments of the United States Government and its agencies; (d) commercial paper and corporate notes with an overall average maturity of less than one year and rated in one of the four highest rating categories by at least two nationally recognized statistical rating organizations; and/or (e) instruments with similar risk, duration and credit quality characteristics to the commercial paper described above.  Based on our March 31, 2012 investment portfolio, a

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - Continued

hypothetical 10% increase in average interest rates would not have a material impact in the fair value of our restricted cash and marketable investment securities.

Noncurrent Auction Rate and Mortgage Backed Securities

As of March 31, 2012, we held investments in ARS and MBS of $118 million, which are reported at fair value.  Events in the credit markets have reduced or eliminated current liquidity for certain of our ARS and MBS investments.  As a result, we classify these investments as noncurrent assets as we intend to hold these investments until they recover or mature, and therefore interest rate risk associated with these securities is mitigated.  A hypothetical 10% adverse change in the price of these investments would result in a decrease of approximately $12 million in the fair value of these investments.

Long-Term Debt

As of March 31, 2012, we had long-term debt of $7.246 billion, excluding capital lease obligations, on our Condensed Consolidated Balance Sheets.  We estimated the fair value of this debt to be approximately $7.852 billion using quoted market prices for our publicly traded debt, which constitutes approximately 99% of our debt.  The fair value of our debt is affected by fluctuations in interest rates.  A hypothetical 10% decrease in assumed interest rates would increase the fair value of our debt by approximately $189 million.  To the extent interest rates increase, our costs of financing would increase at such time as we are required to refinance our debt.  As of March 31, 2012, a hypothetical 10% increase in assumed interest rates would increase our annual interest expense by approximately $52 million.

Derivative Financial Instruments

From time to time, we speculate using derivative financial instruments; such amounts, however, are typically insignificant.

Item 4. CONTROLS AND PROCEDURES

Conclusion regarding disclosure controls and procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal control over financial reporting

On April 26, 2011, we completed the Blockbuster Acquisition.  On March 9, 2012, we completed the DBSD Transaction and the TerreStar Transaction.  We are currently integrating policies, processes, people, technology and operations for each of the combined companies.  Management will continue to evaluate our internal control over financial reporting as we execute integration activities.  Except as discussed above, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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

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appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.

For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties (as with many patent-related cases).  For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Channel Bundling Class Action

During 2007, a purported class of cable and satellite subscribers filed an antitrust action against our wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Central District of California.  The suit also names as defendants DirecTV, Comcast, Cablevision, Cox, Charter, Time Warner, Inc., Time Warner Cable, NBC Universal, Viacom, Fox Entertainment Group and Walt Disney Company.  The suit alleges, among other things, that the defendants engaged in a conspiracy to provide customers with access only to bundled channel offerings as opposed to giving customers the ability to purchase channels on an “a la carte” basis.  On October 16, 2009, the District Court entered an order granting the defendants’ motion to dismiss with prejudice.  On June 3, 2011, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s order.  The plaintiff class sought rehearing en banc.  On October 31, 2011, the Ninth Circuit issued an order vacating the previous June 3, 2011 order, directing that a 3-judge panel be reconstituted, and denying the plaintiff class’ motion for rehearing.  On March 30, 2012, the reconstituted panel of the Ninth Circuit again affirmed the District Court’s order.  On April 10, 2012, the plaintiff class again filed a petition for rehearing en banc, which was denied on May 4, 2012.  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.

Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC)

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.”  On November 18, 2011, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed an amended complaint making the same claim.  DirecTV was dismissed from the case on January 4, 2012.

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.

ESPN

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 high-definition feeds of the Disney Channel, ESPN News, Toon and ABC Family.  In October 2011, the jury returned a verdict in favor of the defendants.  We intend to appeal.

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 is disputed.  On December 29, 2010, the New York State Supreme Court, Appellate Division,

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PART II — OTHER INFORMATION — Continued

First Department affirmed the partial grant of ESPN’s motion 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 affirmed the prior grant of ESPN’s motion and ruled that we owe the full amount of approximately $66 million under the applicable affiliation agreement.  As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Condensed Consolidated Balance Sheets.

On June 21, 2011, the First Department affirmed the New York 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, during 2011, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss).  On February 6, 2012, ESPN filed a motion seeking $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim, which we have opposed.  As a result, during the three months ended March 31, 2012, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million as of March 31, 2012.  This reflects our estimated exposure for ESPN’s counterclaim.  We intend to vigorously prosecute and defend this case.

Norman IP Holdings, Inc.

On September 15, 2011, Norman IP Holdings, Inc. (“Norman”) filed a patent infringement complaint against Brother International Corporation and Lexmark International Corporation in the United States District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 5,592,555 (the “‘555 patent”)  and U.S. Patent No. 5,502,689 (the “‘689 patent”).  On December 9, 2011, Norman filed a first amended complaint that added Ricoh Americas Corporation and dropped Brother International Corporation as defendants.  On January 27, 2012, Norman filed a second amended complaint that added us as a defendant, in addition to adding Belkin International, Inc., BMW of North America LLC, Daimler North America Corporation, Mercedes-Benz USA, LLC, D-Link Systems, Inc., Ford Motor Company, Garmin International, Inc., Garmin USA, Inc., General Electric Company, General Motors Company, JVC Americas Corporation, Novatel Wireless, Inc., Novatel Wireless Solutions, Inc., Novatel Wireless Technology, Inc., TomTom, Inc., ViewSonic Corporation, Vizio, Inc., Volkswagen Group of America, Inc., Xerox Corporation, ZTE USA, Inc., and ZTE Solutions, Inc.  The ‘555 patent relates to a wireless communications privacy method and system and the ‘689 patent relates to a clock generator capable of shut-down mode and clock generation method.  Norman 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 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.

NorthPoint Technology, Ltd.

On July 2, 2009, NorthPoint Technology, Ltd. (“NorthPoint”) filed suit against us, EchoStar and DirecTV in the United States District Court for the Western District of Texas alleging infringement of United States Patent No. 6,208,636 (the “‘636 patent”).  The ‘636 patent relates to the use of multiple low-noise block converter feedhorns, or LNBFs, which are antennas used for satellite reception.  On April 21, 2011, the U.S. Patent and Trademark Office issued an order granting reexamination of the ‘636 patent.  On June 21, 2011, the District Court entered summary judgment in our favor, finding that all asserted claims of the ‘636 patent are invalid.  NorthPoint has appealed.

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.

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PART II — OTHER INFORMATION — Continued

Olympic Developments AG, LLC

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 4, 2011, the case was stayed pending reexamination by the U.S. Patent and Trademark Office.

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.

Personalized Media Communications, Inc.

During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against us, EchoStar and Motorola Inc. in the United States District Court for the Eastern District of Texas alleging infringement of United States Patent Nos. 4,694,490, 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 EchoStar and us as defendants.  Trial is currently set for August 2012.

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 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.

Preservation Technologies, LLC

In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against us in the United States District Court for the Central District of California.  In the Operative Fourth Amended Complaint, filed on March 28, 2012, Preservation Technologies alleges that our BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services infringe U.S. 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 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.

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 alleges 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.

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PART II — OTHER INFORMATION — Continued

Only four patents remain in the case against us, one of which is subject to a reexamination request before the U.S. Patent and Trademark Office, which was filed on February 13, 2012.

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 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.

Technology Development and Licensing L.L.C.

On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against us 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 our motion to stay the case pending two reexamination petitions before the Patent and Trademark Office.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

TQP Development, LLC

On April 4, 2012, TQP Development, LLC (“TQP Development”) 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 titled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.”  TQP Development is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted 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.

Vigilos, LLC

On February 23, 2011, Vigilos, LLC filed suit against EchoStar, two EchoStar subsidiaries, Sling Media, Inc. and EchoStar Technologies L.L.C., and Monsoon Multimedia, Inc. in the U.S. District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 6,839,731, which is entitled “System and Method for Providing Data Communication in a Device Network.”  Subsequently in 2011, Vigilos added DISH Network L.L.C., our wholly owned subsidiary, as a defendant in its First Amended Complaint and the case was transferred to the Northern District of California.  Later in 2011, Vigilos filed a Second Amended Complaint that added claims for infringement of a second patent, U.S. Patent No. 7,370,074, which is entitled “System and Method for Implementing Open-Protocol Remote Device Control.”  Vigilos is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

Voom HD Holdings

In January 2008, 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.  At that time,

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PART II — OTHER INFORMATION — Continued

Voom also sought a preliminary injunction to prevent us from terminating the agreement.  The Court denied Voom’s request, finding, among other things, that Voom had not demonstrated that it was likely to prevail on the merits.  In April 2010, we and Voom each filed motions for summary judgment.  Voom later filed two motions seeking discovery sanctions.  On November 9, 2010, the Court issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery sanctions.  The Court’s decision provides for an adverse inference jury instruction at trial and precludes our damages expert from testifying at trial.  We appealed the grant of Voom’s motion for discovery sanctions to the New York State Supreme Court, Appellate Division, First Department.  On February 15, 2011, the appellate court granted our motion to stay the trial pending our appeal.  On January 31, 2012, the appellate court affirmed the order imposing discovery sanctions and precluding our damages expert from testifying at trial.  We sought leave to appeal to New York’s highest state court, the Court of Appeals, but that motion was denied on April 26, 2012.  A trial date has not been set.  Voom is claiming over $2.5 billion in damages.  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.

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 position, 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.

Item 1A.  RISK FACTORS

Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2011, includes a detailed discussion of our risk factors.  The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

We made a substantial investment to acquire certain wireless spectrum licenses and other assets from DBSD North America and TerreStar.  We will be required to make significant additional investments or partner with others to commercialize these assets.

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012.  While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

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PART II — OTHER INFORMATION — Continued

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

Furthermore, the fair values of wireless licenses and related assets may vary significantly in the future.  In particular, valuation swings could occur if:

·consolidation in the wireless industry allows or requires wireless carriers to sell significant portions of their wireless spectrum holdings, which could in turn reduce the value of our spectrum holdings; or

·a sale of spectrum by one or more wireless providers occurs.

In addition, the fair value of wireless licenses and related assets could decline as a result of the FCC’s pursuit of policies, including proposed rulemakings, such as the NPRM, or auctions, designed to increase the number of wireless licenses available in each of our markets.  If the fair value of our 2 GHz licenses and related assets were to decline significantly, we may incur substantial impairment charges, which could materially and adversely affect our future financial condition or results of operations.

Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information regarding repurchases of our Class A common stock from January 1, 2012 through March 31, 2012.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
	(In thousands, except share data)
January 1 - January 31, 2012	—	$	—	—	$	1,000,000
February 1 - February 29, 2012	—	$	—	—	$	1,000,000
March 1 - March 31, 2012	—	$	—	—	$	1,000,000
Total	—	$	—	—	$	1,000,000

(1) Our Board of Directors previously authorized stock repurchases of up to $1.0 billion of our Class A common stock. On November 1, 2011, our Board of Directors extended the plan and authorized an increase in the maximum dollar value of shares that may be repurchased under the plan, such that we are currently authorized to repurchase up to $1.0 billion of our outstanding shares through and including December 31, 2012. Purchases under our repurchase program may be made through open market purchases, privately negotiated transactions, or Rule 10b5-1 trading plans, subject to market conditions and other factors. We may elect not to purchase the maximum amount of shares allowable under this program and we may also enter into additional share repurchase programs authorized by our Board of Directors.

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PART II — OTHER INFORMATION — Continued

Item 6.    EXHIBITS

(a)          Exhibits.

10.1o	Receiver Agreement dated January 1, 2012 between Echosphere L.L.C. and EchoStar Technologies L.L.C.*
10.2o	Broadcast Agreement dated January 1, 2012 between EchoStar Broadcasting Corporation and DISH Network L.L.C.*
31.1o	Section 302 Certification of Chief Executive Officer.
31.2o	Section 302 Certification of Chief Financial Officer.
32.1o	Section 906 Certification of Chief Executive Officer.
32.2o	Section 906 Certification of Chief Financial Officer.
101o	The following materials from the Quarterly Report on Form 10-Q of DISH Network for the quarter ended March 31, 2012, filed on May 7, 2012, formatted in eXtensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements.

o	Filed herewith.
*	Certain portions of the exhibit have been omitted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DISH NETWORK CORPORATION
	By:	/s/ Joseph P. Clayton
	Joseph P. Clayton
	President and Chief Executive Officer
	(Duly Authorized Officer)
	By:	/s/ Robert E. Olson
	Robert E. Olson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
Date:  May 7, 2012

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EX-10.1

Exhibit 10.1

2012 RECEIVER AGREEMENT

This 2012 Receiver Agreement (“Agreement”) is entered into as of this 1st day of January, 2012 (the “Effective Date”), by and between EchoStar Technologies L.L.C. (“ETLLC”), having a principal place of business at 100 Inverness Terrace East, Englewood CO, 80112 and EchoSphere L.L.C. (“Licensee”), having a principal place of business at 9601 S. Meridian Blvd., Englewood CO 80112.

INTRODUCTION

A.ETLLC has developed a proprietary Digital Satellite Receiver (as defined in Section 1.4 below) for use in conjunction with the DISH service, a digital direct broadcast satellite (“DBS”) programming service network owned and operated by Affiliates of Licensee in the United States (the “DISH Service”).

B.Licensee is a distributor of consumer electronics products and desires to purchase OEM Products (as defined in Section 1.36 below) from ETLLC solely for distribution and sale in connection with the DISH Service in the Territory (as defined in Section 1.46 below).

C.ETLLC is willing to sell OEM Products to Licensee for such purposes, subject to and in accordance with the terms and conditions set forth below.

D.ETLLC and Licensee previously entered into that certain “Receiver Agreement” effective January 1, 2008 (as thereafter amended) (the “Prior Receiver Agreement”) pursuant to which the parties placed Purchase Orders (as defined in the Prior Receiver Agreement) for OEM Product (as defined in the Prior Receiver Agreement) from January 1, 2008 to December 31, 2011. The Prior Receiver Agreement will expire pursuant to its terms on December 31, 2011.  The parties now desire to enter into this Agreement whereby OEM Products purchased pursuant to purchase orders on or after January 1, 2012 will be governed by this Agreement, as set forth in Section 13.5 of this Agreement.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.DEFINITIONS

In addition to any other defined terms in this Agreement and except as otherwise expressly provided for in this Agreement, the following terms shall have the following meanings:

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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1.1“Accessories” means: (i) an antenna, LNB, feedhorn, feedarm, and other equipment necessary to bring a satellite signal into the home; or (ii) remote control devices for Digital Satellite Receivers, as such components may change from time to time in ETLLC’s sole discretion.

1.2“Affected Party” shall have the meaning set forth in Section 10.2.

1.3“Affiliate” means, with respect to a party to this Agreement, any person or entity directly or indirectly controlling, controlled by or under common control with such party provided that, solely for purposes hereof, DISH Network Corporation and its subsidiaries shall not be considered Affiliates of EchoStar Corporation and its subsidiaries, and EchoStar Corporation and its subsidiaries shall not be considered Affiliates of DISH Network Corporation and its subsidiaries.

1. 4“Agreement” shall have the meaning set forth in the introductory paragraph.***

1.6“Approved OEM Brand Name” means those Licensee Marks, which have been approved in writing by ETLLC (which approval shall not be unreasonably withheld), for placement on the bezel (front panel) of OEM Products and packaging therefor in accordance with the trademark usage guidelines (or as otherwise mutually agreed) of both Licensee and ETLLC.***

1.8“Business Day” means any day ending at 11:59 p.m. (Mountain Time) other than a Saturday or Sunday or a day on which commercial banks located in Denver, Colorado, are authorized or required to close.***

1.10“Covered Component” shall have the meaning set forth in Section 13.3.

1.11“Digital Converter Box” means a digital-to-analog converter box manufactured by or on behalf of ETLLC, which as of the Effective Date includes the “TR-40” digital converter box and the “TR-50” digital converter box and shall include such additional digital converter box models as mutually agreed between the Parties.

1.12“Digital Satellite Receiver” means a digital satellite receiver/decoder for use in connection with direct to home satellite programming services (including any related components), whether stand alone or incorporated into another product (i.e., a television or VCR), which may include Accessories.  For clarity and the avoidance of doubt, Existing Receivers, K Version Receivers and New Receivers are all Digital Satellite Receivers.

1.13“DBS” shall have the meaning set forth in the introduction.

1. 14“DISH Service” shall have the meaning set forth in the introduction.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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1. 15“DISH System” means a Digital Satellite Receiver manufactured by or on behalf of ETLLC solely for use in connection with, and compatible with the specifications of, the DISH Service.***

1.17“ETLLC” shall have the meaning set forth in the introductory paragraph.

1. 18“ETLLC Group” shall have the meaning set forth in Section 13.1.1.

1.19“ETLLC Marks” means those trademarks, service marks or trade names owned by ETLLC or for which ETLLC has the right to grant a sublicense, as such ETLLC Marks may change from time to time in ETLLC’s discretion.

1.20“ETLLC System Architecture” means the software, system architecture, and conditional access system that ETLLC commonly deploys in its Digital Satellite Receivers.

1. 21“Excess Inventory” shall have the meaning set forth in Section 5.7.

1.22“Existing Digital Satellite Receiver” or “Existing Receiver” means those Digital Satellite Receivers set forth in Section 1 of Schedule 1.

1. 23“Force Majeure” shall have the meaning set forth in Section 14.8.

1. 24“Forecast” shall have the meaning set forth in Section 5.1. ***

1. 26“Initial Term” shall have the meaning set forth in Section 10.1.

1.27“Indemnified Party” shall have the meaning set forth in Section 13.4.1.

1. 28“Indemnifying Party” shall have the meaning set forth in Section 13.4.1.

1.29“Intellectual Property” means all patents, copyrights, design rights, trademarks, service marks, trade secrets, know-how and any other intellectual or industrial property rights (whether registered or unregistered) and all applications for the same owned or controlled by ETLLC or Licensee, as the case may be, anywhere in the world.

1. 30‘K Version Receiver” shall mean: (i) those Digital Satellite Receivers set forth in Section 3 of Schedule 1; and (ii) those future Digital Satellite Receivers with modifications to*** as are mutually agreed by the parties from time to time.

1.31“Licensee” shall have the meaning set forth in the introductory paragraph.

1.33“Licensee Group” shall have the meaning set forth in Section 13.1.2.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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1.34“Licensee Marks” means the trademarks or trade names owned by Licensee, or for which Licensee has a license to use or the right to grant a sublicense sufficient for the purposes of this Agreement.

1.35“New Digital Satellite Receiver” or “New Receiver” means those Digital Satellite Receivers set forth in Section 2 of Schedule 1 and such future Digital Satellite Receivers that: (i) are not a K Version Receiver; (ii) have not previously been: (a) manufactured by or on behalf of ETLLC; and (b) deployed to Licensee’s subscribers in production quantity, as of the date of this Agreement; and (iii) *** as are mutually agreed by the parties from time to time.

1.36“OEM Product” means: (i) any Digital Satellite Receiver that: (a) is manufactured by or on behalf of ETLLC; (b) is branded with an Approved OEM Brand Name; (c) is designed to be compatible only with the DISH Service; and (d) after being equipped with a Security Access Device is designed to be unable to receive, decode or descramble signals transmitted by satellite transponders that are not owned, leased, or controlled by Licensee or an Affiliate of Licensee; (ii) a Sling Product; (iii) a Digital Converter Box; or (iv) Accessories.  For clarity and the avoidance of doubt, a Digital Satellite Receiver which is specifically designed for a third party other than Licensee or an Affiliate of Licensee shall not be considered an OEM Product.

1.37“OEM Product Price” shall have the meaning set forth in Section 4.1.

1. 38“Other Party” shall have the meaning set forth in Section 10.2.

1.39“Programming” means the video and audio signals transmitted by DBS satellite transponders that are owned or controlled by Licensee or an Affiliate and are part of DISH Network’s regular programming services.

1. 40“Purchase Order” shall have the meaning set forth in Section 5.2.

1.41“Security Access Device” means the card or smart chip, which, through the use of a secure microprocessor, controls the ability of the OEM Product to access the Programming.

1.42“Sling Product” means those Sling products set forth in Section 4 of Schedule 1 or such other products generally made available by Sling Media, Inc. and its subsidiaries as are mutually agreed upon between the Parties from time to time.

1. 43“Subscriber Information” shall have the meaning set forth in Section 9.2.

1. 44“Taxes” shall have the meaning set forth in Section 14.1.

1.45“Term” means the duration of this Agreement as specified in Section 10.1.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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1.46“Territory” means the geographic boundaries of: (i) the United States of America; (ii) Puerto Rico; and (iii) any other territorial possession of the United States within DISH Network’s existing satellite footprint as of the date of this Agreement.

1. 47“Third Party Intellectual Property” shall have the meaning set forth in Section 13.2.1.

1.48“Third Party Mark” shall have the meaning set forth in Section 13.2.1.

1. 49“Third Party Vendor” shall have the meaning set forth in Section 13.3.

1. 50“Uncapped Claim” shall have the meaning set forth in Section 13.4.2.

1. 51“Warranty” shall have the meaning set forth in Section 6.1.1. ***

1.53“Warranty Period for Security Access Devices” shall have the meaning set forth in Section 6.4.

2.MANUFACTURE AND SALE OF OEM PRODUCTS BY ETLLC

2.1Manufacture.

2.1.1Manufacture.  ETLLC agrees to manufacture and sell OEM Products to Licensee during the Term, and Licensee has the right, but not the obligation, to purchase OEM Products from ETLLC during the Term, in accordance with and subject to the terms of this Agreement.  ETLLC may select and authorize any third party to manufacture OEM Products on ETLLC’s behalf. ***

2.2Authorization; Territory.  Licensee shall be authorized to resell OEM Products within the Territory solely to: (i) retailers, distributors, installers and end users of DISH Network; and (ii) solely for use in conjunction with DISH Network in the Territory.  Licensee agrees that it shall not sell any OEM Product to: (a) any person or entity other than those authorized in clauses (i) and (ii) of the preceding sentence; (b) any person or entity who Licensee knows or has reason to know intends to use it, or resell it for use, in Canada or at any other location outside of the Territory; or (c) any person or entity who Licensee knows or has reason to know intends to use it, or resell it for use, in conjunction with a DBS service other than DISH Network.

2.3Approved OEM Brand Names.  Upon request by Licensee, ETLLC shall manufacture the OEM Product with any of the Approved OEM Brand Names affixed to the bezel (front panel) of the OEM Products in accordance with Section 8 below; provided, however, that ETLLC shall have no obligation under this Section 2.3 unless at the time of such request Licensee issues and delivers to ETLLC a firm Purchase Order for not less than *** units of an OEM Product with an Approved OEM Brand Name requested by Licensee which has not been previously manufactured by ETLLC

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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hereunder.  At the request of Licensee, new Approved OEM Brand Names may be added upon prior written approval of ETLLC (which approval shall not be unreasonably withheld).  The provisions of Section 8.1 shall apply to the use of ETLLC Marks on or in connection with OEM Product delivered hereunder which include any Approved OEM Brand Name.

2.4Costs.  Licensee shall be responsible, and shall pay ETLLC in advance, for all costs of labor and materials for the customization of an OEM Product with any Approved OEM Brand Name hereunder, including without limitation: (a) any tooling required; (b) silk-screening front panels of the satellite receivers; and (c) all costs in connection with the customization of any packaging for OEM Products.

2.5Identical Products.  All OEM Products other than Sling Products and Digital Converter Boxes delivered hereunder to Licensee shall be identical in functionality and technical specifications to the DISH Systems, and shall be identical in appearance to the DISH Systems except for the placement of Approved OEM Brand Names on OEM Products pursuant to Section 2.3 above, as otherwise expressly provided herein and as otherwise mutually agreed by the parties in writing.

2.6Freedom of Action.  Licensee acknowledges and agrees that this Agreement is non-exclusive in nature and that nothing in this Agreement shall prohibit or otherwise restrict ETLLC and/or any of their Affiliates from entering into an agreement with any third party concerning activities which are the same or similar activities to those contemplated in this Agreement, or any other activity.  ETLLC agrees that it shall not directly sell any OEM Product except for Sling Products or Digital Converter Boxes to any person or entity other than Licensee.

3.TRADEMARK LICENSE AGREEMENT

3.1Trademark License Agreement.  Licensee shall sign the Trademark License Agreement in ETLLC’s customary form.

4.PRICE; PAYMENT TERMS; RELATED MATTERS

4.1Price.  Licensee shall pay ETLLC for OEM Products in accordance with the pricing set forth in Schedule 4.1 (the “OEM Product Price”).***

4.3Reserved.

4.4Payment.  Except as otherwise agreed to by the parties, all invoices to Licensee hereunder shall be due, in immediately available funds, within *** days from the date of invoice, which shall be issued no earlier than the ship date for the OEM Products covered by the invoice.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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4.5Taxes.  In addition to the prices Licensee pays for OEM Products, as provided above, Licensee is responsible for any and all sales, use, gross receipts, excise and other taxes applicable to the sale, use, transportation or addition to value of the OEM Products.

4.6Shipping Costs.  Unless otherwise mutually agreed upon between the Parties, all OEM Products shall be shipped DDP (Destination Duty Paid) if international or DAP (Delivered at Place) on domestic shipments to Denver, Colorado or Atlanta, GA USA or such other terms or location mutually agreed upon between the parties.  Title of OEM Products purchased under this Agreement shall pass to Licensee upon delivery by ETLLC or its agent to the carrier for shipment thereof or at such other time as mutually agreed upon between the Parties.  Licensee shall be responsible for all costs of shipping and insurance of OEM Products. ETLLC shall have the sole responsibility to file any claims with the carrier for damage, missing items or otherwise, and Licensee shall have no liability or responsibility if ETLLC is unable to obtain full compensation for any loss from the claim.  ETLLC shall select the method of shipment and carrier; provided, however, that, in the event that ETLLC fails to make the necessary arrangements for shipment, ETLLC acknowledges and agrees that Licensee shall, without incurring any liability, have the option, in its sole discretion, to select the method of shipment and the carrier.

4.7Default.  If Licensee defaults in any payment due ETLLC, or Licensee violates any term or condition of this Agreement or of any credit extended by ETLLC or any Affiliate to Licensee, ETLLC reserves the right to: (i) suspend any shipment to Licensee; (ii) require payment for shipments prior to shipment or delivery; and/or (iii) require payment of all unpaid balances prior to any shipment and payment for that shipment.  Exercise of any of the above rights by ETLLC shall not be construed as a limitation of ETLLC’s authority to exercise any other rights which ETLLC may have at law, in equity or pursuant to this Agreement.

4.8Third Party License Fees.  The Parties acknowledge and agree that as of the Effective Date the OEM Product Price for Digital Satellite Receivers includes ***).  The Parties further acknowledge and agree that as of the Effective Date ***.

5.ORDERS, SHIPMENT; FORECASTS; AND RETURNS

5.1Forecast.  Each month during the Term, Licensee will send ETLLC a rolling forecast in accordance with the forecasting procedures set forth in Schedule 5.1 (the “Forecast”). Subject to the forecasting modification procedures set forth in Schedule 5.1, each Forecast shall be deemed a firm and binding commitment for the purchase of the OEM Products specified therein. The Forecast will be translated into a Purchase Order (as defined below), including the requested month of delivery, by Licensee in accordance with the Purchase Order procedures set forth in Schedule 5.1.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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5.2Purchase Orders.  Licensee will order OEM Products by written purchase order (“Purchase Order”) issued during the Term in accordance with the procedures set forth in Schedule 5.1.  Purchase Orders of Licensee shall state only: (i) identity of goods; (ii) quantity of goods; (iii) OEM Product Price of goods; and (iv) requested month of delivery of goods.  Any additional terms stated in a Purchase Order shall not be binding upon ETLLC unless expressly agreed to in writing by ETLLC.  In the event of any conflict between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement shall prevail.

5.3Cancellations and Modifications.  Neither Party may cancel or modify any accepted Purchase Order, except with the prior written consent of the other Party.

5.4Shipment.  Shipments will be made in standard shipping packages that have been approved by Licensee. All shipments will include a packing slip which lists items contained in the shipment by part number, descriptions (including the serial number and corresponding Security Access Device number for each OEM Product), quantity, and Purchase Order number. Not later than a reasonable time before the scheduled delivery dates, Licensee will notify ETLLC in writing of the specific shipping destinations and the specific quantity of OEM Products to be shipped to each destination, which Licensee agrees will be at least one full truckload per destination or such other minimum quantity as the parties may agree to from time to time in writing.

5.5Shipment Dates; Quantities.  ETLLC will use reasonable commercial efforts to make shipments of OEM Products by the month specified in Purchase Orders accepted from Licensee; provided however, that ETLLC shall be permitted to modify shipping dates due to circumstances beyond ETLLC’s reasonable control. All deliveries are contingent on ETLLC or its third party manufacturer receiving timely shipment of necessary materials for production.  Within a reasonable time after ETLLC becomes aware that it will not be able to make shipment of all or a portion of the OEM Products by the month specified in a particular Purchase Order accepted from Licensee, ETLLC shall give Licensee notice setting forth an estimated delivery month.  Licensee shall have the right, but not the obligation to reduce the total quantity of OEM Products requested in that Purchase Order in accordance with the Purchase Order Modification procedures set forth in Schedule 5.1.

5.6Partial Shipments.  Subject to Section 5.4, ETLLC reserves the right to ship OEM Products in a single or by multiple deliveries.  Except as expressly provided herein, failure of ETLLC to ship in the month requested in any Purchase Order shall not entitle Licensee to cancel or amend such order.  Subject to Section 5.4, ETLLC reserves the right to ship all or a portion of any Purchase Order, including partial Purchase Orders. Licensee shall pay for such portion of the shipment as is actually shipped.

5.7Sale of OEM Products by ETLLC. While, subject to Section 5.5 and the purchase order modification procedures set forth in Schedule 5.1, Licensee’s obligation

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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to honor Purchase Orders submitted to ETLLC is absolute, in the event that Licensee breaches this obligation, then, in addition to all other remedies available to ETLLC under this Agreement, at law, in equity or otherwise, and notwithstanding anything to the contrary herein ETLLC and/or any of its Affiliates shall have the right, but not the obligation, to sell the OEM Products covered by the relevant Purchase Order(s) (“Excess Inventory”) without removing Licensee’s markings.

6.WARRANTY

6.1Warranty of OEM Products.

6.1.1General Warranty.ETLLC warrants that each OEM Product will be free from defects in materials and workmanship (the “Warranty”) for a period *** (the “Warranty Period”).  The materials portion of this Warranty shall not apply to: (i) any OEM Product that is abused, damaged by external causes, altered or misused; or (ii) OEM Product damaged due to improper installation or use.  OEM Products shall be considered free from defects in workmanship if they are manufactured in accordance with ETLLC’s manufacturing workmanship standards (or those of any third party which manufactures the OEM Product on ETLLC’s behalf), conform to the product specifications, and successfully complete product acceptance tests for the product.

6.1.2Deadline for Claims; Disclaimer.ALL CLAIMS FOR WARRANTY FULFILLMENT MUST BE RECEIVED BY ETLLC (OR ITS DESIGNEE) NO LATER THAN A REASONABLE PERIOD OF TIME AFTER THE EXPIRATION OF THE WARRANTY PERIOD FOR THE PRODUCT.  THIS WARRANTY IS THE ONLY WARRANTY GIVEN BY ETLLC.  ETLLC MAKES, AND LICENSEE RECEIVES, NO OTHER WARRANTY EITHER EXPRESS OR IMPLIED.  ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, ARE EXPRESSLY DISCLAIMED AND EXCLUDED HEREFROM.

6.1.3Exclusive Remedy.Except as expressly set forth in Section 6.1.4, Licensee’s exclusive remedy for fulfillment of the Warranty shall be, at ETLLC’s option, repair by ETLLC at an ETLLC or third party facility of ETLLC’s choice, replacement of the defective OEM Product, or return of the OEM Product Price within a reasonable period of time after receipt of the OEM Product by ETLLC.***

6.2Licensee’s Warranty Obligations.  In addition to the obligations of Licensee elsewhere in this Article 6, Licensee shall:

6.2.1receive at a Licensee facility all OEM Products returned for both in-warranty and out-of-warranty repair;

6.2.2submit a daily report to ETLLC listing the serial number of each OEM Product and corresponding Security Access Device number which have been

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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received by Licensee and for which the subscriber has received a replacement OEM Product and/or Security Access Device;

6.2.3for in-warranty and out-of-warranty returns, conduct, at its own expense, an initial review of the OEM Product to verify the existence of a defect;

6.2.4in the case of OEM Products for which no defect is found, take such actions as it deems appropriate and ETLLC shall have no liability hereunder;

6.2.5in the case of in-warranty OEM Products with defects which are covered by the Warranty and verified by Licensee, ship such OEM Products at Licensee’s expense, to an ETLLC or third party facility, as designated by ETLLC, for treatment in accordance with the Warranty in Section 6.1.1 above, with ETLLC responsible for all costs associated with the shipment of conforming OEM Products to Licensee’s facility to replace failed units covered by the Warranty;

6.2.6in the case of out-of-warranty OEM Products with defects verified by Licensee (including in-warranty OEM Products with defects not covered by the Warranty), Licensee shall take such actions as it deems appropriate and ETLLC shall have no liability hereunder;  and

6.2.7reimburse ETLLC, within a reasonable period of time the customary screening fee, and any out of pocket expenses of ETLLC to third parties, including but not limited to the costs of returning the OEM Product to Licensee, in relation to OEM Products returned by Licensee under the preceding subsections for which there was no problem found upon testing by ETLLC, or with respect to which problems were identified which are not covered by the Warranty.

6.3Reserved.

6.4ETLLC Security Access Device Warranty.

(a)ETLLC warrants that any Security Access Devices purchased by Licensee from ETLLC in conjunction with an OEM Product shall be free from defects in materials and workmanship for the warranty period customarily provided by ETLLC to Licensee for like product (“Warranty Period for Security Access Devices”).  Licensee shall return defective Security Access Devices purchased by Licensee from ETLLC in conjunction with an OEM Product at Licensee’s expense.  If a Security Access Device purchased by Licensee from ETLLC in conjunction with an OEM Product is: (i) verified as having failed during the Warranty Period for Security Access Devices; (ii) returned to ETLLC by Licensee within a reasonable period of time after expiration of the Warranty Period for Security Access Devices; and (iii) confirmed as defective by ETLLC, Licensee’s exclusive remedy for fulfillment of this warranty shall be, at ETLLC’s option, for ETLLC to repair and return or replace and return conforming Security Access

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Devices to Licensee at no charge to Licensee, or refund Licensee the purchase price of such defective Security Access Devices.

(b)THE LIMITED WARRANTY PROVIDED BY ETLLC FOR SECURITY ACCESS DEVICES IN SECTION 6.4 IS IN LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR USE OR PURPOSE.  IN NO EVENT SHALL ETLLC BE LIABLE FOR ANY INDIRECT, EXEMPLARY, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE) ARISING OUT OF OR IN CONNECTION WITH THE SALE, USE OR PERFORMANCE OF ANY SECURITY ACCESS DEVICES AND REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED UPON BREACH OF WARRANTY OR CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL THEORY.

(c)Licensee agrees to provide ETLLC with a written report matching the identification number of each replacement Security Access Device with the serial number of the OEM Product into which it is installed prior to returning the OEM Product to the end-user.  In addition, Licensee shall notify ETLLC of the disposition and identification number of all Security Access Devices that Licensee has replaced but not returned to ETLLC within a reasonable time of such replacement.

7.EXPORT RESTRICTIONS

Licensee acknowledges and understands that U.S. export laws relating to the OEM Products and Security Access Devices provided therewith may change from time to time in the future.  Licensee acknowledges that it is Licensee’s sole responsibility to be and remain informed of all U.S. laws relating to the export of OEM Products and Security Access Devices outside of the U.S.  Licensee further acknowledges and agrees that ETLLC has absolutely no obligation to update Licensee regarding the status of U.S. export laws or any other U.S. laws relating to the export of OEM Products or Security Access Devices outside of the U.S.  Without ETLLC giving any consent for export of the OEM Products or Security Access Devices and subject to territorial limitations of this Agreement, Licensee represents, warrants and covenants that: (i) prior to exporting or selling any OEM Products or Security Access Devices outside of the U.S., it will investigate all applicable U.S. laws relating to the export of OEM Products and Security Access Devices outside of the U.S.; (ii) it will not export or reexport any OEM Product or Security Access Device to Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria or any other any destination in any country prohibited by U.S. export laws governing OEM Products or Security Access Devices without the prior approval of the United States Government; and (iii) it will not use any OEM Product or Security Access Device directly or indirectly to support the design, development, production or use of nuclear, chemical or biological weapons or ballistic missiles.  Licensee is strictly prohibited from violating any U.S. law relating to the export or sale of OEM Products or Security Access Devices outside of the U.S.  Should Licensee export

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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or sell any OEM Product or Security Access Device outside of the U.S. in violation of this Agreement and/or U.S. law, this Agreement shall automatically terminate.

8.TRADEMARKS

8.1ETLLC’s Marks.

8.1.1In addition to the Approved OEM Brand Names affixed to the OEM Products under this Agreement, ETLLC shall have the right to affix such of the ETLLC Marks on or in connection with the OEM Products, including, but not limited to, on the Accessories and packaging and on the electronic on screen guide, in accordance with the usage guidelines for the ETLLC Marks or ETLLC’s User Interface Specification, as such guidelines and/or specification may change from time to time in ETLLC’s sole discretion.   ETLLC agrees that Licensee shall not be required to accept the use of the ETLLC Marks on the OEM Products in any manner inconsistent with the usage guidelines for the Licensee Marks and the terms of this Section 8.1 without the prior written consent of Licensee, which consent shall not be unreasonably withheld.

8.1.2Notwithstanding Section 8.1.1 above and Section 8.1.3 below, Licensee acknowledges and agrees that the ETLLC Marks customarily used and the minimum size and manner of placement requirements for the ETLLC Marks currently set forth in: (i) ETLLC’s trademark usage guidelines and User Interface Specification; and (ii) this Section 8.1.2, are consistent with Licensee’s usage guidelines for use in connection with the Licensee Marks, and may continue to be applied by ETLLC in the size and manner customarily used and set forth in ETLLC’s trademark usage guidelines and User Interface Specification respectively and this Section 8.1.2 for the Term, including any extensions thereto.  Specifically, and without limitation of the foregoing, Licensee agrees that ETLLC shall have the right for the duration of the Term and any extensions thereof to affix the ETLLC Marks on or in connection with the OEM Products, including without limitation on the Accessories and packaging and on the electronic program guide, such that the ETLLC Marks are displayed in a manner which is at least equally as prominent as the Approved OEM Brand Names affixed to the same.  In the event that Licensee desires to change its usage guidelines in a manner that would effect the rights granted to ETLLC by Licensee under this Section 8.1.2, the parties agree to discuss the possibility of altering the application of the ETLLC Marks, Licensee Marks and Third Party Marks to the OEM Products in such a manner as will be consistent with the new usage guidelines proposed by Licensee and insure to ETLLC as nearly as possible the same results to which ETLLC is entitled under this Section 8.1.2.

8.1.3Licensee agrees not to use any of the ETLLC Marks in any manner inconsistent with the usage guidelines for the ETLLC Marks and without the prior written consent of ETLLC, and, subject to Section 8.1.2 above, ETLLC agrees that Licensee shall not be required to use the ETLLC Marks in any manner inconsistent with the usage guidelines for the Licensee Marks without the prior written consent of Licensee

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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which consent shall not be unreasonably withheld.  Licensee shall not use any of the ETLLC Marks without the prior written consent of ETLLC, which consent ETLLC may withhold in its sole discretion.  Licensee expressly acknowledges and understands that ETLLC and its Affiliates claim to have the absolute ownership of, or right to allow Licensee to use, the ETLLC Marks.

8.1.4Regardless of whether ETLLC grants Licensee permission to use any ETLLC Mark, Licensee agrees that it will not in any way dispute or impugn the validity of any of the ETLLC Marks or registrations of the ETLLC Marks, nor the sole proprietary right of ETLLC and its Affiliates thereto, nor the right of ETLLC and its Affiliates to use or license the use of the ETLLC Marks in the Territory or elsewhere, either during the Term or at any time thereafter.  Licensee further agrees not to perform, either during the Term or at any time thereafter, any act or deed either of commission or of omission which is inconsistent with ETLLC or its Affiliates’  proprietary rights in and to the ETLLC Marks, whether or not the ETLLC Marks are registered.

8.2Licensee’s Marks.

8.2.1ETLLC agrees not to use any of the Licensee Marks in any manner inconsistent with the usage guidelines for the Licensee Marks and without the prior written consent of Licensee, and Licensee agrees that ETLLC shall not be required to use the Licensee Marks in any manner inconsistent with the usage guidelines for the ETLLC Marks without the prior written consent of ETLLC which consent shall not be unreasonably withheld.  ETLLC shall not use any of the Licensee Marks without the prior written consent of Licensee, which consent Licensee may withhold in its sole discretion; provided however, that no consent shall be required for ETLLC or an Affiliate to sell Excess Inventory under Section 5.7 above, for which Licensee hereby grants to ETLLC and its Affiliates a license to the Licensee Marks and any Approved OEM Brand names only as necessary for the marketing and sale of such Excess Inventory.  ETLLC expressly acknowledges and understands that Licensee and its Affiliates claim to have the absolute ownership of, or right to allow ETLLC to use, the Licensee Marks.

8.2.2Regardless of whether Licensee grants ETLLC permission to use any Licensee Mark, ETLLC agrees that it will not in any way dispute or impugn the validity of any of the Licensee Marks or registrations of the Licensee Marks, nor the sole proprietary right of Licensee and its Affiliates thereto, nor the right of Licensee and its Affiliates to use or license the use of the Licensee Marks in the Territory or elsewhere, either during the Term or at any time thereafter.  ETLLC further agrees not to perform, either during the Term or at any time thereafter, any act or deed either of commission or of omission which is inconsistent with Licensee or its Affiliates proprietary rights in and to the Licensee Marks, whether or not the Licensee Marks are registered.

8.3Third Party Trademarks.  Licensee may also request that ETLLC affix to the OEM Products the “DVB”, “MPEG 2” and “MPEG 4” standard trademarks, provided that no third party trademarks shall be more than half as large as the Licensee and

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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ETLLC trademarks.  Licensee recognizes and understands that ETLLC may not have authority to grant Licensee any rights to affix the “DVB”, “MPEG 2” and “MPEG 4” standard trademarks to an OEM Product, and Licensee shall be solely responsible for securing the entitlement of such rights with the applicable rights holders.  Licensee hereby acknowledges that, in the future, ETLLC may be obligated to affix the trademarks, service marks or trade names of the owners of third party technology that is presently, or at some time in the future, incorporated into the OEM Product, and Licensee hereby grants its approval for ETLLC to affix any such trademarks, service marks or trade names to the OEM Product subject to the size requirements set forth above, unless the parties mutually agree otherwise.

9.CONFIDENTIAL AND PROPRIETARY INFORMATION

9.1General.  At all times during the Term and for a period of *** years thereafter, the parties and their employees will maintain, in confidence, the terms and provisions of this Agreement, as well as all data, summaries, reports or information of all kinds, whether oral or written, acquired, devised or developed in any manner from the other party’s personnel or files, or as a direct or indirect result of a party’s actions or performance under this Agreement, and each party represents that it has not and will not reveal the same to any persons not employed by such party, except: (i) at the written direction of the party which is the owner of such information; (ii) to the extent necessary to comply with law, the valid order of a court of competent jurisdiction or the valid order or requirement of a governmental agency or any successor agency thereto, in which event the disclosing party shall notify the owner of the information in advance, prior to making any disclosure, and shall seek confidential treatment of such information; (iii) as part of its normal reporting or review procedure to its parent company, its auditors and its attorneys, provided such parent company, auditors and attorneys agree to be bound by the provisions of this paragraph; or (iv) to the extent necessary to permit the performance of obligations under this Agreement.

9.2Subscriber Information.  All subscribers who subscribe to any of the Programming and/or any other programming services offered by Licensee and/or any of its Affiliates shall be deemed customers of Licensee for all purposes relating to programming services (including without limitation video, audio and data services) and the hardware necessary to receive programming services.  ETLLC acknowledges and agrees that the names, addresses and other identifying information of such subscribers (“Subscriber Information”) are as between ETLLC and Licensee, with respect to the delivery of programming services and the hardware necessary to receive programming services, proprietary to Licensee, and shall be treated with the highest degree of confidentiality by ETLLC.  ETLLC will not directly or indirectly use any Subscriber Information for the purpose of soliciting, or to permit any others to solicit, such subscribers to subscribe to any other programming services or to promote the sale of any hardware product used in connection with programming services, and ETLLC shall under no circumstance directly or indirectly reveal any Subscriber Information to any third party for any reason without the express prior written consent of Licensee, which

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Licensee may withhold in its sole and absolute discretion; provided, however, that nothing shall prohibit ETLLC from utilizing its own customer list for its general business operations unrelated to the delivery and/or promotion of programming services or the sale of any product used in conjunction with programming services.  The provisions of this Section 9.2 shall survive termination or expiration of this Agreement indefinitely.

9.3Equitable Relief.  ETLLC agrees that a breach of the obligations set forth in this Section 9 will result in the substantial likelihood of irreparable harm and injury to the Licensee or its Affiliates for which monetary damages alone would be an inadequate remedy, and which damages are difficult to accurately measure.  Accordingly, ETLLC agrees that Licensee and its Affiliates (or either of them) shall have the right, in addition to any other remedies available, to obtain immediate injunctive relief (without the necessity of posting or filing a bond or other security) to restrain the threatened or actual violation hereof by the ETLLC, its Affiliates, its employees and agents, as well as other equitable relief allowed by the federal and state courts. The foregoing is agreed to without prejudice to the Licensee and its Affiliates (or either of them) to exercise any other rights and remedies they may have, including without limitation, the right to terminate this Agreement and seek damages or other legal or equitable relief.  The provisions of this Section 9.3 shall survive termination or expiration of this Agreement indefinitely.

9.4Economic Benefits Derived Held in Trust.  In the event that ETLLC derives an economic benefit, in any form, from a violation of its obligations under Section 9.2, it is hereby agreed that such economic benefit is the property of Licensee and that ETLLC shall deliver the cash value of the economic benefit to Licensee immediately upon receipt of the economic benefit.  It is further agreed that ETLLC shall hold such economic benefit in trust for the benefit of Licensee until such time as its cash value is delivered to Licensee.  The foregoing is agreed to without prejudice to Licensee to exercise any other rights and remedies it may have, including without limitation, the right to terminate this Agreement and seek damages or other legal or equitable relief. The provisions of this Section 9.4 shall survive termination or expiration of this Agreement indefinitely.

10.TERM AND TERMINATION

10.1Term.  This Agreement shall commence on the date first written above and shall continue until December 31, 2014 (the “Initial Term”) unless terminated sooner as provided in this Agreement.  Licensee shall have the exclusive right, but not the obligation, to extend this Agreement for one (1) additional year (a “Renewal Term”, and collectively with the Initial Term, the “Term”), upon submission of written notice to ETLLC no less than one hundred eighty (180) calendar days prior to expiration of the current Term.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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10.2Termination By Either Party Upon Default.  This Agreement may be terminated by a party (the “Affected Party”) upon the occurrence of any of the following with respect to the other party (the “Other Party”):

10.2.1The Other Party commits a payment default which is not cured within *** days of receipt of written notice from the Affected Party.

10.2.2The Other Party defaults on any obligation or breaches any representation, warranty or covenant in this Agreement (regardless of whether breach or default of such obligation, representation, warranty or covenant is designated as giving rise to a termination right), and such default or breach is not cured within *** days of receipt of written notice from the Affected Party.  The parties agree that all obligations, representations, warranties and covenants contained in this Agreement, whether or not specifically designated as such, are material to the agreement of the parties to enter into and continue this Agreement.

10.3Termination by ETLLC.  ETLLC may terminate this Agreement upon written notice to Licensee at any time in case of: (i) acquisition of Licensee, directly or indirectly, by a third party, or the merger of Licensee with a third party, which in either case manufactures set-top boxes (this Section 10.3 will not apply to an acquisition of Licensee by, or the merger of Licensee with, an Affiliate of Licensee; provided that such Affiliate is not a direct or indirect manufacturer of set-top boxes); (ii) Licensee’s falsification of any material records or reports required hereunder; or (iii) a material breach, as determined in ETLLC’s sole judgment, by Licensee of the confidentiality provisions contained in Section 9 above.

10.4Purchase During Notice Period.  During any notice and cure period under Section 10.2, ETLLC will determine in its sole judgment the amount of OEM Products, if any, Licensee may purchase.

10.5Termination for Convenience by Licensee.  Licensee may terminate this Agreement for any or no reason by providing ETLLC not less than sixty (60) days prior written notice setting forth the termination date for this Agreement.

10.6Payment, Forfeiture and Cancellation.  Upon expiration or termination of this Agreement for any reason, all sums due ETLLC must be immediately paid.  Any credit or allowance under any cooperative or incentive program or other promotion (including any credit or allowance against the future purchase of OEM Products) which has not been applied by such date shall be forfeited unless otherwise expressly provided in the program or promotion, and all orders in process may at ETLLC’s option be deemed canceled unless in transit or paid for in advance by Licensee.  ETLLC and Licensee hereby waive all claims against each other in connection with such forfeiture and cancellation.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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10.7         Survival of Certain Obligations. Termination or expiration of this Agreement for any reason shall not terminate any obligation or liability of one party to the other which is specified in this Agreement to expressly survive termination or expiration, which arises by operation of law or which logically is to be performed after termination or expiration, nor preclude or foreclose recovery of damages or additional remedies available to any party under applicable law, except as otherwise provided in this Agreement.

11.          REPRESENTATIONS AND WARRANTIES

11.1         Representations, Warranties and Covenants of Licensee. Licensee represents, warrants and covenants, as follows, which representations, warranties and covenants shall survive the execution of this Agreement:

11.1.1      Licensee has the right and authority to enter into this Agreement and the execution, delivery and performance by Licensee of this Agreement have been duly authorized by all requisite corporate action and will not violate any provision of Licensee’s articles of organization, or any provision of any agreement by which Licensee is bound or affected.

11.1.2      Licensee acknowledges the applicability of U.S. export control regulations which prohibit the sale, export, reexport or diversion of certain products and technology to certain countries, and will not sell, export or reexport any of the OEM Products, in the form received, or as modified or incorporated into other equipment, except as permitted under this Agreement and authorized by such regulations.

11.1.3      Licensee is not, nor at any time will it be, in violation of any applicable Law by entering into and undertaking the performance of this Agreement and in performing its obligations pursuant to this Agreement.  Licensee agrees to comply with any and all applicable laws.

11.1.4      Licensee shall provide to ETLLC such adequate assurances as ETLLC may require from time to time in order to ensure that the requirements of this Section 11.1 have been met, and will continue to be met on an ongoing basis, by Licensee.

11.1.5      Except as otherwise expressly stated in this Agreement, Licensee makes no other representations or warranties, either express or implied, statutory or otherwise, and all such warranties are hereby excluded except to the extent such exclusion is absolutely prohibited by law.

11.2         Representations, Warranties and Covenants of ETLLC. ETLLC represents, warrants and covenants as follows, which representations, warranties and covenants shall survive the execution of this Agreement:

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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11.2.1      ETLLC has the right and authority to enter into this Agreement and the execution, delivery and performance by ETLLC of this Agreement have been duly authorized by all requisite corporate action and will not violate any provision of ETLLC’s articles of organization, or any provision of any agreement by which ETLLC is bound or affected.

11.2.2      ETLLC is the beneficial owner of Intellectual Property created independently by it, and such Intellectual Property is not subject to any covenant or other restriction preventing or limiting ETLLC’s right to manufacture the OEM Products as contemplated by this Agreement.

11.2.3      ETLLC is not, nor at any time will it be, in violation of any applicable Law by entering into and undertaking the performance of this Agreement and in performing their obligations pursuant to this Agreement.  ETLLC agrees to comply with any and all applicable Laws.

11.2.4      ETLLC shall provide to Licensee such adequate assurances as Licensee may require from time to time in order to ensure that the requirements of this Section 11.2 have been met, and will continue to be met on an ongoing basis, by ETLLC.

11.2.5      Except as otherwise expressly stated in this Agreement, ETLLC makes no other representations or warranties, either express or implied, statutory or otherwise, and all such warranties are hereby excluded except to the extent such exclusion is absolutely prohibited by law.

12.          LIMITATION OF LIABILITY

12.1         Limitation.  IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OR LOST BUSINESS, REVENUE, PROFITS OR GOODWILL) ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, TERMINATION OR ANY OTHER MATTER RELATED HERETO.  IN ADDITION TO AND WITHOUT LIMITATION OF THE FOREGOING, ETLLC SHALL HAVE NO LIABILITY OR RESPONSIBILITY TO LICENSEE OR ANYONE CLAIMING THROUGH LICENSEE FOR ANY LOSS OR DAMAGE (INCLUDING, GENERAL, INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL AND CONSEQUENTIAL DAMAGES) ARISING OUT OF ANY FAILURE OR DELAY IN SHIPMENT, LATE SHIPMENT, OR DELIVERY OF ALL OR ANY PART OF ANY ORDER.

12.2         Risk Allocation.  The parties agree that each and every provision of this Agreement which provides for a limitation of liability, disclaimer of warranties or exclusion of damages is expressly intended to be severable and independent of any other provision since they represent separate elements of risk allocation between the

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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 parties and shall be separately enforced. This Section 12.2 shall expressly survive the expiration or termination of this Agreement.

13.          INDEMNIFICATION

13.1         General Indemnity

13.1.1      By Licensee. In addition to the intellectual property indemnity in Section 13.2.1 below, Licensee shall defend, indemnify and hold ETLLC and its Affiliates, and any and all of its and their respective officers, directors, shareholders, employees, agents and representatives, and any and all of its and their assigns, successors, heirs and legal representatives (collectively the “ETLLC Group”), harmless from and against any and all claims, demands, litigation, settlements, judgments, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees) incurred by the ETLLC Group arising directly out of: (i) a breach or default of any obligation, representation, warranty or covenant of Licensee hereunder; (ii) manufacture and sale to Licensee of OEM Products bearing, or use by ETLLC or an Affiliate of, any Approved OEM Brand Name on or in connection with the OEM Products as permitted by this Agreement; and (iii) any claims of third parties otherwise arising out of or in connection with the marketing, promotion, sale and distribution of OEM Products.

13.1.2      By ETLLC.  In addition to the intellectual property indemnity in Section 13.2.2 below, ETLLC shall defend, indemnify and hold Licensee and its Affiliates, and any and all of its and their respective officers, directors, shareholders, employees, agents and representatives, and any and all of its and their assigns, successors, heirs and legal representatives (collectively the “Licensee Group”), harmless from and against any and all claims, demands, litigation, settlements, judgments, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees) incurred by the Licensee Group arising directly out of: (i) a breach or default of any obligation, representation, warranty or covenant of ETLLC hereunder; and (ii) any claim whatsoever of product liability with respect to the OEM Products.

13.2         Intellectual Property Indemnity

13.2.1      By Licensee.

(a)           Licensee, at its own expense, shall defend any suit brought against ETLLC insofar as based upon a claim that: (i) the OEM Product(s), as such, directly infringes any third party trademark, trade name or service mark (“Third Party Mark”) due to any trademark, trade name or service mark affixed to the OEM Products at Licensee’s request; or (ii) the Digital Converter Box(es), as such, directly infringes any third party patent, copyright, trademark, service mark, trade secret, mask work or other intellectual or industrial property right (“Third Party Intellectual Property”)

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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*** , and Licensee shall indemnify ETLLC against any final award of damages or costs in such suit. This indemnity is conditional upon ETLLC giving Licensee prompt notice in writing of any suit for such infringement.

(b)           Subject to Section 13.4.2.2, no cost or expense shall be incurred on behalf of Licensee without its written consent.

(c)           Except as otherwise agreed to by the parties, Licensee’s liability under Section 13.2.1(a) shall be limited to US $2,500,000.00 per occurence or US $5,000,000.00 in the aggregate.

(d)           Subject to Section 13.4.2.2, the foregoing states the entire liability of Licensee in connection with infringement of: (i) a Third Party Mark by an OEM Product; or (ii) any Third Party Intellectual Property by a Digital Converter Box, and except as stated in this clause, Licensee will not be liable for any loss or damage of whatever kind (including in particular any incidental, indirect, special or consequential damage) suffered by ETLLC in respect of the infringement of any Third Party Intellectual Property by an OEM Product.

13.2.2      By ETLLC.

(a)           Except as otherwise agreed to by the parties, ETLLC, at its own expense, shall defend any suit brought against Licensee insofar as based upon a claim that an OEM Product directly infringes (excluding any claims for which Licensee has an indemnity obligation pursuant to Section 13.2.1(a)) any Third Party Intellectual Property and shall indemnify Licensee against any final award of damages or costs in such suit. This indemnity is conditional upon Licensee giving ETLLC prompt notice in writing of any suit for such infringement.

(b)           Subject to Section 13.4.2.2, no cost or expense shall be incurred on behalf of ETLLC without its written consent.

(c)           Except as otherwise agreed to by the parties, in the event that a OEM Product is in such suit held to constitute infringement, ETLLC at its own election and at its own expense may either procure for Licensee the rights to continue the sale of a OEM Product or modify a OEM Product so that it becomes non-infringing.***

(f)            Except as otherwise agreed to by the parties, ETLLC’s liability under Section 13.2.2(a) shall be limited to US $2,500,000.00 per occurence or US $5,000,000.00 in the aggregate.

(g)           Subject to Section 13.4.2.2, except as otherwise agreed to by the parties, the foregoing states the entire liability of ETLLC in connection with infringement of Third Party Intellectual Property by the OEM Products and except as stated in this clause, ETLLC will not be liable for any loss or damage of whatever kind (including in particular any incidental, indirect, special or consequential damage) suffered by Licensee or any other person in respect of the infringement of any Third Party Intellectual Property. ***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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13.4         Indemnification Procedure.

13.4.1      Notice.  The party seeking indemnification (the “Indemnified Party”) shall promptly notify the party from whom indemnification is being sought (the “Indemnifying Party”).

13.4.2      Control of Proceeding.

13.4.2.1   ***With respect to any Claim for which indemnification is sought pursuant to Section 13.1 ***, the Indemnifying Party shall be entitled to have the exclusive conduct of and/or settle all negotiations and litigation arising from *** and the Indemnified Party shall, at the Indemnifying Party’s request and expense, give the Indemnifying Party all reasonable assistance in connection with those negotiations and litigation.  The Indemnified Party shall not make any formal, written admission as to liability or agree to any settlement of or compromise *** without the prior written consent of the Indemnifying Party, and in the event that the Indemnified Party does so without the prior written consent of the Indemnifying Party, the Indemnifying Party shall have no further obligations under this Section 13 with respect to *** at issue.

13.4.2.2    ***With respect to any Claim for which indemnification is sought pursuant to Section 13.2 ***, the Indemnified Party shall be entitled to have the exclusive conduct of and/or settle all negotiations and litigation arising from *** and the Indemnifying Party shall give the Indemnified Party all reasonable assistance in connection with those negotiations and litigation; provided, however, that the Indemnified Party may not make any formal, written admission as to liability or settle any *** without the prior written approval of the Indemnifying Party (which approval the Indemnifying Party may withhold in its sole discretion), and in the event that the Indemnified Party does so without the prior written consent of the Indemnifying Party ***.

13.5         Relationship to Prior Receiver Agreement.  Any OEM Product purchased pursuant to a Purchase Order accepted between January 1, 2008 and December 31, 2011 shall be governed by the Prior Receiver Agreement.  Any OEM Product purchased pursuant to a Purchase Order accepted on or after January 1, 2012 shall be governed by this Agreement. With respect to any Claim for which indemnification is sought relating to a matter arising under both the Prior Receiver Agreement and this Agreement, the Parties shall mutually agree on how such Claim shall be allocated between the Prior Receiver Agreement and this Agreement.  Any such allocated Claim shall be subject to the terms and conditions of the agreement to which it is allocated, including, without limitation, the limitation of liability set forth therein.

14.          GENERAL

14.1         Taxes. Any and all payments required to be made by Licensee to ETLLC under this Agreement are exclusive of any tax, levy or similar governmental charge (“Taxes”) that may be assessed against Licensee by any jurisdiction.  In the event that, under the laws of any jurisdiction, Licensee is required to withhold Taxes on any such

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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payment (with the exception for income Taxes assessed against ETLLC, or any Affiliate thereof), the amount of the payment will be automatically increased so that the amount actually remitted to ETLLC, net of all Taxes, equals the amount invoiced or otherwise due.  Licensee shall forthwith pay any amounts deducted or withheld from such payments to the relevant taxing or other authority in accordance with applicable law.  Within *** days after the date of any payment of Taxes, Licensee will furnish to ETLLC a copy of a receipt evidencing payment thereof.

14.2         Remedies Cumulative.  It is agreed that the rights and remedies herein provided in case of default or breach of this Agreement are cumulative and shall not affect in any manner any other remedies that any party may have by reason of such default or breach.  The exercise of any right or remedy herein provided shall be without prejudice to the right to exercise any other right or remedy provided herein, at law, or in equity.

14.3         Notice.  Any notice to be given hereunder shall be in writing and shall be sent by facsimile transmission, or by first class certified mail, postage prepaid, or by overnight courier service, charges prepaid, to the party notified, addressed to such party at the following address, or sent by facsimile to the following fax number, or such other address or fax number as such party may have substituted by written notice to the other party. The sending of such notice with confirmation of receipt thereof (in the case of facsimile transmission) or receipt of such notice (in the case of delivery by mail or by overnight courier service) shall constitute the giving thereof:

If to Licensee:	***
	Attn: General Counsel
	Fax: ***
If to ETLLC:	***
	Attn: ***
	Fax: ***
	and to
	Attn: General Counsel
	Fax: ***

14.4         Independent Contractors. This Agreement and the transactions contemplated hereby are not intended to create an agency, partnership or joint venture relationship between the parties, or confer any benefit on any third party. All agents and employees of each party shall be deemed to be that party’s agents and employees exclusively, and the entire management, direction, and control thereof shall be vested exclusively in such party. Each party, its agents and employees, shall not be entitled to any benefits, privileges or compensation given or extended by the other party to its employees.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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14.5         Waiver.  The failure or delay of either party to exercise any right hereunder shall not be deemed to be a waiver of such right, and the delay or failure of either party to give notice of, or to terminate this Agreement for, breach or default shall not be deemed to be a waiver of the right to do so for that or any subsequent breach or default or for the persistence in a breach or default of a continuing nature.

14.6         Choice of Law and Exclusive Jurisdiction.

14.6.1      This Agreement shall be governed, construed and enforced in accordance with the laws of the State of Colorado and the United States of America, without giving effect to the conflict of law provisions thereof.  The parties acknowledge and agree that they and their counsel have reviewed, or have been given a reasonable opportunity to review, this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or Schedules hereto.

14.6.2      Except as otherwise agreed to by the parties, any and all disputes arising out of, or in connection with, the interpretation, performance or the nonperformance of this Agreement or any and all disputes arising out of, or in connection with, transactions in any way related to this Agreement and/or the relationship between the parties established by this Agreement (including but not limited to the termination of this Agreement or the relationship or disputes under rights granted pursuant to statutes or common law, including those in the country in which Licensee is located) shall be litigated solely and exclusively before the United States District Court for the District of Colorado.  The parties consent to the in personam jurisdiction of said court for the purposes of any such litigation, and waive, fully and completely, any right to dismiss and/or transfer any action pursuant to 28 U.S.C.A. 1404 or 1406 (or any successor statute).  In the event the United States District Court for the District of Colorado does not have subject matter jurisdiction of said matter, then such matter shall be litigated solely and exclusively before the appropriate state court of competent jurisdiction located in Arapahoe County, State of Colorado.

14.7         Entire Agreement. Subject to Section 13.5, this Agreement sets forth the entire, final and complete understanding between the parties hereto relevant to the subject matter of this Agreement, and it supersedes and replaces all previous understandings or agreements, written, oral, or implied, relevant to the subject matter of this Agreement made or existing before the date of this Agreement.  Except as expressly provided by this Agreement, no waiver or modification of any of the terms or conditions of this Agreement shall be effective unless in writing and signed by both parties.  Subject to Section 13.5, in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any other agreement entered into by the Parties or their Affiliates relating to the subject matter hereof, including without limitation that certain Separation Agreement dated as of December 31, 2007 by and between DISH Network Corporation (formerly known as EchoStar

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Communications Corporation) and EchoStar Corporation (formerly known as EchoStar Holding Corporation), the terms and conditions of this Agreement shall prevail.

14.8         Force Majeure. Neither party shall be liable to the other party for nonperformance or delay in performance of any of its obligations under this Agreement due to causes reasonably beyond its control or which cause makes performance a commercial impracticability, including: (i) materials or part shortages and software discrepancies or anomalies (provided such shortages, discrepancies, or anomalies are not reasonably within the control of ETLLC); and (ii) acts of God, fire, explosion, flood, windstorm, earthquake, trade embargoes, strikes, labor troubles or other industrial disturbances, accidents, governmental regulations, riots, and insurrections (“Force Majeure”).  Upon the occurrence of a Force Majeure condition, the affected party shall immediately notify the other party with as much detail as possible and shall promptly inform the other party of any further developments.  Immediately after the Force Majeure event is removed or abates, the affected party shall perform such obligations with all due speed.  Neither party shall be deemed in default of this Agreement if a delay or other breach is caused by a Force Majeure event.  If a Force Majeure event is expected to continue for more than *** months, any party may terminate this Agreement by providing *** days prior written notice to the other party.  Such termination shall be without any continuing liabilities or obligations on the part of one party to the other of any kind except as expressly set forth herein.

14.9         Severability. If any term or provision herein, or the application thereof to any person, entity, or circumstances shall to any extent be invalid or unenforceable in any pertinent jurisdiction, the remainder hereof shall not be affected thereby but shall be valid and enforceable as if the invalid term or provision were not a part hereof.

14.10       Headings. The descriptive headings contained in this Agreement are included for convenience and reference only and shall not be held to expand, modify, amplify or aid in the interpretation, construction or meaning of this Agreement.

14.11      Assignment.  Subject to Section 10.3, Licensee may assign its rights and delegate its duties under this Agreement in whole or in part at any time; provided, however, that, in the event that Licensee assigns this Agreement to a non-Affiliate, the assignee must be at least as creditworthy as Licensee at the time they originally executed this Agreement.  ETLLC may not assign any rights or delegate any duties under this Agreement without Licensee’s prior written consent, which consent shall not be unreasonably withheld, except to an Affiliate of ETLLC; provided, however, that, such Affiliate is: (i) at least as creditworthy as ETLLC at the time it originally executed this Agreement; and (ii) is not a direct or indirect provider of direct to home programming. Any attempt to assign the Agreement without such consent shall be void.  This Agreement will bind and inure to the benefit of the parties and their respective successors and permitted assigns.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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14.12       Compliance with Law.  The parties shall comply with, and agree that this Agreement is subject to, all applicable federal, state, and local laws, rules and regulations, and all amendments thereto, now enacted or hereafter promulgated in force during the Term.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the date first written above.

ECHOSTAR TECHNOLOGIES L.L.C.
By:
	Name:
	Title:
ECHOSPHERE L.L.C.
By:
	Name:
	Title:

Signature Page to Receiver Agreement

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Schedule 1

OEM Products

***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Schedule 4.1

OEM Product Price

***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Schedule 4.8

***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Schedule 5.1

Forecasts

1.  Forecast Procedures.  Unless otherwise agreed to by the Parties, Licensee will use commercially reasonable efforts to provide ETLLC, on a monthly basis, a Forecast setting forth a rolling estimate of the type and quantity of OEM Products Licensee expects to purchase over the next *** period.  ***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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Schedule 6.1.4

***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

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EX-10.2

Exhibit 10.2

2012 Broadcast Services Agreement (Uplinking)

This 2012 Broadcast Services Agreement (“Agreement”) by and between EchoStar Broadcasting Corporation, a Colorado corporation, (“EBC”) and DISH Network L.L.C., a Colorado limited liability company, (“Customer”) is entered into as of this 1st day of January, 2012 (the “Effective Date”).  EBC and Customer shall each be referred to herein as a “Party” and collectively as the “Parties.”

A.EchoStar Corporation (“EchoStar”), the indirect parent company of EBC, and Customer previously entered into that certain “Broadcast Services Agreement (Uplinking)” effective January 1, 2008 (as thereafter amended) (the “Prior Broadcast Services Agreement”) pursuant to which the Parties placed Service Orders (as defined in the Prior Broadcast Services Agreement) for Services (as defined in the Prior Broadcast Services Agreement) from January 1, 2008 through December 31, 2011.  The Prior Broadcast Services Agreement expires pursuant to its terms on December 31, 2011 and the Parties now desire to enter into this Agreement.

1.Teleport Services.  EBC shall provide, and Customer shall purchase, all or any of the applicable services set forth in this Article 1 (collectively “Teleport Services”).  The Teleport Services shall be provided at an EBC owned, operated and/or controlled facility (a “Teleport”).  Collectively, the Teleport Services, and/or the Channel Management and Origination Services (each as described below) shall be referred to as the “Service(s).”  EBC shall have the right to re-configure, re-specify or relocate all or any portion of the Services or Teleport at its sole discretion so long as such does not materially alter the quality of any of the Services.

(a)Receiving Customer Channel Content.  EBC shall receive Customer Channel(s) (as defined below in this Section) from either: *** (hereinafter referred to as a “Transponder” and the specified bandwidth thereon allocated to Customer Channel(s), referred to as the “Transponder Capacity”); and/or ***.  EBC shall receive the Customer Channels: ***.  Unless expressly set forth in the Agreement to the contrary, Customer is responsible for providing, operating and maintaining all equipment, at locations other than the Teleport or LRF, necessary for reception of the downlinked Customer Channel(s).  If EBC provides the IRD’s, then upon termination or expiration of the Teleport Services set forth in this Section 1(a), Customer shall at its cost, return all such IRD’s to the Teleport.  Failure to return such IRD’s to the Teleport within *** days subsequent to such termination or expiration shall entitle EBC to, and Customer shall pay EBC, a dollar amount equal to the replacement cost of such IRD’s.  “Customer Channels” shall mean those programming channels which Customer delivers to EBC in accordance with the provisions of this Agreement.

(b)Transmission of Customer Channel Content.  EBC shall receive and transmit (in a format and/or quality which is acceptable to EBC) the content contained in the Customer Channel(s), (“Content”), such Content which may include video, audio, data and/or other information in accordance with the provisions of this Agreement).

(c)HVAC and Power.  HVAC and Utility power (120vac or 208vac) at the Teleport for all the applicable equipment (whether such equipment is provided by EBC or Customer) shall be supplied by EBC.  In the event of utility power failure at the Teleport, all such critical equipment will have power supplied by an uninterruptible power supply with

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

sufficient battery capacity to allow time for an EBC-supplied generator to be automatically switched on-line.

(d)Rack Space for Necessary Equipment.  EBC will provide environmentally controlled rack space adequate for all the applicable equipment (whether such equipment is provided by EBC or Customer) within equipment racks owned by EBC and located within the Teleport, (“Rack Space”).  The EBC racks in which the necessary equipment is located may not be dedicated solely or exclusively to the Customer.

(e)EBC Provided Equipment.  EBC shall provide and configure at its sole discretion all, or a portion of, the necessary equipment within the Teleport to provide the Service(s) requested by Customer pursuant to this Agreement.  Such EBC equipment may not be dedicated solely or exclusively to the Customer.  All equipment provided by EBC shall remain the sole property of EBC.

(f)Channel Monitoring.  EBC shall provide the necessary personnel and equipment at the Teleport for monitoring the transmission of the Content at the Beginning Demarcation Point to the Ending Demarcation Point on a 24 hours per day, 7 days per week (24 x 7) basis.  EBC will monitor the Content and communicate with Customer regarding any technical problems in connection with the Content.

(g)Limitations.  Additional Rack Space may not be contiguous with the initial Rack Space.  In no event shall EBC be required, nor shall Customer request, any Services which exceed the Transponder Capacity.

2.Satellite Services.  In the event EBC provides a Transponder and/or Transponder Capacity (collectively “Satellite Services”) such Satellite Services may be subject to the terms and conditions of satellite services agreement(s).  For the avoidance of doubt, the satellite services agreement(s) are not incorporated into this Agreement and are separate, severable contract(s) from this Agreement.

3.Channel Management and Origination Services.  EBC shall provide, and Customer agrees to pay for any applicable Services set forth in this Article 3 (collectively “Channel Management and Origination Services”) as specifically requested.

(a)Additional Graphics Creation.  One time, upon written request from Customer, EBC will develop and implement industry standard graphics file(s) (“Basic Graphics”) for each Customer Channel for which any Services are being provided under this Agreement at no charge to Customer.  Customer’s written request shall delineate all information necessary for the creation of such Basic Graphics.  Such Basic Graphics shall be limited to station logos, station identification bugs and trouble slides.  Subsequent to EBC providing any Basic Graphics, Customer may request, and EBC shall provide, additional graphics (“Additional Graphics”) including but not limited to text scrolls and custom slides.  Customer shall pay EBC a mutually agreed upon hourly rate for the creation of any Additional Graphics.  EBC shall provide Customer the specifications for any such graphics and Customer shall be responsible for providing EBC with all applicable images for the creation of any such graphics.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

(b)Additional Graphics Insertion.  EBC shall insert such Basic Graphics or Additional Graphics into programs within a Customer Channel as per Customer’s written request.  Any Additional Graphics which are inserted into programs within a Customer Channel shall incur additional charges to be mutually agreed upon between the Parties per program (per Customer Channel) in which Additional Graphics are inserted.  In the event Customer provides any graphics for insertion EBC shall provide Customer the specifications for any such graphics.

(c)Voice Overs Creation.  At its studios and subject to availability, EBC will develop, produce and record audio voice messages for the insertion into programs within a Customer Channel (“Voice Overs”) per Customer’s written request.  Voice Over studio / production sessions shall be booked by Customer in blocks of *** of recording and production time (each a “Production Session”).  Customer shall provide EBC with all information necessary to create any Voice Overs.

(d)Voice Overs Insertion.  EBC shall insert Voice Overs (either Customer produced or EBC produced) into programs within a Customer Channel as per Customer’s written request.  Any such Voice Overs which are inserted shall incur additional charges to be mutually agreed upon between the Parties per program (per Customer Channel) in which Voice Overs are inserted.

(e)Dubbing from Tape-to-Tape.  Upon written request from Customer, EBC shall record, tape-to-tape, any program (each program not to exceed ***) on the Customer Channel which it receives via tape.  EBC shall charge Customer at rates to be mutually agreed upon between the Parties per program (per Customer Channel) that it dubs from tape-to-tape for Customer.

(f)Dubbing from Downlink.  Upon written request from Customer, EBC shall record any program (each program not to exceed ***) on the Customer Channel which it receives via downlink.  EBC shall charge Customer at rates to be mutually agreed upon between the Parties (per Customer Channel) that it dubs from downlink for Customer.

(g)Re-Configuring Data Rate for Customer Channels.  In the event Customer elects to re-configure the data rate at which a Customer Channel is transmitted, then EBC shall re-configure such data rate in the manner customarily used by the Parties to re-configure data rates.

(h)Commercial Insertion Reports and Tapes.  Upon written request from Customer, EBC shall provide to Customer commercial insertion reports indicating which commercials were transmitted to the Ending Demarcation Point and the time each such insert was completed (the “As Run Logs”); and (ii) a video / audio tape with a time stamp of each program (per Customer Channel) that was transmitted by EBC (the “Logger Tapes”).  As a general rule, Customer should request As Run Logs in advance; however, EBC shall make commercially reasonable efforts to maintain As Run Logs, which can be provided to Customer upon request, for a period of *** days following the transmission date.  Logger Tapes must be requested in advance so as to reasonably give EBC the opportunity to purchase and configure any necessary equipment therefor.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

4.Additional Services.  EBC and Customer shall mutually agree in a separate statement of work or separate agreement upon the pricing and other terms and conditions pursuant to which EBC will provide additional services which are outside the scope of this Agreement.  Such additional services shall include without limitation, new corporate initiatives not relating to the scope of the Services or the provision of services to third parties whose Content Customer desires to carry or with whom Customer otherwise desires to do business. *** For clarity, in the event EBC provides additional services to Customer via a statement of work or separate agreement, unless set forth to the contrary in such statement of work or separate agreement, such statement of work or separate agreement shall be subject to the provisions of this Agreement and such additional services shall be deemed “Services” under this Agreement.

5.Equipment and Real Property.

(a)Equipment.  Customer shall have the right, but not the obligation to: (i) provide itself a portion of, or all of, the equipment necessary for provision of the Services to Customer (“Customer Equipment”); or (ii) have EBC purchase and/or lease a portion of, or all of, the equipment necessary for provision of the Services to Customer (the “Leased Equipment”).  Customer shall lease all Leased Equipment used for provision of the Services at *** (the “Lease Payment”). Customer Equipment shall remain the property of Customer, and maintenance, repair, or replacement of Customer Equipment shall be the sole responsibility of Customer.  Leased Equipment shall remain the property of EBC, and maintenance, repair, or replacement of Leased Equipment shall be the sole responsibility of EBC.

(b)Removal of Customer Equipment.  Within *** days after the expiration of the Term or any extension period thereof (if any), or termination of the Agreement, Customer shall remove all Customer Equipment from the Rack Space and/or Teleport at Customer’s sole cost under EBC supervision.  Customer shall provide EBC with at least *** days’ written notice prior to such removal.  Customer shall not be entitled to use the Teleport Services after expiration or termination thereof.  If Customer Equipment is located at the Teleport and Customer fails to remove such Customer Equipment from the Teleport within such *** day period, EBC shall have the right to either:  (i) remove such Customer Equipment and issue an invoice to Customer for the cost of removal and shipment to the address set forth on Customer’s Notice Information; or (ii) notify Customer that EBC elects to take ownership of such Customer Equipment, in which case Customer hereby consents and agrees to such change of ownership.  In the event any damage to the Rack Space or Teleport (reasonable wear and tear excepted) results from any use of the Rack Space and/or removal of Customer Equipment, Customer shall pay EBC the cost of repairs except to the extent caused by EBC.  Customer accepts all responsibility for Customer Equipment, including but not limited to risk of loss of its Equipment, except to the extent caused by EBC’s gross negligence or willful misconduct.

(c)Real Property.  “Real Property” shall mean such land purchased or leased by EBC or its Affiliates after the Effective Date, upon which EBC locates a Teleport, equipment, system or other facility primarily used to provide Services hereunder; provided that prior to such purchase or lease EBC shall obtain Customer’s consent.  Customer shall lease Real Property at *** (the “Real Property Payment”).

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

6.Teleport Access.  In the event Customer is providing Customer Equipment and such Customer Equipment is located at an EBC owned, operated or leased facility, Customer shall have access to Customer Equipment for normal maintenance purposes from *** local time, weekends and holidays excluded, and Customer shall give the Teleport a minimum of *** days advance written notice of its need for access to such Customer Equipment.  For emergency servicing purposes, Customer shall have access to Customer Equipment located at the Teleport upon notice that is reasonable under such emergency circumstances.  EBC may revoke, effective immediately without notice, the access of any individual to the Teleport.  EBC reserves the right to escort any entities entering a Teleport and to monitor (and/or inspect) such entities’ work, means and methods.  Such right is intended only for the benefit of EBC and shall not be construed as constituting any:  warranty; certification of compliance or performance by EBC; or in any way alleviating or diminishing any of Customer’s obligations.  Customer acknowledges that EBC is granting only permission to access and utilize the Rack Space and that EBC is not granting any leasehold or other real property interests in the Rack Space or the Teleport.

7.Demarcation Points.  The demarcation points for Teleport Services are as follows:  (a) the point at which EBC obtains control of Customer Channel(s) for downlinking or receiving in accordance with the Agreement (“Beginning Demarcation Point”); and (b) the point at which EBC relinquishes control of the Customer Channel(s) having already transmitted them in accordance with the Agreement (“Ending Demarcation Point”).  Collectively the Beginning Demarcation Point and the Ending Demarcation Point are referred to herein as the “Demarcation Points”.  Notwithstanding anything contained herein to the contrary, Customer shall be solely responsible for: (i) delivery of properly formatted Content to the Beginning Demarcation Point; and (ii) for receiving such Content at the Ending Demarcation Point.

8.Service Initiation Date.  EBC shall initiate the Service(s) on January 1, 2012 (the “Service Initiation Date”). Customer’s obligation to pay for the Service(s) shall begin on the Service Initiation Date for each applicable Service, unless the applicable Service has not begun as of that date due to some fault of EBC. If a delay in the readiness of any Service is caused for any other reason which is the fault of Customer, including but not limited to the failure of Customer Equipment and/or Customer-provided Transponder to be ready, then the delay shall not affect Customer’s obligation to begin payment on the Service Initiation Date for the applicable Service(s).

9.Charges and Payment.

Monthly Recurring Charge.  Customer shall pay a monthly recurring charge (the “MRC”) for provision of the Services, such MRC consisting of: ***

(a)Payment.  EBC shall provide Customer with an invoice setting forth each month’s MRC and Customer shall pay all amounts due and properly payable thereunder within *** days of receipt of EBC’s invoice.  Any payment not received within *** days of its due date will be subject to late payment interest at a rate of *** per month or the maximum rate allowed by law, whichever is greater.  Customer shall not offset any sums due to it pursuant to any other agreement(s) between Customer, or any of its Affiliates, and EBC, or any of its Affiliates, against any amount which is due to EBC pursuant to this Agreement.  EBC shall not offset any sums due to it pursuant to any other agreement(s)

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

between EBC, or any of its Affiliates, and Customer, or any of its Affiliates, against any amount which is due to Customer pursuant to this Agreement.  “Affiliate” means any person or entity directly or indirectly controlling, controlled by or under common control with another person or entity; provided that, solely for purposes hereof, DISH and its subsidiaries shall not be considered Affiliates of EchoStar Corporation and its subsidiaries, and EchoStar Corporation and its subsidiaries shall not be considered Affiliates of DISH and its subsidiaries.

(b)Reserved.

(c)Reserved.

10.Term.

This Agreement shall commence on the Effective Date and shall expire on the earlier of: (i) the date all Services have been terminated in accordance with the terms of this Agreement; or (ii) December 31, 2016 (“Term”).

11.Teleport Service Outages and Service Failures.

(a)Teleport Service Outages.

(i)  Customer acknowledges the possibility of an unscheduled period of time during which a Customer Channel is not available (“Outage”).  An Outage shall be measured on a per Customer Channel basis and shall begin when EBC receives notice of the Outage from the Customer, or when EBC discovers the Outage (whichever occurs first) and will be considered to have ended when the affected Customer Channel has been restored.  For an Outage to be counted toward the accumulated Outage time for which Customer may be entitled to a credit as set forth in Section 11(b) below (“Outage Credit”), Customer shall submit a written Outage notice to EBC (which identifies the Outage and requests an Outage Credit) within *** days of the Outage.  If EBC does not receive Customer’s written Outage notice within such *** day period, the Outage shall not be counted toward the accumulated Outage time.  For the avoidance of doubt, the term “Outage” shall include all Outages specified in Section 11(a)(ii).

(ii) Termination for Chronic Outages. In the event that the cumulative Outages experienced on a Customer Channel exceed the industry standard service level (a “Chronic Channel Outage”), Customer shall have the right to terminate this Agreement in whole or in part as to any one or more Customer Channels, so long as such Chronic Channel Outage condition is not remedied within *** days after EBC’s receipt of such written notice.

(b) Outage Credit Calculation.  In the event that Outages exceed the industry standard service level (an “Excessive Outage”), Customer shall be entitled to an Outage Credit based upon that Customer Channel’s prorated portion of the applicable Teleport Service’s MRC and the length of such Outage as calculated pursuant to the equation in the table below.  Any Outage Credit due shall be credited on Customer’s monthly invoices.  The total Outage Credits for any *** for a Customer Channel shall not exceed an amount *** of a Customer Channel’s prorated portion of the applicable Teleport Service’s MRC for such affected Customer Channel.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

Outage Credit Calculation

Outage duration (in number of minutes), multiplied by the Customer Channel’s prorated portion of the applicable Teleport Service’s MRC, divided by 43,200 (deemed number of minutes in a month.)

For the avoidance of doubt and solely by way of example, an affected Customer Channel’s prorated portion of the applicable Teleport Service’s MRC shall be calculated as follows:  If the Teleport Service’s MRC is $100 for all Customer Channels and there are an aggregate of 10 Customer Channels, one Customer Channel’s prorated portion of the Teleport Service’s MRC would be $10.

(c)Service Failure.  Customer acknowledges the possibility of an unscheduled period of time during which all or any portion of the Service(s) (excluding Teleport Services which are subject to Section 11(a) above) are not available, are interrupted or otherwise fail (“Service Failure”).  In the event of a Service Failure, Customer shall be entitled to receive a credit (pro rata if applicable) for the applicable Service Failure (“Service Failure Credit”).

(d)Exceptions.  Notwithstanding any contrary provision herein, EBC shall not be responsible for and shall not be in default or breach of this Agreement as a result of, nor shall it be held liable for any Outages, Service Failures, Outage Credits, Service Failure Credits or other damages, claims, losses, or costs and expenses on account of, any interruption of any Services, nor shall such interruption be deemed an Outage or Service Failure, if such interruption or failure occurs due to any of the following:  (i) de minimus degradation or interruptions of Customer Channel(s) due to protection switching; (ii) any failure on the part of Customer to perform its obligations pursuant to the Agreement, including, but not limited to the failure of Customer to provide Content to EBC in a format and/or quality in accordance with EBC specifications; (iii) the failure of transmission lines, fiber, Customer Equipment, equipment, connections, or other facilities provided by Customer or any third party; (iv) the failure or nonperformance of any earth station not operated by EBC; (v) interference from a third party transmission or usage; (vi) testing of the Services as mutually agreed to in advance; (vii) interruption or degradation due to atmospheric attenuation of the Content signal including but not limited to sun transit outage, rain fade or weather; (viii) Force Majeure Events (as defined in Section 20(b)); (ix) telecommunications interruptions and/or failure of the Transponder; (x) any act or failure to act by Customer; (xi) interruptions due to tests and adjustments necessary to maintain the Services in satisfactory operating condition; (xii) reconfiguration(s) performed or directed by Customer; (xiii) scheduled EBC maintenance and/or; (xiv) the failure of any fiber network, data or telecommunications services for which EBC receives a credit from the providers of such and thereafter passes through such credit to Customer in accordance with Section 9 above.

(e)Exclusive Remedy.  Except as expressly set forth in Section 11(b) (i.e. Outage Credits) and 11(c) (i.e. Service Failure Credits) of this Agreement, neither EBC nor its Affiliates shall have any liability for any Outages or Services Failure.  For Outages, Outage Credits from EBC (as set forth in Section 11(b) above) and termination rights for Chronic Outages (as set forth in Section 11(a)(ii) above) are Customer’s sole and exclusive remedy(s)

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

with respect to Outages.  For a Service Failure, Service Failure Credits from EBC (as set forth in Section 11(c) above) are Customer’s sole and exclusive remedy(s) with respect to Service Failures.  In no event shall an Outage or a Service Failure be deemed a breach of this Agreement and all other remedies or damages at law or in equity Customer may have against EBC in connection with any Outage or Service Failure are waived.

12.Insurance.  In the event Customer is providing Customer Equipment and such Customer Equipment is located at an EBC owned, operated or leased facility, to cover its employees and/or agents performing work at the Teleport, and Customer Equipment or other property located at the Teleport, Customer shall carry and maintain at its sole cost during the provision of the Teleport Services, with insurance companies having at least A- and be assigned a financial size category of at least Class IX as rated in the most recent edition of “Best’s Key Rating Guide” for insurance companies or a rating of at least AAA as rated by Standard & Poor’s, the insurance indicated below as a minimum requirement: ***

Customer shall provide to EBC at or prior to the Effective Date, certificates of insurance or proof of subscription to any state fund evidencing that Customer is maintaining all of the insurance required hereunder, and stating that EBC shall be provided with a copy of such certificates at the execution of any amendment thereto and at each policy renewal thereof, which certificates or proofs shall be in a form acceptable to EBC.  All policies shall (a) be endorsed to include EBC, its stockholders, Affiliates, directors, officers and employees as additional insureds (the “Additional Insureds”); (b) be primary and non-contributory coverage to any insurance or self-insurance maintained by the Additional Insureds; (c) contain an endorsement waiving subrogation rights of insurer against the Additional Insureds, and (d) shall be issued by insurer(s) and in a form reasonably satisfactory to EBC.  All deductibles shall be paid by Customer, assumed by Customer, for the account of Customer and EBC, and at Customer’s sole risk.

(a)No Obligation on EBC.  EBC will not insure nor be responsible for any loss or damage, regardless of cause, to any Customer Equipment or property of any kind, including loss of use thereof, owned, leased or borrowed by the Customer, its employees, servants or agents.

(b)Contractors.  If Customer utilizes contractor(s) per the Agreement, then Customer shall require such contractor(s) to comply with these insurance requirements.  Customer will supply subcontractor’s certificates of insurance to EBC before any work commences.

13.Operational Notices.  To report Outages, Service Failures and/or technical problems Customer shall call the Teleport, which shall be available to answer customer’s call on a 24 x 7 basis.  EBC will communicate with Customer regarding any technical problems with any Customer Channel or Service.  Customer shall update its list of operational contacts with EBC as needed.  EBC shall not be responsible for any Outages, Service Failures or other technical problems with any Customer Channel(s) or Service in the event that EBC has attempted to communicate with Customer’s operational contacts according to the information provided by Customer to EBC and EBC is unable to establish communications with them.

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

14.Warranty.  EXCEPT AS SET FORTH HEREIN, ANY SERVICE(S), SYSTEMS, EQUIPMENT OR PRODUCTS PROVIDED BY EBC TO CUSTOMER, EITHER DIRECTLY OR INDIRECTLY, SHALL BE “AS IS” WITHOUT WARRANTY OF ANY KIND WHETHER EXPRESSED OR IMPLIED OR STATUTORY, AND EBC MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  CUSTOMER EXPRESSLY ACKNOWLEDGES THAT NO OTHER REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE.

15.Liability Restrictions.

(a)NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ASSIGNS BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE, SPECIAL, EXEMPLARY OR INDIRECT DAMAGES, INCLUDING, BY WAY OF EXAMPLE AND NOT LIMITATION, LOSS OF BUSINESS, PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE, WHETHER SUCH CLAIM IS CHOATE OR INCHOATE, WHETHER BY STATUTE, IN TORT, OR IN CONTRACT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

(b)IN NO EVENT SHALL EBC, AND ITS AFFILIATES AND ITS AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND SHAREHOLDERS, AND ITS AND THEIR RESPECTIVE ASSIGNS, HEIRS, SUCCESSORS AND LEGAL REPRESENTATIVES (THE “EBC GROUP”) BE LIABLE FOR:  (i) CONTENT THAT IS TRANSMITTED BY CUSTOMER OR THIRD PARTIES VIA THE SERVICE(S); OR (ii) FOR ANY OUTAGE OR SERVICE FAILURE ATTRIBUTABLE IN WHOLE OR IN PART TO ANY OF THE EXCEPTIONS SET FORTH SECTION 11(d) OR OTHER CAUSES BEYOND EBC’S CONTROL.

(c)EXCEPT AS SET FORTH IN SECTION 11(b) AND 11(c) OF THIS AGREEMENT, IN NO EVENT SHALL THE EBC GROUP BE LIABLE FOR ANY OUTAGE, SERVICE FAILURE, DEFECT, ERROR, INTERRUPTION, DELAY, OR ATTENUATION OF ANY OF THE SERVICES.

(d)AS A MATERIAL CONDITION OF ENTERING INTO THIS AGREEMENT AT THE PRICING SPECIFIED HEREIN, AND IN REGARD TO ANY AND ALL CAUSES ARISING OUT OF OR RELATING TO THIS AGREEMENT, CUSTOMER AGREES EBC’S AGGREGATE LIABILITY SHALL BE LIMITED TO THE LESSER OF:  ***. IN THE EVENT OF EBC LIABILITY PURSUANT TO THIS AGREEMENT, EBC MAY ELECT, AT ITS DISCRETION AND SOLE OPTION, TO PAY SUCH REQUIRED AMOUNTS OR PROVIDE A CREDIT AGAINST SERVICES.  THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE EXPIRATION OR TERMINATION OF THIS AGREEMENT (FOR ANY REASON OR NO REASON WHATSOEVER) INDEFINITELY.  THE LIABILITY LIMITATION IN THIS PARAGRAPH

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

SHALL NOT APPLY TO AMOUNTS PAYABLE UNDER THIS AGREEMENT (INCLUDING ANY OUTAGE CREDITS AND/OR SERVICE FAILURE CREDITS).

16.           Indemnification.

(a)         Notwithstanding anything to the contrary contained herein, Customer shall indemnify, defend and hold the EBC Group harmless from and against, any and all costs, losses, liabilities, damages, lawsuits, judgments, claims, actions, penalties, fines and expenses (including, without limitation, interest, penalties, reasonable attorney fees and all monies paid in the investigation, defense or settlement of any or all of the foregoing), that arise out of, or are incurred in connection with:  (i) material breach of the Agreement, breach of any warranty, representation or covenant, or fault, negligence, act or omission, by the Customer or its Affiliates, directors, employees, agents or contractors; (ii) bodily injury including death, or property damage incurred by Customer or its Affiliates, directors, employees, agents or contractors as related to any Service, howsoever caused; (iii) third party claims arising out of the quality, content, alleged defects in, or failure (however caused) of any Service; (iv) the failure by Customer, its Affiliates or downstream customers of Customer, or any third party, to obtain approval, consent, or authorization relating to the content transmitted over any Service, including without limitation claims relating to any violation of copyright law or export control laws; (v) Customer’s or its Affiliate’s alleged breach of any national or international laws, rules and regulations applicable to it; (vi) alleged infringement of intellectual property rights including patents arising from Content, Customer Equipment, Customer-provided facilities, apparatus, or systems, or combining such with any of the Services and/or EBC-provided equipment; and/or (vii) EBC acting in accordance with the instructions of the Customer.

In the event of any claim for indemnification by the EBC Group under this Section, the EBC Group shall be entitled to representation by counsel of its own choosing, at Customer’s sole cost and expense.  Customer shall have the right to the exclusive conduct of all negotiations, litigation, settlements and other proceedings arising from any such claim, and the EBC Group shall, at Customer’s request and at Customer’s own cost and expense, render all assistance reasonably requested by Customer in connection with any such negotiation, litigation, settlement or other proceeding.  Customer will not settle or compromise a claim without the prior written consent of the EBC Group, which consent shall not be unreasonably withheld or delayed by the EBC Group.  The EBC Group shall not make any formal written admission as to liability or agree to any settlement of or compromise claim without the prior written consent of Customer, and in the event the EBC Group does so without the prior written consent of Customer, Customer shall have no further obligations under this Section 16 with respect to the claim at issue.

Relationship to Prior Broadcast Services Agreement.  Any Services provided between January 1, 2008 and December 31, 2011 shall be governed by the Prior Broadcast Services Agreement and any Services provided pursuant to this Agreement accepted on or after January 1, 2012 shall be governed by this Agreement. With respect to any claim for which indemnification is sought relating to a matter arising under both the Prior Broadcast Services Agreement and the Term of this Agreement, the Parties shall mutually agree on how such claim shall be allocated between the Prior Broadcast Services Agreement and this Agreement and any such allocated amount shall be subject to the terms and conditions of the agreement to which it is

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

allocated, including, without limitation, the limitation of liability set forth therein.  Subject to the foregoing, in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any other agreement entered into by the Parties or their Affiliates relating to the subject matter hereof, including without limitation that certain Separation Agreement dated as of December 31, 2007 by and between DISH (formerly known as EchoStar Communications Corporation) and EchoStar (formerly known as EchoStar Holding Corporation), the terms and conditions of this Agreement shall prevail.  The Parties agree that with respect to equipment purchases under the Prior Broadcast Services Agreement, to the extent any termination liability would have been due in connection with the expiration of the Prior Broadcast Services Agreement, no termination liability shall be due under the Prior Broadcast Services Agreement for so long as this Agreement remains in effect.  Upon expiration or sooner termination of this Agreement, to the extent there is any termination liability for equipment purchases under the Prior Broadcast Services Agreement, such termination liability, if any, shall be governed by the terms of the Prior Broadcast Services Agreement.

The provisions of this Section 16 shall survive expiration or termination of this Agreement (for any reason or no reason whatsoever) indefinitely.

17.           Termination and Suspension.

(a)         EBC may, at its option, terminate or suspend all or any portion of the Agreement (i.e. all or any Services provided hereunder) without liability by giving Customer written notice as follows:  (i) if Customer fails to make any payment due to EBC within *** days of Customer’s receipt from EBC of written notice of such failure; (ii) if Customer breaches any material provision of this Agreement, and (A) if such breach is capable of remedy, Customer does not cure such breach within *** days of Customer’s receipt from EBC of written notice of such breach, or (B) if such breach is not capable of remedy, or has occurred more than once, immediately upon Customer’s receipt of written notice from EBC of such breach; or (iii) if Customer files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or files or has filed against it any petition or answer seeking any reorganization, composition, liquidation or similar relief for itself under any applicable statute, law or regulation or makes any general assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due.  In no event shall EBC’s election to suspend the Agreement and/or any Service(s) be construed as a waiver of EBC’s right to terminate the Agreement and/or any Service(s).

(b)         Customer may terminate any Channel Management and Origination Services for any reason or no reason, by giving EBC sixty (60) days written notice without any Customer Termination Liability as defined in Section 17(d) below.  Provided that the Customer is not in breach of any material provision of this Agreement, Customer may terminate all or any portion of the Teleport Services, without any Customer Termination Liability, by giving EBC written notice as follows:  (i) if EBC breaches any material provision of this Agreement, and (A) if such breach is capable of remedy, EBC does not cure such breach within *** days of receipt of written notice of such breach, or (B) if such breach is not capable of remedy, immediately upon receipt of written notice of such breach; or (ii) if EBC files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or files or has filed against it any petition or answer seeking any reorganization, composition, liquidation or similar relief for itself under any

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

applicable statute, law or regulation or makes any general assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due.

(c)         Upon termination or expiration of all or any portion of any Services and/or the Agreement for whatever reason, the Customer shall cease using all the terminated or expired Services.  Notwithstanding anything contained herein to the contrary, in such event all outstanding indebtedness of the Customer to EBC under this Agreement, adjusted for any applicable Outage Credits and/or Service Failure Credits, shall become immediately due and payable.

(d)         In the event Customer terminates any portion of the Agreement for any reason except for that as set forth in Section 17(b) above or 20(b) below, within *** days of such termination Customer shall pay EBC a sum equal to the projected MRCs that Customer would have paid EBC to provide the Teleport Services for the remainder of the Term, had such Teleport Services not been terminated (a “Customer Termination Liability”);  provided that EBC must use commercially reasonable efforts to reduce the amount of the Customer Termination Liability by mitigating any costs directly related to discontinuing the Teleport Services or other costs incurred by EBC in order to provide the Services.  To the extent EBC is able to mitigate such costs, EBC shall return to Customer an amount equal to the reduction in the amount of the Customer Termination Liability paid by Customer, in no event to exceed the Customer Termination Liability paid by Customer. The Parties agree this is a proper assessment of the loss of bargain and damages EBC will incur, and is not a penalty.

(e)         The Customer shall remain liable to pay all charges for any suspended Services pursuant to Section 17(a) hereof during any period of suspension and, for the avoidance of doubt, any such suspensions shall not be deemed an Outage or Service Failure and no Outage Credits or Service Failure Credits are payable by EBC to the Customer for any such period of suspension. ***

18.           Confidentiality.  The terms and conditions of this Agreement as well as all financial, business, technical and other confidential and proprietary information that is disclosed or provided in connection herewith by any Party to the Agreement or their Affiliates shall be kept and treated as strictly confidential by each Party and their Affiliates and shall not be disclosed to any third party without the other Party’s prior written consent.

19.           Representations, Covenants and Warranties.

(a)         Customer represents, covenants and warrants that:  (i) it has and will obtain all applicable clearances and licenses, consents and approvals necessary to enable it to operate, receive and use the Services and to perform its other obligations under this Agreement; (ii) it is in compliance with, and performance of its obligations hereunder will not violate or conflict with, any applicable law or regulation of any jurisdiction to which it is subject; (iii) it will only use the Services and/or display or transmit any information or Content in connection with the Services in compliance at all times with all applicable laws and regulations; (iv) it is and shall be solely responsible for the acquisition of sufficient rights from, and all payments to, the owners of all Content it transmits or receives and shall adhere to all applicable Federal

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

Communications Commission and regulatory guidelines as related to such Content; and (v) no Content provided to EBC in connection with the Agreement shall contain any material which is patently obscene, libelous, or that violates or infringes any copyright, right of privacy or literary or dramatic right of any person or entity; and (vi) it will follow established standard industry practices and procedures for frequency co-ordination and will not request any Service in a manner that could reasonably be expected to interfere with or cause physical harm to satellites or other services that EBC offers.

(b)         EBC covenants that it shall provide the Services lawfully and with reasonable skill and care to recognized industry standards using appropriately experienced and trained personnel.

20.           Miscellaneous.

(a)         Assignment.  Neither Party may assign its rights or delegate its duties under the Agreement without the other Party’s written consent which consent will not be unreasonably withheld, except that notwithstanding anything contained herein to the contrary, either Party may assign its rights and/or delegate any portion of its duties under the Agreement without the other Party’s consent to any of such Party’s Affiliates capable of performing the assigning Party’s obligations hereunder, or in connection with a change of control whether by merger, sale of stock, sale of assets or otherwise.  Any attempted assignment in violation of the foregoing will be void and of no effect.

(b)         Force Majeure.  Neither Party shall be held liable for any delay or failure in performance of any part of the Agreement from any cause beyond its control and without its fault or negligence, such as acts of God, acts of civil or military authority, government regulations, embargoes, epidemics, war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents, floods, power blackouts, meteorological or astronomical disturbances, satellite failure, satellite launch failure, Transponder failure and/or unusually severe weather conditions (each a “Force Majeure Event”).  Notwithstanding anything to the contrary contained herein, if any Force Majeure Event affects EBC’s ability to provide a Service and continues for:  (i) *** days or less, then the affected Service shall remain in effect; and (ii) more than *** days, then either Party may cancel the affected Service with no liability on the part of any Party.  Notwithstanding anything contained herein to the contrary, if after the occurrence of a Force Majeure Event, EBC is able to provide Services to Customer via a manner outside that which the Parties normally provision and accept Services, Customer hereby agrees to utilize commercially reasonable efforts to accept such provision of such Services by EBC.

(c)         Choice of Law and Jurisdiction.  Except as otherwise agreed to by the Parties, this Agreement and the legal relations between the Parties hereto, including all disputes and claims, whether arising in contract, tort or under statute, shall be governed by and construed in accordance with the laws of the State of Colorado, USA, without giving effect to its conflict of law provisions.  Any and all disputes arising out of, or in connection with, the interpretation, performance or the nonperformance of the Agreement or any and all disputes arising out of, or in connection with, transactions in any way related to the Agreement and/or the relationship between the Parties shall be litigated solely and exclusively before the United States District

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

Court for the District of Colorado.  The Parties consent to the in personam jurisdiction of said court for the purposes of any such litigation, and waive, fully and completely, any right to dismiss and/or transfer any action pursuant to 28 U.S.C. §1404 or §1406 (or any successor statute).  In the event the United States District Court for the District of Colorado does not have subject matter jurisdiction of said matter, then such matter shall be litigated solely and exclusively before the appropriate state court of competent jurisdiction located in Arapahoe County, State of Colorado, USA.

(d)         Entire Agreement/Amendments.  This Agreement constitutes the Parties’ entire agreement and supersedes all prior agreements, proposals, or discussions, whether oral or written with respect to the matters set forth herein.  This Agreement may only be modified by a written amendment signed by an authorized representative of each Party.

(e)         Independent Contractor.  The Parties are independent contractors for all purposes and at all times.  Each Party has the responsibility for, and control over, the methods and details of performing it obligations hereunder.  Each Party will be responsible for the hiring, training, supervision, tools, work policies and procedures of its own employees, and each will be responsible for the compensation, discipline and termination of its own personnel.  Neither Party will have any authority to act on behalf of, nor bind the other Party to any obligation other than as expressly provided in the Agreement.

(f)          Notices.  Except for the communication of Operational Notices (pursuant to Section 13) or other information of an urgent nature for which telephone communication between the operational contacts of the Parties is appropriate, or as otherwise expressly set forth to the contrary herein, any notice or other communications required or permitted to be given hereunder shall be in English, in writing and shall be delivered personally or sent by facsimile transmission, or by first class certified mail, postage prepaid, or by overnight courier service, charges prepaid, to the Party to be notified, addressed to such Party at the address set forth below, or sent by facsimile to the fax number set forth below, or such other address or fax number as such Party may have substituted by written notice to the other Party.  The sending of such notice with confirmation of receipt thereof (in the case of facsimile transmission) or receipt of such notice (in the case of personal delivery or delivery by mail or by overnight courier service) shall constitute the giving thereof:

If to EBC:

EchoStar Broadcasting Corporation
Attn:   General Counsel
Address: ***
Fax No.:  ***

With Copy To:

EchoStar Broadcasting Corporation
Attn:   Vice President of Engineering
Address: ***
Fax No.:  ***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

If to the Customer to:

DISH Network L.L.C.
Attn:   General Counsel
Address: ***
Fax No.:  ***

(g)         Waiver.  Except where timeframes for a specific action by a Party are expressly delineated in the Agreement, if either Party fails to enforce any right or remedy under the Agreement, that failure is not a waiver of the right or remedy for any other breach or failure by the other Party.  No waiver shall be binding unless executed in writing by the Party making the waiver.

(h)         Construction.  Because the Parties actively negotiated the Agreement, the Agreement will not be construed against the drafter.

(i)          Severability.  If any provision of the Agreement is found to be unenforceable, the Agreement’s unaffected provisions will remain in effect and the Parties will negotiate a mutually acceptable replacement provision consistent with the Parties’ original intent.

(j)          Third-Party Beneficiaries.  This Agreement shall not provide any person who is not a Party to the Agreement with any remedy, claim, liability, reimbursement, cause of action, or other right in excess of those existing without reference to the Agreement.

(k)         Headings.  The headings and numbering of Articles, Sections and Subsections in the Agreement are for convenience only and shall not be construed to define or limit any of the terms herein or affect the meaning or interpretation of the Agreement.

(l)          Trademarks.  Nothing in the Agreement will be construed to give the Customer any rights to use any EBC trademarks, service marks, or logos without the express prior written consent of EBC.

(m)        Attorney’s Fees.  In the event of litigation involving the Agreement, the prevailing Party in any such action or proceeding shall be entitled to recover its reasonable costs and expenses incurred in such action from the other Party, including without limitation the cost of reasonable attorneys’ fees as determined by the judge of the court.

(n)         Counterparts.  This Agreement may be executed by facsimile and in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same document.

[AGREEMENT SIGNATURE PAGE FOLLOWS]

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

IN WITNESS WHEREOF, the Parties hereto have caused the Agreement to be entered into as of the date first set forth above.

ECHOSTAR BROADCASTING CORPORATION
By:
	Name:
	Title:
DISH NETWORK L.L.C.
By:
	Name:
	Title:

Signature Page to the 2012 Broadcast Services Agreement

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

Schedule 9

***

***Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text.  Copies of the exhibit containing the redacted portions have been filed separately with the Securities and Exchange Commission subject to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Section 302 Certification

I, Joseph P. Clayton, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DISH Network Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2012

/s/ Joseph P. Clayton

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Section 302 Certification

I, Robert E. Olson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DISH Network Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 7, 2012

/s/ Robert E. Olson

Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Section 906 Certification

Pursuant to 18 U.S.C. § 1350, the undersigned officer of DISH Network Corporation (the “Company”) hereby certifies that to the best of his knowledge the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	May 7, 2012
Name:	/s/ Joseph P. Clayton
Title:	President and Chief Executive
	Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Section 906 Certification

Pursuant to 18 U.S.C. § 1350, the undersigned officer of DISH Network Corporation (the “Company”) hereby certifies that to the best of his knowledge the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	May 7, 2012
Name:	/s/ Robert E. Olson
Title:	Executive Vice President and
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Fair value of marketable securities
Debt and equity security	$ 1,529,716	$ 1,606,915
Debt security	1,334,546	1,431,745
Debt security	118,470	109,327
Investment in DBSD North America		1,297,614
Current marketable investment securities - VRDNs
Fair value of marketable securities
Debt security	185,005	160,555
Debt security	185,005	160,555
ARS and MBS, noncurrent
Fair value of marketable securities
Debt security	118,000
Other (including restricted)
Fair value of marketable securities
Debt security	858,719	994,021
Equity securities
Fair value of marketable securities
Equity security	367,522	343,012
Fair value measurements on recurring basis | Total
Fair value of marketable securities
Cash Equivalents (including restricted)	1,146,565	397,777
Debt and equity security	1,529,716	1,606,915
Investment in DBSD North America		839,009
Total marketable investment securities (including DBSD North America)	1,529,716	2,445,924
Fair value measurements on recurring basis | Total | Current marketable investment securities - VRDNs
Fair value of marketable securities
Debt security	185,005	160,555
Fair value measurements on recurring basis | Total | ARS and MBS, noncurrent
Fair value of marketable securities
Debt security	118,470	109,327
Fair value measurements on recurring basis | Total | Other (including restricted)
Fair value of marketable securities
Debt security	858,719	994,021
Fair value measurements on recurring basis | Total | Equity securities
Fair value of marketable securities
Equity security	367,522	343,012
Fair value measurements on recurring basis | Level 1
Fair value of marketable securities
Cash Equivalents (including restricted)	46,748	46,371
Debt and equity security	367,522	343,012
Total marketable investment securities (including DBSD North America)	367,522	343,012
Fair value measurements on recurring basis | Level 1 | Equity securities
Fair value of marketable securities
Equity security	367,522	343,012
Fair value measurements on recurring basis | Level 2
Fair value of marketable securities
Cash Equivalents (including restricted)	1,099,817	351,406
Debt and equity security	1,047,133	1,157,988
Total marketable investment securities (including DBSD North America)	1,047,133	1,157,988
Fair value measurements on recurring basis | Level 2 | Current marketable investment securities - VRDNs
Fair value of marketable securities
Debt security	185,005	160,555
Fair value measurements on recurring basis | Level 2 | ARS and MBS, noncurrent
Fair value of marketable securities
Debt security	3,409	3,412
Fair value measurements on recurring basis | Level 2 | Other (including restricted)
Fair value of marketable securities
Debt security	858,719	994,021
Fair value measurements on recurring basis | Level 3
Fair value of marketable securities
Debt and equity security	115,061	105,915
Investment in DBSD North America		839,009
Total marketable investment securities (including DBSD North America)	115,061	944,924
Fair value measurements on recurring basis | Level 3 | ARS and MBS, noncurrent
Fair value of marketable securities
Debt security	$ 115,061	$ 105,915

XML

Related Party Transactions (Details) (USD $)	3 Months Ended			3 Months Ended				1 Months Ended	3 Months Ended		1 Months Ended		12 Months Ended	1 Months Ended		3 Months Ended	12 Months Ended				1 Months Ended				3 Months Ended			1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011	Mar. 31, 2012 Santa Fe Lease Agreement Y	Mar. 31, 2012 Gilbert Lease Agreement D	Mar. 31, 2012 Move Networks Services Agreement D Y	Mar. 31, 2012 Sprint Settlement Agreement	Apr. 30, 2011 EchoStar TiVo vs Dish Network and EchoStar Corporation installment	Mar. 31, 2012 EchoStar TiVo vs Dish Network and EchoStar Corporation	Mar. 31, 2012 EchoStar Remanufactured Receiver Agreement D	Jan. 31, 2012 EchoStar Professional Services Agreement Y D	Jan. 31, 2012 EchoStar Management Services Agreement D Y	Dec. 31, 2008 EchoStar Real Estate Lease Agreement Y	Jan. 31, 2012 EchoStar Broadcast Agreement D	May 31, 2010 EchoStar Certain Sports Related Programming Broadcast Agreement Y	Mar. 31, 2012 EchoStar EchoStar XVI Y	Dec. 31, 2009 EchoStar Nimiq 5 Agreement Y transponder	Dec. 31, 2009 EchoStar DISH Nimiq 5 Agreement Y transponder	Dec. 31, 2008 EchoStar QuetzSat-1 Lease Agreement Y transponder	Dec. 31, 2008 EchoStar QuetzSat-1 Transponder Agreement transponder	Jan. 31, 2012 EchoStar TT and C Agreement D	Mar. 31, 2012 EchoStar DBSD North America Agreement D Y option	Sep. 30, 2010 EchoStar Rural Utilities Service Implementation Agreement D	Jan. 31, 2012 EchoStar Receiver Agreement D	Mar. 31, 2012 EchoStar Receiver Agreement	Mar. 31, 2011 EchoStar Receiver Agreement	Mar. 31, 2012 EchoStar Product Support Agreement D	Jan. 31, 2010 EchoStar DISH Online.com Services Agreement Y option D	Mar. 31, 2011 EchoStar DISH Online.com Services Agreement Y	Feb. 28, 2010 EchoStar DISH Remote Access Services Agreement Y	Mar. 31, 2012 EchoStar DISH Remote Access Services Agreement Y D	Feb. 28, 2010 EchoStar Sling Service Services Agreement Y	Mar. 31, 2012 EchoStar Sling Service Services Agreement Y D	Dec. 31, 2011 EchoStar Patent Cross-License Agreements	Mar. 31, 2012 Blockbuster, Inc. Y	Mar. 31, 2012 NagraStar	Mar. 31, 2011 NagraStar	Dec. 31, 2011 NagraStar
Related Party Transactions
Minimum required notice period for termination of agreement by related party (in days)										60		30
Automatic renewal period (in years)						1					1	1																	1		1		1
Required minimum notice for termination of agreement (in days)						180					60											30		180
Required minimum notice for termination of individual service (in days)					30						30
Grants receivable																							$ 14,000,000
Required notice period for termination by the reporting entity (in days)												180		60							60		45	60			60	120			120		120
Agreement term (in years)						5							7		10		15	10										2		5		5
Agreement term (in years) from commencement of service date																10			10
Number of DBS transponders available to receive services																	32		32
Number of DBS transponders expected to receive services																		32		24
Set-top boxes and other equipment purchased from EchoStar																									237,365,000	272,126,000
Set-top boxes and other equipment included in "Cost of sales - subscriber promotion subsidies - Echostar"	82,274,000	54,426,000																							82,274,000	54,426,000
Term of renewal option (in years)				1																		1						1							1
Number of successive one year renewal options																						4						3
Amount paid for related party transaction									5,000,000
Purchases (including fees):																																				17,484,000	20,729,000
Related party transaction expenses from transactions with related party, less than																																		10,000,000
Amounts payable to NagraStar	284,407,000		229,852,000																																	12,925,000		5,853,000
Due to related parties, less than																																		3,000,000
Related party transaction expenses from transactions with related party																																				17,484,000	20,729,000
Capitalized expenses																																			4,000,000
Net payment for agreement settlement							114,000,000
Settlement amount								500,000,000
Initial settlement amount paid								300,000,000
Contribution from related party								10,000,000
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
Percentage of litigation settlement amount to be made by related party								95.00%

XML

Stock-Based Compensation (Details) (USD $)	3 Months Ended	1 Months Ended		1 Months Ended	3 Months Ended								1 Months Ended	3 Months Ended			3 Months Ended									1 Months Ended	3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011 Class A common stock	Mar. 31, 2012 Class A common stock	Dec. 31, 2011 Class B common stock	Mar. 31, 2012 Non-Performance Based Stock Awards Y	Mar. 31, 2012 Restricted stock units	Jan. 02, 2008 Restricted stock units	Mar. 31, 2012 Restricted stock units DISH Network Awards	Mar. 31, 2012 Restricted stock units DISH Network Awards Held by DISH Network employees	Mar. 31, 2012 Restricted stock units DISH Network Awards Held by EchoStar employees	Mar. 31, 2012 Restricted stock units EchoStar Awards	Mar. 31, 2012 Restricted stock units EchoStar Awards Held by DISH Network employees	Jan. 31, 2008 Stock options	Mar. 31, 2012 Stock options Y	Mar. 31, 2011 Stock options Y	Jan. 02, 2008 Stock options Stock multiplicationfactor	Mar. 31, 2012 Stock options Maximum	Mar. 31, 2011 Stock options Maximum	Mar. 31, 2012 Stock options Minimum	Mar. 31, 2011 Stock options Minimum	Mar. 31, 2012 Stock options DISH Network Awards	Mar. 31, 2012 Stock options DISH Network Awards Held by DISH Network employees	Mar. 31, 2012 Stock options DISH Network Awards Held by EchoStar employees	Mar. 31, 2012 Stock options EchoStar Awards	Mar. 31, 2012 Stock options EchoStar Awards Held by DISH Network employees	Jan. 31, 2012 2012 stock option adjustment employee	Mar. 31, 2012 Long-Term Performance Based Plans	Mar. 31, 2011 Long-Term Performance Based Plans	Mar. 31, 2012 LTIP 2005	Mar. 31, 2012 LTIP 2005 DISH Network Awards Held by DISH Network employees	Mar. 31, 2012 LTIP 2005 EchoStar Awards Held by DISH Network employees	Mar. 31, 2012 LTIP 2008 and Other Performance Awards	Mar. 31, 2011 LTIP 2008 and Other Performance Awards	Mar. 31, 2012 Other Employee Performance Awards	Mar. 31, 2011 Other Employee Performance Awards
Share-based compensation
Expiration term (in years)														P10Y
Percentage of stock awards vesting per year (as a percent)	20% per year
Number of stock options subject to an exercise price change in connection with the Stock Option Adjustment (in shares)																										21,200,000
Number of common stock available for future grant under stock incentive plans (in shares)			72,600,000
Dividend in cash per share		$ 2.00		$ 2.00
Reduction in exercise price due to dividend declaration (in dollars per share)																										$ 2.00
Number of employees affected by stock option adjustment																										600
Stock option converted into new stock options (in shares)																2
Multiplication factor for conversion of original stock option to adjusted stock option																0.831219
Portion of the number of shares that were exercisable under the original option needed to receive a new stock option													one-fifth
Multiplication factor for conversion of original stock option to new stock option																0.843907
One Echostar restricted stock unit converted into new Dish Network restricted stock units (in shares)							5
Stock option activity
Total options outstanding at the beginning of the period (in shares)														21,336,159							21,343,332	18,762,631	2,580,701	791,554	791,554
Granted (in shares)														411,000
Exercised (in shares)														(363,027)
Forfeited and cancelled (in shares)														(40,800)
Total options outstanding at the end of the period (in shares)														21,343,332							21,343,332	18,762,631	2,580,701	791,554	791,554		9,619,075		3,332,500			3,286,575		3,000,000
Exercisable at the end of the period (in shares)														8,538,056
Weighted-Average Exercise Price
Total options outstanding, beginning of the period (in dollars per share)														$ 20.53
Granted (in dollars per share)														$ 32.93
Exercised (in dollars per share)														$ 13.66
Forfeited and cancelled (in dollars per share)														$ 20.45
Total options outstanding at the end of the period (in dollars per share)														$ 18.90													$ 17.35		$ 21.12			$ 10.06		$ 21.16
Exercisable, Weighted-Average Exercise Price (in dollars per share)														$ 20.05
Share-based compensation additional disclosures
Remaining portion to meet vesting condition (as a percent)																																55.00%
Portion meeting vesting condition (as a percent)																																45.00%
Future forfeiture rate (as a percent)					3.90%
Weighted average period for recognition of compensation cost (in years)					2
Tax benefit from stock awards exercised														$ 1,743,000	$ 795,000
Aggregate intrinsic value
Aggregate intrinsic value of stock options outstanding														299,451,000
Aggregate intrinsic value of stock options exercisable														109,990,000
Restricted stock unit activity
Total restricted stock units outstanding, beginning of period (in shares)						1,284,708		1,281,375	1,186,376	94,999	53,620	53,620
Forfeited and cancelled (in shares)						(3,333)
Total restricted stock units outstanding, end of period (in shares)						1,281,375		1,281,375	1,186,376	94,999	53,620	53,620															1,281,375		359,830			21,545		900,000
Weighted - Average Grant Date Fair Value
Total restricted stock units outstanding, beginning of period (in dollars per share)						$ 23.25
Forfeited and cancelled (in dollars per share)						$ 25.07
Total restricted stock units outstanding, end of period (in dollars per share)						$ 23.24																					$ 23.24
2005 LTIP Terms
Awards vesting period (in years)																													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 expenses
Unrecognized non-cash stock-based compensation expense on vested portion																													36,206,000	30,587,000	5,619,000
Unrecognized compensation expense relating to long-term performance based incentive awards																													45,069,000	38,172,000	6,897,000
Unrecognized compensation expense					29,000,000
Estimated Remaining Non-Cash, Stock-Based Compensation Expense
Remaining expense estimated to be recognized during 2012																																3,474,000		3,139,000
Estimated contingent expense subsequent to 2012																																3,619,000		47,594,000
Total estimated expense remaining over the term of plan																																7,093,000		50,733,000
Recognized non-cash stock-based compensation expense
Non-cash stock-based compensation expense recognized																											$ 8,978,000	$ 12,879,000				$ 5,839,000	$ 12,804,000	$ 3,139,000	$ 75,000
Black-Scholes option valuation model, assumptions
Risk free interest rate, low end of range (as a percent)														0.51%	2.24%
Risk free interest rate, high end of range (as a percent)														1.29%	2.68%
Volatility factor, low end of range (as a percent)														38.80%	35.82%
Volatility factor, high end of range (as a percent)														39.34%	39.59%
Expected term of options, low end of range (in years)														3.4	4.9
Expected term of options, high end of range (in years)														5.9	6.3
Weighted-average fair value of options granted (in dollars per share)																	$ 12.69	$ 9.81	$ 9.49	$ 9.16

XML

Acquisitions (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012
Preliminary allocation of the DBSD North America and TerreStar assets acquired
Cash	$ 5,230
Current assets	8,487
Property and equipment	1,207,000
Goodwill	31,000
FCC Authorizations	1,949,000
Current liabilities	(341,069)
Total purchase price	$ 2,859,648

XML

Basic and Diluted Net Income (Loss) Per Share (Details 2) (Class A common stock)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Stock awards
Antidilutive securities excluded from computation of earnings per share
Antidilutive securities excluded from computation of earnings per share	3,400,000	7,100,000
Performance-based options
Antidilutive securities excluded from computation of earnings per share
Dilutive securities excluded from computation of earnings per share	9,619,000	10,859,000
Restricted Performance Units and other
Antidilutive securities excluded from computation of earnings per share
Dilutive securities excluded from computation of earnings per share	1,281,000	1,101,000
Long-Term Performance Based Plans
Antidilutive securities excluded from computation of earnings per share
Dilutive securities excluded from computation of earnings per share	10,900,000	11,960,000

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2012

Property and Equipment

Schedule of depreciation and amortization expense

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Equipment leased to customers	$	152,443	$	182,987
Satellites	33,837		32,091
Buildings, furniture, fixtures, equipment and other	22,418		14,619
Total depreciation and amortization	$	208,698	$	229,697

XML

Stock-Based Compensation (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Additional non-cash, stock-based compensation cost	$ 23,182	$ 15,177
2012 stock option adjustment
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Additional non-cash, stock-based compensation cost	$ 14,000

XML

Inventory (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Inventory
Total inventory	$ 670,008	$ 707,151
DISH Network
Inventory
Finished goods - DBS	298,771	295,058
Raw materials	141,423	183,711
Work-in-process - used	38,160	29,228
Work-in-process - new	3,261	2,308
Total inventory	481,615	510,305
Blockbuster
Inventory
Rental library	93,625	104,238
Merchandise	90,920	92,608
Total inventory	184,545	196,846
Wireless Spectrum
Inventory
Finished goods - DBS	3,848
Total inventory	$ 3,848

XML

Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 3) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Components of our available-for-sale investments
Debt security	$ 1,334,546,000	$ 1,431,745,000
Total marketable investment securities	1,529,716,000	1,606,915,000
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains	125,008,000	95,417,000
Unrealized Losses	(63,693,000)	(82,985,000)
Unrealized Gains Losses, Net	61,315,000	12,432,000
Investment in DBSD North America		1,297,614,000
Contractual maturities of restricted and non-restricted marketable investment securities
Debt security with contractual maturities of one year or less	881,000,000
Debt securities with contractual maturities greater than one year	281,000,000
Accumulated net unrealized gains (losses)
Accumulated net unrealized gains, net of tax, in accumulated other comprehensive income (loss)	61,000,000	91,000,000
DBSD North America (ICO)
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains		78,749,000
Unrealized Gains Losses, Net		78,749,000
Investment in DBSD North America		1,298,000,000
DBSD North America (ICO) | 7.5% Convertible Senior Secured Notes due 2009
Unrealized Gains (Losses) on Marketable Investment Securities
Investment in DBSD North America		839,000,000
Marketable Securities
Components of our available-for-sale investments
Total marketable investment securities (including DBSD North America)	1,529,716,000	2,445,924,000
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains	125,008,000	174,166,000
Unrealized Losses	(63,693,000)	(82,985,000)
Unrealized Gains Losses, Net	61,315,000	91,181,000
Current marketable investment securities - VRDNs
Components of our available-for-sale investments
Debt security	185,005,000	160,555,000
Debt security	185,005,000	160,555,000
ARS and MBS, noncurrent
Components of our available-for-sale investments
Debt security	49,940,000	46,657,000
ARS fair value election	68,530,000	62,670,000
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains	1,056,000	848,000
Unrealized Losses	(10,630,000)	(14,486,000)
Unrealized Gains Losses, Net	(9,574,000)	(13,638,000)
Other (including restricted)
Components of our available-for-sale investments
Debt security	858,719,000	994,021,000
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains	10,066,000	5,525,000
Unrealized Losses	(1,250,000)	(6,565,000)
Unrealized Gains Losses, Net	8,816,000	(1,040,000)
Equity securities
Components of our available-for-sale investments
Equity security	367,522,000	343,012,000
Unrealized Gains (Losses) on Marketable Investment Securities
Unrealized Gains	113,886,000	89,044,000
Unrealized Losses	(51,813,000)	(61,934,000)
Unrealized Gains Losses, Net	$ 62,073,000	$ 27,110,000

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Commitments and Contingencies (Details 2) (USD $)	3 Months Ended			1 Months Ended		12 Months Ended						1 Months Ended
	Mar. 31, 2011	Mar. 31, 2012 Satellite lease guarantees	Mar. 31, 2012 Satellite transponder guarantees	Feb. 29, 2012 ESPN-Affiliation agreements	Apr. 30, 2009 ESPN-Affiliation agreements	Dec. 31, 2011 ESPN-Affiliation agreements	Dec. 31, 2008 ESPN-Affiliation agreements	Mar. 31, 2012 ESPN-Affiliation agreements	Jun. 21, 2011 ESPN-Affiliation agreements	Dec. 31, 2010 ESPN-Affiliation agreements	Mar. 15, 2010 ESPN-Affiliation agreements	Jul. 31, 2009 Technology Development Licensing petition	Apr. 30, 2010 Voom HD Holdings motion	Dec. 31, 2007 Katz Communications-Patent infringement patent
Loss contingencies
Guarantees for payments		$ 169,000,000	$ 486,000,000
Guarantee term		P3Y
Claim amount					30,000,000		35,000,000						2,500,000,000
Court ruling									66,000,000		66,000,000
Attorneys' fees				5,000,000
Litigation accrual								71,000,000		42,000,000
Litigation Expense	$ (340,677,000)					$ 24,000,000
Loss contingency terms
Number of reexamination petitions pending before patent and trademark office												2
Number of patents the suit alleges infringement of														19
Number of motions seeking discovery sanctions													2

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Long-Term Debt (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Long-term debt
Carrying Value	$ 7,246,252	$ 7,221,871
Fair Value	7,851,597	7,807,121
Capital lease obligations	264,154	271,908
Long-term debt and capital lease obligations (including current portion)	7,510,406	7,493,779
7 % Senior Notes due 2013
Long-term debt
Carrying Value	500,000	500,000
Fair Value	535,625	535,000
Interest rate (as a percent)	7.00%	7.00%
6 5/8% Senior Notes due 2014
Long-term debt
Carrying Value	1,000,000	1,000,000
Fair Value	1,090,000	1,060,000
Interest rate (as a percent)	6.625%	6.625%
7 3/4% Senior Notes due 2015
Long-term debt
Carrying Value	750,000	750,000
Fair Value	851,970	817,500
Interest rate (as a percent)	7.75%	7.75%
7 1/8% Senior Notes due 2016
Long-term debt
Carrying Value	1,500,000	1,500,000
Fair Value	1,662,750	1,593,750
Interest rate (as a percent)	7.125%	7.125%
7 7/8% Senior Notes due 2019
Long-term debt
Carrying Value	1,400,000	1,400,000
Fair Value	1,610,000	1,589,000
Interest rate (as a percent)	7.875%	7.875%
6 3/4% Senior Notes due 2021
Long-term debt
Carrying Value	2,000,000	2,000,000
Fair Value	2,005,000	2,140,000
Interest rate (as a percent)	6.75%	6.75%
Mortgages and other notes payable
Long-term debt
Carrying Value	96,252	71,871
Fair Value	$ 96,252	$ 71,871

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Basic and Diluted Net Income (Loss) Per Share

3 Months Ended

Mar. 31, 2012

Basic and Diluted Net Income (Loss) Per Share

Basic and Diluted Net Income (Loss) Per Share

3.Basic and Diluted Net Income (Loss) Per Share

We present both basic earnings per share (“EPS”) and diluted EPS.  Basic EPS excludes potential dilution and is computed by dividing “Net income (loss) attributable to DISH Network” by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if stock awards were exercised.  The potential dilution from stock awards was computed using the treasury stock method based on the average market value of our Class A common stock.  The following table presents earnings per share amounts for all periods and the basic and diluted weighted-average shares outstanding used in the calculation.

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands, except per share amounts)
Net income (loss) attributable to DISH Network	$	360,310	$	549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic	447,289		443,360
Dilutive impact of stock awards outstanding	2,591		5,490
Diluted	449,880		448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.81	$	1.24
Diluted net income (loss) per share attributable to DISH Network	$	0.80	$	1.22

As of March 31, 2012 and 2011, there were stock awards to purchase 3.4 million and 7.1 million shares, respectively, of Class A common stock outstanding, not included in the weighted-average common shares outstanding above, as their effect is antidilutive.

Vesting of options and rights to acquire shares of our Class A common stock granted pursuant to our performance-based stock incentive plans (“Restricted Performance Units”) is contingent upon meeting certain goals, some of which are not yet probable of being achieved.  As a consequence, the following are also not included in the diluted EPS calculation.

	As of March 31,
	2012	2011
	(In thousands)
Performance-based options	9,619	10,859
Restricted Performance Units and other	1,281	1,101
Total	10,900	11,960

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Property and Equipment (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Depreciation and amortization expense
Depreciation and amortization expense	$ 208,698,000	$ 229,697,000
Property, plant and equipment, net	4,313,678,000		3,169,891,000
Increase in property, plant and equipment	1,144,000,000
Equipment leased to customers
Depreciation and amortization expense
Depreciation and amortization expense	152,443,000	182,987,000
DBS Satellites
Depreciation and amortization expense
Depreciation and amortization expense	33,837,000	32,091,000
Number of satellites utilized in geostationary orbit approximately 22,300 miles above the equator	13
Owned Satellites	6
Number of satellites utilized under operating lease	5
Number of satellites utilized under capital lease	2
Buildings, furniture, fixtures, equipment and other
Depreciation and amortization expense
Depreciation and amortization expense	$ 22,418,000	$ 14,619,000

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2012

Segment Reporting

Schedule of assets, revenue, and net income (loss)

	As of
	March 31,			December 31,
	2012			2011
	(In thousands)
Total assets:
DISH (1)	$	8,822,873		$	11,104,003
Blockbuster	450,804			453,661
Wireless Spectrum (1)	3,858,905			—
Eliminations	(723,070		)	(87,433		)
Total assets	$	12,409,512		$	11,470,231

	For the Three Months
	Ended March 31,
	2012			2011
	(In thousands)
Revenue:
DISH	$	3,252,922		$	3,224,131
Blockbuster (2)	333,991			—
Wireless Spectrum	33			—
Eliminations	(5,077		)	—
Total revenue	$	3,581,869		$	3,224,131
Operating income (loss):
DISH	$	566,545		$	983,353
Blockbuster (2)	13,957			—
Wireless Spectrum	(8,091		)	—
Total operating income (loss)	$	572,411		$	983,353

(1)The decrease in DISH total assets resulted from the reclassification of assets to the wireless spectrum segment.

(2)Our Blockbuster operations are included in our financial results beginning April 26, 2011.

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2012

Share-based compensation

Schedule of stock awards outstanding

	As of March 31, 2012
	DISH Network Awards		EchoStar Awards
Stock Awards Outstanding	Stock Options	Restricted Stock Units	Stock Options	Restricted Stock Units
Held by DISH Network employees	18,762,631	1,186,376	791,554	53,620
Held by EchoStar employees	2,580,701	94,999	N/A	N/A
Total	21,343,332	1,281,375	791,554	53,620

Schedule of stock option activity

	For the Three Months
	Ended March 31, 2012
	Options		Weighted- Average Exercise Price
Total options outstanding, beginning of period (1)	21,336,159		$	20.53
Granted	411,000		$	32.93
Exercised	(363,027	)	$	13.66
Forfeited and cancelled	(40,800	)	$	20.45
Total options outstanding, end of period	21,343,332		$	18.90
Performance-based options outstanding, end of period (2)	9,619,075		$	17.35
Exercisable at end of period	8,538,056		$	20.05

(1)The beginning of period weighted-average exercise price of $20.53 does not reflect the 2012 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 and other employee performance awards below.

Schedule of realized tax benefits from stock awards exercised

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Tax benefit from stock awards exercised	$	1,743	$	795

Schedule of aggregate intrinsic value of stock options outstanding and exercisable

	As of March 31, 2012
	Options Outstanding		Options Exercisable
	(In thousands)
Aggregate intrinsic value	$	299,451	$	109,990

Schedule of restricted stock unit activity

	For the Three Months
	Ended March 31, 2012
	Restricted Stock Units		Weighted- Average Grant Date Fair Value
Total restricted stock units outstanding, beginning of period	1,284,708		$	23.25
Granted	—		$	—
Vested	—		$	—
Forfeited and cancelled	(3,333	)	$	25.07
Total restricted stock units outstanding, end of period	1,281,375		$	23.24
Restricted Performance Units outstanding, end of period (1)	1,281,375		$	23.24

(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 and other employee performance awards below.

Schedule of non-cash, stock-based compensation expense recognized

	For the Three Months
	Ended March 31,
Non-Cash, Stock-Based Compensation Expense Recognized	2012		2011
	(In thousands)
2008 LTIP	$	5,839	$	12,804
Other employee performance awards	3,139		75
Total non-cash, stock-based compensation expense recognized for performance-based awards	$	8,978	$	12,879

Schedule of awards outstanding pursuant to performance-based stock incentive plans

	As of March 31, 2012
	Number of Awards	Weighted- Average Exercise Price
Performance-Based Stock Options
2005 LTIP	3,332,500	$	21.12
2008 LTIP	3,286,575	$	10.06
Other employee performance awards	3,000,000	$	21.16
Total	9,619,075	$	17.35
Restricted Performance Units and Other
2005 LTIP	359,830
2008 LTIP	21,545
Other employee performance awards	900,000
Total	1,281,375

Schedule of allocated non-cash, stock-based compensation expense for all employees

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Subscriber-related	$	837	$	977
General and administrative	22,345		14,200
Total non-cash, stock-based compensation	$	23,182	$	15,177

Schedule of assumptions of Black-Scholes option valuation model

	For the Three Months
	Ended March 31,
Stock Options	2012	2011
Risk-free interest rate	0.51% - 1.29%	2.24% - 2.68%
Volatility factor	38.80% - 39.34%	35.82% - 39.59%
Expected term of options in years	3.4 - 5.9	4.9 - 6.3
Weighted-average fair value of options granted	$9.49 - $12.69	$9.16 - $9.81

LTIP 2005

Share-based compensation

Schedule of unrecognized non-cash, stock-based compensation expense

	2005 LTIP
	Total		Vested Portion (1)
	(In thousands)
DISH Network awards held by DISH Network employees	$	38,172	$	30,587
EchoStar awards held by DISH Network employees	6,897		5,619
Total	$	45,069	$	36,206

(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 and Other Performance Awards

Share-based compensation

Schedule of unrecognized non-cash, stock-based compensation expense

Estimated Remaining Non-Cash, Stock-Based Compensation Expense	2008 LTIP		Other Employee Performance Awards
	(In thousands)
Remaining expense estimated to be recognized during 2012	$	3,474	$	3,139
Estimated contingent expense subsequent to 2012	3,619		47,594
Total estimated remaining expense over the term of the plan	$	7,093	$	50,733

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Property and Equipment (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2012 Satellite	Dec. 31, 2011
Property and equipment
Number of other satellites to be relocated in the event of failure or loss of any satellite	1
FCC authorizations	$ 3,340,441,000	$ 1,391,441,000
Increase in FCC authorizations	1,949,000,000
148 degree orbital location
Property and equipment
Write down in value license agreement if FCC decides to revoke license	$ 68,000,000
EchoStar G1
Property and equipment
Depreciable Life of lives of assets (in years)	15 years
EchoStar T1
Property and equipment
Depreciable Life of lives of assets (in years)	15 years
EchoStar XI
Property and equipment
Depreciable Life of lives of assets (in years)	12 years
EchoStar XIV
Property and equipment
Depreciable Life of lives of assets (in years)	15 years
S-band satelllites
Property and equipment
Number of satellites added	3
Number of satellites in-orbit	2
Number of satellites under construction	1
EchoStar I
Property and equipment
Depreciable Life of lives of assets (in years)	12 years
EchoStar VI
Property and equipment
Loss of Travelling wave tube amplifiers("TWTAs")	2
Increase in loss of TWTAs	5

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2012

Related Party Transactions

Schedule of dollar value of set-top boxes and other equipment purchased from EchoStar and purchases included in "Cost of sales- subscriber promotion subsidies- EchoStar"

	For the Three Months
	Ended March 31,
Purchases from EchoStar	2012		2011
	(In thousands)
Set-top boxes and other equipment	$	237,365	$	272,126
Set-top boxes and other equipment included in “Cost of sales – subscriber promotion subsidies – EchoStar”	$	82,274	$	54,426

Schedule of transactions with NagraStar

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Purchases (including fees):
Purchases from NagraStar	$	17,484	$	20,729

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Amounts Payable and Commitments:
Amounts payable to NagraStar	$	12,925	$	5,853

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Organization and Business Activities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2012 segment subscriber	Dec. 31, 2008	Mar. 09, 2012 Sprint Settlement Agreement	Mar. 09, 2012 TerreStar Networks, Inc. ("TerreStar")	Mar. 09, 2012 DBSD North America (ICO)
Organization and Business Activities
Number of primary business segments	3
Number of DISH Network subscribers	14,071,000
Spectrum Investments
Commitment to acquire percentage ownership interest	100.00%
Payment to acquire certain 700 MHz wireless licenses		$ 712
Payments to acquire wireless spectrum assets	2,860
Purchase price			$ 114	$ 1,382	$ 1,364

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

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, 2011 (“2011 10-K”).  Certain prior period amounts have been reclassified to conform to the current period presentation.

Principles of Consolidation

We consolidate all majority owned subsidiaries, investments in entities in which we have controlling influence and variable interest entities where we have been determined to be the primary beneficiary.  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.

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, the useful lives and residual value surrounding our rental library inventory, estimated accruals related to revenue-sharing titles that are subject to performance guarantees, 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, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, asset retirement obligations, 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 Condensed Consolidated Financial Statements.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

Fair Value Measurements

We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.  Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs.  We apply the following hierarchy in determining fair value:

·Level 1, defined as observable inputs being quoted prices in active markets for identical assets;

·Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; 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 March 31, 2012 and December 31, 2011, the carrying value for cash and cash equivalents, marketable investment securities, 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 5.

Fair values for our publicly traded debt securities are based on quoted market prices.  The fair values of our private debt is 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 notes.  See Note 9 for the fair value of our long-term debt.

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Basic and Diluted Net Income (Loss) Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Basic and Diluted Net Income (Loss) Per Share
Net income (loss) attributable to DISH Network	$ 360,310	$ 549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic (in shares)	447,289	443,360
Dilutive impact of stock awards outstanding (in shares)	2,591	5,490
Diluted (in shares)	449,880	448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network (in dollars per share)	$ 0.81	$ 1.24
Diluted net income (loss) per share attributable to DISH Network (in dollars per share)	$ 0.80	$ 1.22

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 6) (Investment Securities, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Investment Securities
Level 3 Investment Securities
Balance at the beginning of the period	$ 944,924	$ 168,993
Net realized and unrealized gains (losses) included in earnings	84,726	3,314
Net realized and unrealized gains (losses) included in other comprehensive income (loss)	74,929	(57,803)
Settlements	(839,660)	(762)
Balance at the end of the period	$ 115,061	$ 229,348

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Segment Reporting (Details) (USD $)	3 Months Ended		12 Months Ended					3 Months Ended		12 Months Ended	3 Months Ended		3 Months Ended					3 Months Ended	12 Months Ended
	Mar. 31, 2012 segment subscriber	Mar. 31, 2011	Dec. 31, 2011	Dec. 31, 2008	Mar. 09, 2012 Sprint Settlement Agreement	Mar. 09, 2012 TerreStar Networks, Inc. ("TerreStar")	Mar. 09, 2012 DBSD North America (ICO)	Mar. 31, 2012 DISH Network	Mar. 31, 2011 DISH Network	Dec. 31, 2011 DISH Network	Mar. 31, 2012 Blockbuster	Dec. 31, 2011 Blockbuster	Mar. 31, 2012 Blockbuster United Kingdom	Mar. 31, 2012 Blockbuster Mexico	Mar. 31, 2012 Blockbuster Denmark	Mar. 31, 2012 Eliminations	Dec. 31, 2011 Eliminations	Mar. 31, 2012 Wireless Spectrum	Dec. 31, 2008 Wireless Spectrum	Mar. 31, 2012 Wireless Spectrum Sprint Settlement Agreement	Mar. 31, 2012 Wireless Spectrum TerreStar Networks, Inc. ("TerreStar")	Mar. 31, 2012 Wireless Spectrum DBSD North America (ICO)
Segment Reporting
Number of primary operating business units	3
Number of DISH Network subscribers	14,071,000
Segment information
Payment to acquire certain 700 MHz wireless licenses				$ 712,000,000															$ 712,000,000
Payments to acquire wireless spectrum assets	2,860,000,000
Purchase price					114,000,000	1,382,000,000	1,364,000,000													114,000,000	1,382,000,000	1,364,000,000
Total assets	12,409,512,000		11,470,231,000					8,822,873,000		11,104,003,000	450,804,000	453,661,000				(723,070,000)	(87,433,000)	3,858,905,000
Total revenue	3,581,869,000	3,224,131,000	3,224,131,000					3,252,922,000	3,224,131,000	3,224,131,000	333,991,000		71,000,000	41,000,000	13,000,000	(5,077,000)		33,000
Total operating income (loss)	$ 572,411,000	$ 983,353,000	$ 983,353,000					$ 566,545,000	$ 983,353,000	$ 983,353,000	$ 13,957,000							$ (8,091,000)

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Current Assets:
Cash and cash equivalents	$ 1,358,668	$ 609,108
Marketable investment securities (Note 5)	1,334,546	1,431,745
Trade accounts receivable - other, net of allowance for doubtful accounts of $11,679 and $12,350, respectively	757,565	778,443
Trade accounts receivable - EchoStar, net of allowance for doubtful accounts of zero	19,002	16,374
Inventory	670,008	707,151
Deferred tax assets	73,014	73,014
Other current assets	136,674	131,988
Total current assets	4,349,477	3,747,823
Noncurrent Assets:
Restricted cash and marketable investment securities (Note 5)	133,872	132,435
Property and equipment, net of accumulated depreciation of $2,919,747 and $2,862,626, respectively (Note 7 and 8)	4,313,678	3,169,891
FCC authorizations (Note 7 and 8)	3,340,441	1,391,441
Marketable and other investment securities (Note 5)	121,349	112,132
Investment in DBSD North America (Note 8)		1,297,614
TerreStar Transaction (Note 8)		1,345,000
Other noncurrent assets, net	150,695	273,895
Total noncurrent assets	8,060,035	7,722,408
Total assets	12,409,512	11,470,231
Current Liabilities:
Trade accounts payable - other	239,358	225,556
Trade accounts payable - EchoStar	284,407	229,852
Deferred revenue and other	832,676	832,390
Accrued programming	1,112,696	1,067,625
Litigation accrual (Note 11)	70,999	65,580
Other accrued expenses	995,003	763,863
Current portion of long-term debt and capital lease obligations (Note 9)	35,980	35,645
Total current liabilities	3,571,119	3,220,511
Long-Term Obligations, Net of Current Portion:
Long-term debt and capital lease obligations, net of current portion (Note 9)	7,474,426	7,458,134
Deferred tax liabilities	1,188,206	974,414
Long-term deferred revenue, distribution and carriage payments and other long-term liabilities	231,344	236,175
Total long-term obligations, net of current portion	8,893,976	8,668,723
Total liabilities	12,465,095	11,889,234
Commitments and Contingencies (Note 11)
Stockholders' Equity (Deficit):
Additional paid-in capital	2,303,908	2,274,005
Accumulated other comprehensive income (loss)	55,430	82,043
Accumulated earnings (deficit)	(851,680)	(1,211,990)
Treasury stock, at cost	(1,569,459)	(1,569,459)
Total DISH Network stockholders' equity (deficit)	(56,766)	(420,370)
Noncontrolling interest	1,183	1,367
Total stockholders' equity (deficit)	(55,583)	(419,003)
Total liabilities and stockholders' equity (deficit)	12,409,512	11,470,231
Class A common stock
Stockholders' Equity (Deficit):
Common stock	2,651	2,647
Class B common stock
Stockholders' Equity (Deficit):
Common stock	2,384	2,384
Class C common stock
Stockholders' Equity (Deficit):
Common stock

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Acquisitions (Details) (USD $)	3 Months Ended		12 Months Ended		3 Months Ended					3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011	Dec. 31, 2008	Mar. 31, 2012 Wireless Spectrum Assets	Mar. 31, 2012 Sprint Settlement Agreement	Mar. 09, 2012 Sprint Settlement Agreement	Mar. 09, 2012 DBSD North America (ICO)	Dec. 31, 2011 DBSD North America (ICO)	Mar. 31, 2012 DBSD North America (ICO) 7.5% Convertible Senior Secured Notes due 2009	Dec. 31, 2011 DBSD North America (ICO) 7.5% Convertible Senior Secured Notes due 2009	Feb. 28, 2012 DBSD North America (ICO) Investment Agreement	Mar. 09, 2012 TerreStar Networks, Inc. ("TerreStar")
Spectrum Investments
Payment to acquire certain 700 MHz wireless licenses				$ 712,000,000
Payments to acquire wireless spectrum assets	2,860,000,000
Purchase price							114,000,000	1,364,000,000				1,400,000,000	1,382,000,000
Investment in DBSD North America (Note 8)			1,297,614,000			114,000,000			1,298,000,000		839,000,000
Net purchase price	2,859,648,000
Cash purchase price paid										2,761,000,000
Gain on conversion of senior secured notes										99,000,000
Accumulated other comprehensive income (loss)	55,430,000		82,043,000							78,000,000
Revenue	3,581,869,000	3,224,131,000	3,224,131,000		1,000,000
Operating expenses					$ 8,000,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
DBSD North America Transaction, cash acquired	$ 5,230

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Marketable investment securities, restricted cash and other investment securities
Current marketable investment securities	$ 1,334,546	$ 1,431,745
Restricted marketable investment securities	76,700	65,843
Noncurrent marketable investment securities - ARS and MBS	118,470	109,327
Total marketable investment securities	1,529,716	1,606,915
Restricted cash and cash equivalents	57,172	66,592
Other investment securities - cost method	2,879	2,805
Investment in DBSD North America		1,297,614
Total other investment securities	2,879	1,300,419
Total marketable investment securities, restricted cash and cash equivalents and other investment securities	1,589,767	2,973,926
Current marketable investment securities - VRDNs
Marketable investment securities, restricted cash and other investment securities
Current marketable investment securities	185,005	160,555
Current marketable investment securities - strategic
Marketable investment securities, restricted cash and other investment securities
Current marketable investment securities	452,082	360,052
Current marketable investment securities - other
Marketable investment securities, restricted cash and other investment securities
Current marketable investment securities	$ 697,459	$ 911,138

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Other Comprehensive Income Related Tax Effects (Tables)

3 Months Ended

Mar. 31, 2012

Other Comprehensive Income Related Tax Effects

Schedule of tax effect allocated to component of other comprehensive income

	For the Three Months
	Ended March 31,
	2012								2011
	Before			Tax		Net			Before			Tax		Net
	Tax			(Expense)		of Tax			Tax			(Expense)		of Tax
	Amount			Benefit		Amount			Amount			Benefit		Amount
	(In thousands)
Foreign currency translation adjustments	$	3,253		$	—	$	3,253		$	—		$	—	$	—
Unrealized holding gains (losses) on available-for-sale securities	51,021			—		51,021			67,800			—		67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss)	(80,887		)	—		(80,887		)	(6,296		)	—		(6,296		)
Other comprehensive income (loss)	$	(26,613	)	$	—	$	(26,613	)	$	61,504		$	—	$	61,504

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 2) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2012 Current marketable investment securities - VRDNs D	Mar. 31, 2012 ARS and MBS, noncurrent	Dec. 31, 2011 ARS and MBS, noncurrent
Other investment securities:
Settlement period (in days)			5
ARS and MBS investments, total carrying value	$ 118,470	$ 109,327		$ 118,000
ARS and MBS investments, portion for which the fair value election was made				$ 68,530	$ 62,670

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Inventory (Tables)

3 Months Ended

Mar. 31, 2012

Inventory

Schedule of inventory

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
DISH:
Finished goods - DBS	$	298,771	$	295,058
Raw materials	141,423		183,711
Work-in-process - used	38,160		29,228
Work-in-process - new	3,261		2,308
Total DISH inventory	481,615		510,305
Blockbuster:
Rental library	93,625		104,238
Merchandise	90,920		92,608
Total Blockbuster inventory	184,545		196,846
Wireless Spectrum:
Finished goods	3,848		—
Total Wireless Spectrum inventory	3,848		—
Total inventory	$	670,008	$	707,151

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Organization and Business Activities

3 Months Ended

Mar. 31, 2012

Organization and Business Activities

Organization and Business Activities

1.Organization and Business Activities

Principal Business

DISH Network Corporation is a holding company.  Its subsidiaries (which together with DISH Network Corporation are referred to as “DISH Network,” the “Company,” “we,” “us” and/or “our”) operate three primary segments.

·DISH.  The DISH® branded direct broadcast satellite (“DBS”) pay-TV service had 14.071 million subscribers in the United States as of March 31, 2012.  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 owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a third-party leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations.

·Blockbuster.  On April 26, 2011, we completed the acquisition of most of the assets of Blockbuster, Inc. (the “Blockbuster Acquisition”).  The financial results of our Blockbuster operations are included in our financial results beginning April 26, 2011.  Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand® service.

·Wireless Spectrum.  In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  On March 9, 2012, we closed the acquisitions of 100% of the equity of reorganized DBSD North America, Inc. (“DBSD North America”) and substantially all of the assets of TerreStar Networks, Inc. (“TerreStar”), pursuant to which we acquired, among other things, 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for DBSD North America (the “DBSD Transaction”), $1.382 billion for TerreStar (the “TerreStar Transaction”), and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.  See Note 8 for further information.

We currently generate an immaterial amount of revenue and incur operating expenses associated with certain satellite operations and regulatory compliance from our wireless spectrum assets.  As we review our options for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have to make significant investments related to, among other things, research and development, wireless testing and construction of a wireless network.

On March 21, 2012, the FCC released a notice of proposed rule making (“NPRM”) that could result in the elimination of the Mobile-Satellite Service (“MSS”) “integrated service” and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  We cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.  See Note 11 for further information.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Current Assets:
Allowance for doubtful accounts on trade accounts receivable - other	$ 11,679	$ 12,350
Allowance for doubtful accounts on trade accounts receivable - EchoStar	0	0
Noncurrent Assets:
Property and equipment, accumulated depreciation	$ 2,919,747	$ 2,862,626
Class A common stock
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,600,000,000	1,600,000,000
Common stock, shares issued	265,123,445	264,732,074
Common stock, shares outstanding	209,005,185	208,613,814
Class B common stock
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	238,435,208	238,435,208
Common stock, shares outstanding	238,435,208	238,435,208
Class C common stock
Common stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	0	0
Common stock, shares outstanding	0	0

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

11.Commitments and Contingencies

Wireless Spectrum

In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  To commercialize these licenses and satisfy the associated FCC build-out requirements, we will be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to these licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly, which may affect our future financial condition or results of operations.  Part or all of these licenses may be terminated if the associated FCC build-out requirements are not satisfied.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these investments and profitably deploy the spectrum represented by the 700 MHz licenses.

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012. While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

Guarantees

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 $169 million over approximately the next three years.

In addition, 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 also guarantee a certain portion of its payment obligations under this agreement through 2019.  As of March 31, 2012, the remaining payment obligations under this agreement are the guarantee of $486 million.

As of March 31, 2012, we have not recorded a liability on the balance sheet for any of these guarantees.

Contingencies

Separation Agreement

In connection with the Spin-off, we 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 we will indemnify EchoStar for any liabilities or damages resulting from intellectual property claims relating to the period prior to the Spin-off as well as our acts or omissions following the Spin-off.

Litigation

We are involved in a number of legal proceedings (including those described below) concerning matters arising in connection with the conduct of our business activities.  Many of these proceedings are at preliminary stages, and many of these proceedings seek an indeterminate amount of damages.  We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or an additional loss may have been incurred and to determine if accruals are appropriate.  If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of the possible loss or range of possible loss can be made.

For certain cases described on the following pages, management is unable to provide a meaningful estimate of the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties (as with many patent-related cases).  For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.

Channel Bundling Class Action

During 2007, a purported class of cable and satellite subscribers filed an antitrust action against our wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Central District of California.  The suit also names as defendants DirecTV, Comcast, Cablevision, Cox, Charter, Time Warner, Inc., Time Warner Cable, NBC Universal, Viacom, Fox Entertainment Group and Walt Disney Company.  The suit alleges, among other things, that the defendants engaged in a conspiracy to provide customers with access only to bundled channel offerings as opposed to giving customers the ability to purchase channels on an “a la carte” basis.  On October 16, 2009, the District Court entered an order granting the defendants’ motion to dismiss with prejudice.  On June 3, 2011, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s order.  The plaintiff class sought rehearing en banc.  On October 31, 2011, the Ninth Circuit issued an order vacating the previous June 3, 2011 order, directing that a 3-judge panel be reconstituted, and denying the plaintiff class’ motion for rehearing.  On March 30, 2012, the reconstituted panel of the Ninth Circuit again affirmed the District Court’s order.  On April 10, 2012, the plaintiff class again filed a petition for rehearing en banc, which was denied on May 4, 2012.  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.

Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC)

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.”  On November 18, 2011, Cyberfone Systems, LLC (f/k/a LVL Patent Group, LLC) filed an amended complaint making the same claim.  DirecTV was dismissed from the case on January 4, 2012.

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.

ESPN

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 high-definition feeds of the Disney Channel, ESPN News, Toon and ABC Family.  In October 2011, the jury returned a verdict in favor of the defendants.  We intend to appeal.

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 is disputed.  On December 29, 2010, the New York State Supreme Court, Appellate Division, First Department affirmed the partial grant of ESPN’s motion 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 affirmed the prior grant of ESPN’s motion and ruled that we owe the full amount of approximately $66 million under the applicable affiliation agreement.  As of December 31, 2010, we had $42 million recorded as a “Litigation accrual” on our Condensed Consolidated Balance Sheets.

On June 21, 2011, the First Department affirmed the New York 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, during 2011, we recorded $24 million of “Litigation Expense” on our Consolidated Statements of Operations and Comprehensive Income (Loss).  On February 6, 2012, ESPN filed a motion seeking $5 million in attorneys’ fees as the prevailing party on both our claim and ESPN’s counterclaim, which we have opposed.  As a result, during the three months ended March 31, 2012, we recorded $5 million of “General and administrative expenses” and increased our “Litigation accrual” to a total of $71 million as of March 31, 2012.  This reflects our estimated exposure for ESPN’s counterclaim.  We intend to vigorously prosecute and defend this case.

Norman IP Holdings, Inc.

On September 15, 2011, Norman IP Holdings, Inc. (“Norman”) filed a patent infringement complaint against Brother International Corporation and Lexmark International Corporation in the United States District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 5,592,555 (the “‘555 patent”)  and U.S. Patent No. 5,502,689 (the “‘689 patent”).  On December 9, 2011, Norman filed a first amended complaint that added Ricoh Americas Corporation and dropped Brother International Corporation as defendants.  On January 27, 2012, Norman filed a second amended complaint that added us as a defendant, in addition to adding Belkin International, Inc., BMW of North America LLC, Daimler North America Corporation, Mercedes-Benz USA, LLC, D-Link Systems, Inc., Ford Motor Company, Garmin International, Inc., Garmin USA, Inc., General Electric Company, General Motors Company, JVC Americas Corporation, Novatel Wireless, Inc., Novatel Wireless Solutions, Inc., Novatel Wireless Technology, Inc., TomTom, Inc., ViewSonic Corporation, Vizio, Inc., Volkswagen Group of America, Inc., Xerox Corporation, ZTE USA, Inc., and ZTE Solutions, Inc.  The ‘555 patent relates to a wireless communications privacy method and system and the ‘689 patent relates to a clock generator capable of shut-down mode and clock generation method.  Norman 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 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.

NorthPoint Technology, Ltd.

On July 2, 2009, NorthPoint Technology, Ltd. (“NorthPoint”) filed suit against us, EchoStar and DirecTV in the United States District Court for the Western District of Texas alleging infringement of United States Patent No. 6,208,636 (the “‘636 patent”).  The ‘636 patent relates to the use of multiple low-noise block converter feedhorns, or LNBFs, which are antennas used for satellite reception.  On April 21, 2011, the U.S. Patent and Trademark Office issued an order granting reexamination of the ‘636 patent.  On June 21, 2011, the District Court entered summary judgment in our favor, finding that all asserted claims of the ‘636 patent are invalid.  NorthPoint has appealed.

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.

Olympic Developments AG, LLC

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 4, 2011, the case was stayed pending reexamination by the U.S. Patent and Trademark Office.

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.

Personalized Media Communications, Inc.

During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against us, EchoStar and Motorola Inc. in the United States District Court for the Eastern District of Texas alleging infringement of United States Patent Nos. 4,694,490, 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 EchoStar and us as defendants.  Trial is currently set for August 2012.

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 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.

Preservation Technologies, LLC

In December 2011, Preservation Technologies, LLC (“Preservation Technologies”) filed suit against us in the United States District Court for the Central District of California.  In the Operative Fourth Amended Complaint, filed on March 28, 2012, Preservation Technologies alleges that our BLOCKBUSTER On Demand, DISH branded pay-TV and DISH Online services infringe U.S. 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 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.

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 alleges 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, one of which is subject to a reexamination request before the U.S. Patent and Trademark Office, which was filed on February 13, 2012.

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 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.

Technology Development and Licensing L.L.C.

On January 22, 2009, Technology Development and Licensing L.L.C. (“TDL”) filed suit against us 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 our motion to stay the case pending two reexamination petitions before the Patent and Trademark Office.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patent, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

TQP Development, LLC

On April 4, 2012, TQP Development, LLC (“TQP Development”) 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 titled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.”  TQP Development is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted 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.

Vigilos, LLC

On February 23, 2011, Vigilos, LLC filed suit against EchoStar, two EchoStar subsidiaries, Sling Media, Inc. and EchoStar Technologies L.L.C., and Monsoon Multimedia, Inc. in the U.S. District Court for the Eastern District of Texas alleging infringement of U.S. Patent No. 6,839,731, which is entitled “System and Method for Providing Data Communication in a Device Network.”  Subsequently in 2011, Vigilos added DISH Network L.L.C., our wholly owned subsidiary, as a defendant in its First Amended Complaint and the case was transferred to the Northern District of California.  Later in 2011, Vigilos filed a Second Amended Complaint that added claims for infringement of a second patent, U.S. Patent No. 7,370,074, which is entitled “System and Method for Implementing Open-Protocol Remote Device Control.”  Vigilos is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

We intend to vigorously defend this case.  In the event that a court ultimately determines that we infringe the asserted patents, we may be subject to substantial damages, which may include treble damages, and/or an injunction that could require us to materially modify certain features that we currently offer to consumers.  We cannot predict with any degree of certainty the outcome of the suit or determine the extent of any potential liability or damages.

Voom HD Holdings

In January 2008, Voom HD Holdings (“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.  At that time, Voom also sought a preliminary injunction to prevent us from terminating the agreement.  The Court denied Voom’s request, finding, among other things, that Voom had not demonstrated that it was likely to prevail on the merits.  In April 2010, we and Voom each filed motions for summary judgment.  Voom later filed two motions seeking discovery sanctions.  On November 9, 2010, the Court issued a decision denying both motions for summary judgment, but granting Voom’s motions for discovery sanctions.  The Court’s decision provides for an adverse inference jury instruction at trial and precludes our damages expert from testifying at trial.  We appealed the grant of Voom’s motion for discovery sanctions to the New York State Supreme Court, Appellate Division, First Department.  On February 15, 2011, the appellate court granted our motion to stay the trial pending our appeal.  On January 31, 2012, the appellate court affirmed the order imposing discovery sanctions and precluding our damages expert from testifying at trial.  We sought leave to appeal to New York’s highest state court, the Court of Appeals, but that motion was denied on April 26, 2012.  A trial date has not been set.  Voom is claiming over $2.5 billion in damages.  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.

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 position, 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.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 30, 2012 Class A common stock	Apr. 30, 2012 Class B common stock
Entity Registrant Name	DISH Network CORP
Entity Central Index Key	0001001082
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		211,376,861	238,435,208
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

XML

Segment Reporting

3 Months Ended

Mar. 31, 2012

Segment Reporting

Segment Reporting

12.Segment Reporting

Operating segments are components of an enterprise for which separate financial information is available and regularly evaluated by the chief operating decision maker(s) of an enterprise.  Under this definition, we operated three primary segments during the three months ended March 31, 2012.

·DISH.  The DISH branded pay-TV service had 14.071 million subscribers in the United States as of March 31, 2012.  The DISH branded pay-TV service consists of FCC licenses authorizing us to use DBS and FSS spectrum, our owned and leased satellites, receiver systems, third-party broadcast operations, customer service facilities, a third-party leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations.

·Blockbuster.  On April 26, 2011, we completed the Blockbuster Acquisition.  The financial results of our Blockbuster operations are included in our financial results beginning April 26, 2011.  Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand® service.

·Wireless Spectrum.  In 2008, we paid $712 million to acquire certain 700 MHz wireless spectrum licenses, which were granted to us by the FCC in February 2009 subject to certain build-out requirements.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.  See Note 8 for further information.

We currently generate an immaterial amount of revenue and incur operating expenses associated with certain satellite operations and regulatory compliance from our wireless spectrum assets.  As we review our options for the commercialization of this wireless spectrum, we may incur significant additional expenses and may have to make significant investments related to, among other things, research and development, wireless testing and construction of a wireless network.

On March 21, 2012, the FCC released an NPRM that could result in the elimination of the MSS “integrated service” and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  We cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.  See Note 11 for further information.

The total assets, revenue and operating income by segment are as follows:

	As of
	March 31,			December 31,
	2012			2011
	(In thousands)
Total assets:
DISH (1)	$	8,822,873		$	11,104,003
Blockbuster	450,804			453,661
Wireless Spectrum (1)	3,858,905			—
Eliminations	(723,070		)	(87,433		)
Total assets	$	12,409,512		$	11,470,231

	For the Three Months
	Ended March 31,
	2012			2011
	(In thousands)
Revenue:
DISH	$	3,252,922		$	3,224,131
Blockbuster (2)	333,991			—
Wireless Spectrum	33			—
Eliminations	(5,077		)	—
Total revenue	$	3,581,869		$	3,224,131
Operating income (loss):
DISH	$	566,545		$	983,353
Blockbuster (2)	13,957			—
Wireless Spectrum	(8,091		)	—
Total operating income (loss)	$	572,411		$	983,353

(1)The decrease in DISH total assets resulted from the reclassification of assets to the wireless spectrum segment.

(2)Our Blockbuster operations are included in our financial results beginning April 26, 2011.

Geographic Information.  Revenues are attributed to geographic regions based upon the location where the products are delivered and services are provided.  During the three months ended March 31, 2012, our international revenue includes transactions with Blockbuster customers in the United Kingdom, Mexico and Denmark totaling $71 million, $41 million and $13 million, respectively.  During the three months ended March 31, 2011, we did not have any international revenue as our Blockbuster operations are included in our financial results beginning April 26, 2011.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenue:
Subscriber-related revenue	$ 3,224,465	$ 3,199,099
Equipment and merchandise sales, rental and other revenue	350,737	16,001
Equipment sales, services and other revenue - EchoStar	6,667	9,031
Total revenue	3,581,869	3,224,131
Costs and Expenses (exclusive of depreciation shown separately below - Note 7):
Subscriber-related expenses	1,762,753	1,693,695
Satellite and transmission expenses:
EchoStar	109,854	108,913
Other	11,679	10,200
Cost of sales - equipment, merchandise, services, rental and other	142,262	22,267
Subscriber acquisition costs:
Cost of sales - subscriber promotion subsidies - EchoStar	82,274	54,426
Other subscriber promotion subsidies	226,389	226,841
Subscriber acquisition advertising	89,374	73,632
Total subscriber acquisition costs	398,037	354,899
General and administrative expenses - EchoStar	12,082	11,940
General and administrative expenses	364,093	149,844
Litigation expense (Note 11)		(340,677)
Depreciation and amortization (Note 7)	208,698	229,697
Total costs and expenses	3,009,458	2,240,778
Operating income (loss)	572,411	983,353
Other Income (Expense):
Interest income	7,089	6,286
Interest expense, net of amounts capitalized	(138,013)	(120,179)
Other, net	110,282	11,633
Total other income (expense)	(20,642)	(102,260)
Income (loss) before income taxes	551,769	881,093
Income tax (provision) benefit, net	(191,643)	(331,767)
Net income (loss)	360,126	549,326
Less: Net income (loss) attributable to noncontrolling interest	(184)	(68)
Net income (loss) attributable to DISH Network	360,310	549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic (in shares)	447,289	443,360
Diluted (in shares)	449,880	448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network (in dollars per share)	$ 0.81	$ 1.24
Diluted net income (loss) per share attributable to DISH Network (in dollars per share)	$ 0.80	$ 1.22
Comprehensive Income (Loss):
Net income (loss)	360,126	549,326
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	3,253
Unrealized holding gains (losses) on available-for-sale securities	51,021	67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss)	(80,887)	(6,296)
Deferred income tax (expense) benefit	0
Total other comprehensive income (loss), net of tax	(26,613)	61,504
Comprehensive income (loss)	333,513	610,830
Less: Comprehensive income (loss) attributable to noncontrolling interest	(184)	(68)
Comprehensive income (loss) attributable to DISH Network	$ 333,697	$ 610,898

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Inventory

3 Months Ended

Mar. 31, 2012

Inventory

Inventory

6.             Inventory

Inventory consists of the following:

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
DISH:
Finished goods - DBS	$	298,771	$	295,058
Raw materials	141,423		183,711
Work-in-process - used	38,160		29,228
Work-in-process - new	3,261		2,308
Total DISH inventory	481,615		510,305
Blockbuster:
Rental library	93,625		104,238
Merchandise	90,920		92,608
Total Blockbuster inventory	184,545		196,846
Wireless Spectrum:
Finished goods	3,848		—
Total Wireless Spectrum inventory	3,848		—
Total inventory	$	670,008	$	707,151

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

3 Months Ended

Mar. 31, 2012

Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

5.Marketable Investment Securities, Restricted Cash  and Cash Equivalents, and Other Investment Securities

Our marketable investment securities, restricted cash and cash equivalents and other investment securities consist of the following:

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Marketable investment securities:
Current marketable investment securities - VRDNs	$	185,005	$	160,555
Current marketable investment securities - strategic	452,082		360,052
Current marketable investment securities - other	697,459		911,138
Total current marketable investment securities	1,334,546		1,431,745
Restricted marketable investment securities (1)	76,700		65,843
Noncurrent marketable investment securities - ARS and MBS (2)	118,470		109,327
Total marketable investment securities	1,529,716		1,606,915
Restricted cash and cash equivalents (1)	57,172		66,592
Other investment securities:
Other investment securities - cost method (2)	2,879		2,805
Investment in DBSD North America (Note 8)	—		1,297,614
Total other investment securities	2,879		1,300,419
Total marketable investment securities, restricted cash and cash equivalents and other investment securities	$	1,589,767	$	2,973,926

(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)Noncurrent marketable investment securities — auction rate securities (“ARS”), mortgage backed securities (“MBS”) and other investment securities are included in “Marketable and other investment securities” on our Condensed Consolidated Balance Sheets.

Marketable Investment Securities

Our marketable investment securities portfolio consists of various debt and equity instruments, all of which are classified as available-for-sale, except as specified below.

Current Marketable Investment Securities - VRDNs

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 of investments in many municipalities, which are backed by financial institutions or other highly rated companies 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.

Current Marketable Investment Securities - Strategic

Our current strategic marketable investment securities include strategic and financial investments in public companies that are highly speculative and have experienced and continue to experience volatility.  As of March 31, 2012, a significant portion of our strategic investment portfolio consisted of securities of several issuers, and a significant portion of the value of that portfolio depends on the value of those issuers.

Current Marketable Investment Securities - Other

Our current marketable investment securities portfolio includes investments in various debt instruments including corporate and government bonds.

Restricted Cash and Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, 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 (See Note 11).

Noncurrent Marketable Investment Securities — ARS and MBS

We have investments in ARS and MBS which are either classified as available-for-sale securities or are accounted for under the fair value method.  Previous events in the credit markets reduced or eliminated current liquidity for certain of our ARS and MBS investments.  As a result, we classify these investments as noncurrent assets, as we intend to hold these investments until they recover or mature.

The valuation of our ARS and MBS investments portfolio is subject to uncertainties that are difficult to estimate.  Due to the lack of observable market quotes for identical assets, we utilize analyses that rely on Level 2 and/or Level 3 inputs, as defined in “Fair Value Measurements.”  These inputs include, among other things, observed prices on similar assets as well as our assumptions and estimates related to the counterparty credit quality, default risk underlying the security and overall capital market liquidity.  These securities were also compared, when possible, to other observable market data for financial instruments with similar characteristics.

Fair Value Election.  As of March 31, 2012, our ARS and MBS noncurrent marketable investment securities portfolio of $118 million includes $69 million of securities accounted for under the fair value method.

Other Investment Securities

We have strategic investments in certain debt and equity securities that are included in noncurrent “Marketable and other investment securities” on our Condensed Consolidated Balance Sheets and accounted for using the cost, equity and/or fair value methods of accounting.

Our ability to realize value from our strategic investments in companies that are not publicly traded depends on the success of those companies’ businesses and their ability to obtain sufficient capital to execute their business plans.  Because private markets are not as liquid as public markets, there is also increased risk that we will not be able to sell these investments, or that when we desire to sell them we will not be able to obtain fair value for them.

Unrealized Gains (Losses) on Marketable Investment Securities

As of March 31, 2012 and December 31, 2011, we had accumulated net unrealized gains of $61 million and $91 million, both net of related tax effect, respectively, as a part of “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit).”  A full valuation allowance has been established against any deferred taxes that are capital in nature.  The components of our available-for-sale investments are summarized in the table below.

	As of March 31, 2012										As of December 31, 2011
	Marketable										Marketable
	Investment		Unrealized								Investment		Unrealized
	Securities		Gains		Losses			Net			Securities		Gains		Losses			Net
	(In thousands)
Debt securities:
VRDNs	$	185,005	$	—	$	—		$	—		$	160,555	$	—	$	—		$	—
ARS and MBS	49,940		1,056		(10,630		)	(9,574		)	46,657		848		(14,486		)	(13,638		)
ARS fair value election	68,530		—		—			—			62,670		—		—			—
Other (including restricted)	858,719		10,066		(1,250		)	8,816			994,021		5,525		(6,565		)	(1,040		)
Equity securities:
Other	367,522		113,886		(51,813		)	62,073			343,012		89,044		(61,934		)	27,110
Subtotal	1,529,716		125,008		(63,693		)	61,315			1,606,915		95,417		(82,985		)	12,432
Investment in DBSD North America (1)	—		—		—			—			839,009		78,749		—			78,749
Total	$	1,529,716	$	125,008	$	(63,693	)	$	61,315		$	2,445,924	$	174,166	$	(82,985	)	$	91,181

(1)Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

As of March 31, 2012, restricted and non-restricted marketable investment securities include debt securities of $881 million with contractual maturities of one year or less and $281 million with contractual maturities greater than one year.  Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

Marketable Investment Securities in a Loss Position

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 March 31, 2012, the unrealized losses on our investments in equity securities represent investments in several companies in the telecommunications and technology industries.  We are not aware of any specific factors which indicate the unrealized losses in these investments are due to anything other than temporary market fluctuations.  As of March 31, 2012 and December 31, 2011, the unrealized losses on our investments in debt securities primarily represent investments in auction rate and mortgage backed securities.  We 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
	March 31, 2012					December 31, 2011
	Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	439,812	$	(796	)	$	694,199	$	(4,793	)
12 months or more	61,872		(11,084		)	98,240		(16,258		)
Equity Securities:
Less than 12 months	218,885		(51,813		)	247,683		(61,934		)
12 months or more	—		—					—
Total	$	720,569	$	(63,693	)	$	1,040,122	$	(82,985	)

Our investments measured at fair value on a recurring basis were as follows:

	As of
	March 31, 2012								December 31, 2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	1,146,565	$	46,748	$	1,099,817	$	—	$	397,777	$	46,371	$	351,406	$	—
Debt securities:
VRDNs	$	185,005	$	—	$	185,005	$	—	$	160,555	$	—	$	160,555	$	—
ARS and MBS	118,470		—		3,409		115,061		109,327		—		3,412		105,915
Other (including restricted)	858,719		—		858,719		—		994,021		—		994,021		—
Equity securities	367,522		367,522		—		—		343,012		343,012		—		—
Subtotal	1,529,716		367,522		1,047,133		115,061		1,606,915		343,012		1,157,988		105,915
Investment in DBSD North America (1)	—		—		—		—		839,009		—		—		839,009
Total	$	1,529,716	$	367,522	$	1,047,133	$	115,061	$	2,445,924	$	343,012	$	1,157,988	$	944,924

(1)   Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

As of March 31, 2012, our Level 3 investments consist predominately of ARS and MBS.  On a quarterly basis we evaluate the reasonableness of significant unobservable inputs used in those measurements.  The valuation models used for some of our ARS investments require an evaluation of the underlying instruments held by the trusts that issue these securities.  For our other ARS and MBS securities, our evaluation uses, among other things, the terms of the underlying instruments, the credit ratings of the issuers, current market conditions, and other relevant factors.  Based on these factors, we assess the risk of realizing expected cash flows and we apply an observable discount rate that reflects this risk.  We may also reduce our valuations to reflect other claims to trust assets or to reflect a liquidity discount based on the lack of an active market for these securities.

Changes in Level 3 instruments are as follows:

	For the Three Months
	Ended March 31,
Level 3 Investment Securities	2012			2011
	(In thousands)
Balance as of December 31, 2011 and 2010	$	944,924		$	168,993
Net realized and unrealized gains (losses) included in earnings	84,726			3,314
Net realized and unrealized gains (losses) included in other comprehensive income (loss)	(74,929		)	57,803
Purchases	—			—
Settlements (1)	(839,660		)	(762		)
Issuances	—			—
Transfers from level 2 to level 3	—			—
Balance as of March 31, 2012 and 2011	$	115,061		$	229,348

(1)  For the three months ended March 31, 2012, this amount primarily relates to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009.  See Note 8 for further information.

Gains and Losses on Sales and Changes in Carrying Values of Investments

“Other, net” income and expense included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) includes other changes in the carrying amount of our marketable and non-marketable investments as follows:

	For the Three Months
	Ended March 31,
Other Income (Expense):	2012			2011
	(In thousands)
Marketable investment securities - gains (losses) on sales/exchanges	$	4,619		$	6,391
Marketable investment securities - unrealized gains (losses) on investments accounted for at fair value	8,479			(4,773		)
Marketable investment securities - gains (losses) on conversion of DBSD North America Notes (1)	99,445			—
Other investment securities - gains (losses) on sales/exchanges	—			10,000
Marketable investment securities - other-than-temporary impairments	(2,481		)	—
Other	220			15
Total	$	110,282		$	11,633

(1)During the three months ended March 31, 2012, we recognized a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction.  See Note 8 for further information.

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Tables)

3 Months Ended

Mar. 31, 2012

Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment Securities

Schedule of marketable investment securities, restricted cash and other investment securities

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Marketable investment securities:
Current marketable investment securities - VRDNs	$	185,005	$	160,555
Current marketable investment securities - strategic	452,082		360,052
Current marketable investment securities - other	697,459		911,138
Total current marketable investment securities	1,334,546		1,431,745
Restricted marketable investment securities (1)	76,700		65,843
Noncurrent marketable investment securities - ARS and MBS (2)	118,470		109,327
Total marketable investment securities	1,529,716		1,606,915
Restricted cash and cash equivalents (1)	57,172		66,592
Other investment securities:
Other investment securities - cost method (2)	2,879		2,805
Investment in DBSD North America (Note 8)	—		1,297,614
Total other investment securities	2,879		1,300,419
Total marketable investment securities, restricted cash and cash equivalents and other investment securities	$	1,589,767	$	2,973,926

(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)Noncurrent marketable investment securities — auction rate securities (“ARS”), mortgage backed securities (“MBS”) and other investment securities are included in “Marketable and other investment securities” on our Condensed Consolidated Balance Sheets.

Schedule of unrealized gain (loss) on marketable investment securities

	As of March 31, 2012										As of December 31, 2011
	Marketable										Marketable
	Investment		Unrealized								Investment		Unrealized
	Securities		Gains		Losses			Net			Securities		Gains		Losses			Net
	(In thousands)
Debt securities:
VRDNs	$	185,005	$	—	$	—		$	—		$	160,555	$	—	$	—		$	—
ARS and MBS	49,940		1,056		(10,630		)	(9,574		)	46,657		848		(14,486		)	(13,638		)
ARS fair value election	68,530		—		—			—			62,670		—		—			—
Other (including restricted)	858,719		10,066		(1,250		)	8,816			994,021		5,525		(6,565		)	(1,040		)
Equity securities:
Other	367,522		113,886		(51,813		)	62,073			343,012		89,044		(61,934		)	27,110
Subtotal	1,529,716		125,008		(63,693		)	61,315			1,606,915		95,417		(82,985		)	12,432
Investment in DBSD North America (1)	—		—		—			—			839,009		78,749		—			78,749
Total	$	1,529,716	$	125,008	$	(63,693	)	$	61,315		$	2,445,924	$	174,166	$	(82,985	)	$	91,181

(1)Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

Schedule of available-for-sale securities in continuous unrealized loss position by length of time and their fair value

	As of
	March 31, 2012					December 31, 2011
	Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss
	(In thousands)
Debt Securities:
Less than 12 months	$	439,812	$	(796	)	$	694,199	$	(4,793	)
12 months or more	61,872		(11,084		)	98,240		(16,258		)
Equity Securities:
Less than 12 months	218,885		(51,813		)	247,683		(61,934		)
12 months or more	—		—					—
Total	$	720,569	$	(63,693	)	$	1,040,122	$	(82,985	)

Schedule of fair value measurements

	As of
	March 31, 2012								December 31, 2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents (including restricted)	$	1,146,565	$	46,748	$	1,099,817	$	—	$	397,777	$	46,371	$	351,406	$	—
Debt securities:
VRDNs	$	185,005	$	—	$	185,005	$	—	$	160,555	$	—	$	160,555	$	—
ARS and MBS	118,470		—		3,409		115,061		109,327		—		3,412		105,915
Other (including restricted)	858,719		—		858,719		—		994,021		—		994,021		—
Equity securities	367,522		367,522		—		—		343,012		343,012		—		—
Subtotal	1,529,716		367,522		1,047,133		115,061		1,606,915		343,012		1,157,988		105,915
Investment in DBSD North America (1)	—		—		—		—		839,009		—		—		839,009
Total	$	1,529,716	$	367,522	$	1,047,133	$	115,061	$	2,445,924	$	343,012	$	1,157,988	$	944,924

(1)   Of our total investment in DBSD North America of $1.298 billion as of December 31, 2011, $839 million was invested in 7.5% Convertible Senior Secured Notes due 2009, which were accounted for as available-for-sale investments prior to the DBSD Transaction.

Schedule of changes in Level 3 instruments

	For the Three Months
	Ended March 31,
Level 3 Investment Securities	2012			2011
	(In thousands)
Balance as of December 31, 2011 and 2010	$	944,924		$	168,993
Net realized and unrealized gains (losses) included in earnings	84,726			3,314
Net realized and unrealized gains (losses) included in other comprehensive income (loss)	(74,929		)	57,803
Purchases	—			—
Settlements (1)	(839,660		)	(762		)
Issuances	—			—
Transfers from level 2 to level 3	—			—
Balance as of March 31, 2012 and 2011	$	115,061		$	229,348

(1)  For the three months ended March 31, 2012, this amount primarily relates to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009.  See Note 8 for further information.

Schedule of gains and losses on sales and changes in carry values of investments

	For the Three Months
	Ended March 31,
Other Income (Expense):	2012			2011
	(In thousands)
Marketable investment securities - gains (losses) on sales/exchanges	$	4,619		$	6,391
Marketable investment securities - unrealized gains (losses) on investments accounted for at fair value	8,479			(4,773		)
Marketable investment securities - gains (losses) on conversion of DBSD North America Notes (1)	99,445			—
Other investment securities - gains (losses) on sales/exchanges	—			10,000
Marketable investment securities - other-than-temporary impairments	(2,481		)	—
Other	220			15
Total	$	110,282		$	11,633

(1)During the three months ended March 31, 2012, we recognized a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009 in connection with the completion of the DBSD Transaction.  See Note 8 for further information.

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Related Party Transactions

3 Months Ended

Mar. 31, 2012

Related Party Transactions

Related Party Transactions

13.Related Party Transactions

Related Party Transactions with 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, or by certain trusts established by Mr. Ergen for the benefit of his family.

EchoStar is our primary supplier of set-top boxes and digital broadcast operations and our key supplier of 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.

Since 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 position and results of operations.

“Equipment sales - EchoStar”

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 2011, we and EchoStar extended this agreement until December 31, 2012.  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.

“Services and other revenue - EchoStar”

Professional Services Agreement.  Prior to 2010, in connection with the Spin-off, we 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, we and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to receive the following services from us, 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, we and EchoStar agreed that we shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for us (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement).  The Professional Services Agreement automatically renewed on January 1, 2012 for an additional one-year period until January 1, 2013 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.

Management Services Agreement.  We have a Management Services Agreement with EchoStar pursuant to which we make certain of our officers available to provide services (which are primarily legal and accounting services) to EchoStar.  Specifically, Paul W. Orban remains employed by us, 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.  EchoStar makes payments to us based upon an allocable portion of the personnel costs and expenses incurred by us with respect to such officers (taking into account wages and fringe benefits).  These allocations are based upon the estimated percentages of time to be spent by our executive officers performing services for EchoStar under the Management Services Agreement.  EchoStar also reimburses us for direct out-of-pocket costs incurred by us for management services provided to EchoStar.  We and EchoStar evaluate all charges for reasonableness at least annually and make any adjustments to these charges as we and EchoStar mutually agree upon.

The Management Services Agreement automatically renewed on January 1, 2012 for an additional one-year period until January 1, 2013 and renews automatically for successive one-year periods thereafter, unless terminated earlier:  (i) by EchoStar at any time upon at least 30 days notice; (ii) by us at the end of any renewal term, upon at least 180 days notice; or (iii) by us upon notice to EchoStar, following certain changes in control.

Satellite Capacity Leased to EchoStar.  During 2009, we entered into a satellite capacity agreement pursuant to which EchoStar leases certain satellite capacity from us on EchoStar I.  The fee for the services provided under this satellite capacity agreement depends, among other things, upon the orbital location of the satellite and the length of the lease.  The lease generally terminates upon the earlier of:  (i) the end of life or replacement of the satellite (unless EchoStar determines to renew on a year-to-year basis); (ii) the date the satellite fails; (iii) the date the transponder on which service is being provided fails; or (iv) a certain date, which depends, among other things, upon 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.  EchoStar generally has the option to renew this 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.

Real Estate Lease Agreement.  During 2008, we entered into a sublease for space at 185 Varick Street, New York, New York to EchoStar for a period of approximately seven years.  The rent on a per square foot basis for this sublease was comparable to per square foot rental rates of similar commercial property in the same geographic area at the time of the sublease, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises.

“Satellite and transmission expenses — EchoStar”

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.

Effective January 1, 2012, we and EchoStar entered into a new broadcast agreement (the “2012 Broadcast Agreement”) pursuant to which EchoStar will continue to provide 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.

Broadcast Agreement for Certain Sports Related Programming.  During May 2010, we and EchoStar entered into a broadcast agreement pursuant to which EchoStar provides certain broadcast services to us in connection with our carriage of certain sports related programming.  The term of this agreement is for ten years.  If we terminate this agreement for a reason other than EchoStar’s breach, we are generally obligated to reimburse EchoStar for any direct costs EchoStar incurs related to any such termination that it cannot reasonably mitigate.  The fees for the broadcast services provided under this agreement depend, among other things, upon the cost to develop and provide such services.

Satellite Capacity Leased from EchoStar.  Since the Spin-off, we have entered into certain satellite capacity agreements pursuant to which we lease certain 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.  The term of each lease is set forth below:

EchoStar VI, VIII and XII.  We lease certain satellite capacity from EchoStar on EchoStar VI, VIII and XII.  The leases 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.

EchoStar IX.  We lease certain satellite capacity from EchoStar on EchoStar IX.  Subject to availability, we generally have the right to continue to lease satellite capacity from EchoStar on EchoStar IX on a month-to-month basis.

EchoStar XVI.  We will lease certain satellite capacity from EchoStar on EchoStar XVI after its service commencement date and this lease generally terminates 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) ten years following the actual service commencement date.  Upon expiration of the initial term, we have the option to renew on a year-to-year basis through the end of life of the satellite.  There can be no assurance that any options to renew this agreement will be exercised.  EchoStar XVI is expected to be launched during the second half of 2012.

EchoStar XV.  EchoStar XV is owned by us and is operated at the 61.5 degree orbital location.  The FCC has granted EchoStar an authorization to operate the satellite at the 61.5 degree orbital location.  For so long as EchoStar XV remains in service at the 61.5 degree orbital location, we are obligated to pay EchoStar a fee, which varies depending on the number of frequencies being used by EchoStar XV.

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.  We have also guaranteed certain obligations of EchoStar under the Telesat Transponder Agreement.  See discussion under “Guarantees” in Note 11.

Under the terms of the DISH Nimiq 5 Agreement, we make certain monthly payments to EchoStar that commenced in 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 it was placed into service.  Upon expiration of the initial term we have the option to renew the DISH Nimiq 5 Agreement on a year-to-year basis through the end of life of the Nimiq 5 satellite.  Upon in-orbit failure or end of life of the Nimiq 5 satellite, and in certain other circumstances, we have certain rights to receive service from EchoStar on a replacement satellite.  There can be no assurance that any options to renew the DISH Nimiq 5 Agreement will be exercised or that we will exercise our option to receive service on a replacement satellite.

QuetzSat-1 Lease Agreement.  During 2008, EchoStar entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provides, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite.  During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we will receive service from EchoStar on 24 of the DBS transponders.  The QuetzSat-1 Transponder Agreement will be accounted for as an operating lease.  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 explore alternative uses for the QuetzSat-1 satellite.  In the interim, EchoStar is providing us with alternate capacity at the 77 degree orbital location.

Under the terms of the QuetzSat-1 Transponder Agreement, we will make certain monthly payments to EchoStar commencing when the QuetzSat-1 satellite is placed into service at the 77 degree orbital location and continuing through the remainder of the service term.  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.  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 TT&C agreement pursuant to which we will continue to 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.

DBSD North America Agreement.  On March 9, 2012, we completed the DBSD Transaction.  During the second quarter 2011, EchoStar acquired Hughes Communications, Inc. (“Hughes”).  Prior to our acquisition of DBSD North America and EchoStar’s acquisition of Hughes, DBSD North America and Hughes Network Systems, LLC (“HNS”), a wholly-owned subsidiary of Hughes, entered into an agreement pursuant to which HNS provides, among other things, hosting, operations and maintenance services for DBSD North America’s satellite gateway and associated ground infrastructure.  This agreement was renewed for a one year period ending on February 15, 2013, and renews for four successive one-year periods unless terminated by DBSD North America upon at least 30 days notice prior to the expiration of any renewal term.

TerreStar Agreement.  On March 9, 2012, we completed the TerreStar Transaction.  Prior to our acquisition of substantially all the assets of TerreStar and EchoStar’s acquisition of Hughes, TerreStar and HNS entered into various agreements pursuant to which Hughes provides, among other things, hosting, operations and maintenance services for TerreStar’s satellite gateway and associated ground infrastructure.  These agreements generally may be terminated by us at any time for convenience.

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 entered into a RUS Implementation Agreement (the “RUS Agreement”) pursuant to which Hughes provides certain portions of the equipment and broadband service used to implement our RUS program.  The initial term of the RUS Agreement shall continue until the earlier of: (i) September 24, 2013; or (ii) the date that the Grant Funds have been exhausted.  In addition, DISH Broadband may terminate the RUS Agreement for convenience upon 45 days’ prior written notice to Hughes.

“Cost of sales — subscriber promotion subsidies — EchoStar”

Receiver Agreement.  EchoStar is currently our sole supplier of set-top box receivers.  The table below indicates the dollar value of set-top boxes and other equipment that we purchased from EchoStar as well as the amount of purchases that are included in “Cost of sales — subscriber promotion subsidies — EchoStar” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).  The remaining amount is included in “Inventory” and “Property and equipment, net” on our Condensed Consolidated Balance Sheets.

	For the Three Months
	Ended March 31,
Purchases from EchoStar	2012		2011
	(In thousands)
Set-top boxes and other equipment	$	237,365	$	272,126
Set-top boxes and other equipment included in “Cost of sales – subscriber promotion subsidies – EchoStar”	$	82,274	$	54,426

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.

Effective January 1, 2012, we and EchoStar entered into a new agreement (the “2012 Receiver Agreement”) pursuant to which we continue to 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.

“General and administrative expenses — EchoStar”

Product Support Agreement.  In connection with the Spin-off, we entered into a product support agreement pursuant to which we have the right, but not the obligation, to receive product support from EchoStar (including certain engineering and technical support services) for all set-top boxes and related accessories that EchoStar has previously sold and in the future may sell to us.  The fees for the services provided under the product support agreement are calculated at cost plus a fixed margin, which varies depending on the nature of the services provided.  The term of the product support agreement is the economic life of such receivers and related accessories, unless terminated earlier.  We may terminate the product support agreement for any reason upon at least 60 days notice.  In the event of an early termination of this agreement, we are entitled to a refund of any unearned fees paid to EchoStar for the services.

Real Estate Lease Agreements.  We have entered into lease agreements pursuant to which we lease certain real estate from EchoStar.  The rent on a per square foot basis for each of the leases is comparable to per square foot rental rates of similar commercial property in the same geographic area, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises.  The term of each of the leases is set forth below:

·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.

·Meridian Lease Agreement.  The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado is for a period ending on December 31, 2016.

·Santa Fe Lease Agreement.  The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado is for a period ending on December 31, 2016 with a renewal option for one additional year.

·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.

·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.

·Cheyenne Lease Agreement.  Effective January 1, 2012, we and EchoStar entered into a lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming for a period ending on December 31, 2031.

DISHOnline.com Services Agreement.  Effective January 1, 2010, we entered into a two-year agreement with EchoStar pursuant to which we will 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 2011, we exercised our right to renew this agreement for a one-year period ending on December 31, 2012.

DISH Remote Access Services Agreement.  Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we will 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 and may be terminated for any reason upon at least 120 days notice to EchoStar.

SlingService Services Agreement.  Effective February 23, 2010, we entered into an agreement with EchoStar pursuant to which we will receive certain place-shifting 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 and may be terminated for any reason upon at least 120 days notice to EchoStar.

Blockbuster.  On April 26, 2011, we completed the Blockbuster Acquisition.  During the second quarter 2011, EchoStar acquired Hughes.  Blockbuster purchased certain broadband products and services from Hughes pursuant to an agreement that was entered into prior to the Blockbuster Acquisition and EchoStar’s acquisition of Hughes.  Subsequent to these transactions, Blockbuster entered into a new agreement with Hughes which extends for a period through October 31, 2014, pursuant to which Blockbuster may continue to purchase certain broadband products and services from Hughes.  Blockbuster has the option to renew the agreement for an additional one year period.

Additionally, on August 5, 2011, we entered into a letter agreement with EchoStar pursuant to which certain assets used to support Blockbuster’s website were transferred to EchoStar and they agreed to provide certain technical and infrastructure support for the Blockbuster website to us.  The fees for the services provided under the letter agreement are calculated at cost plus a fixed margin, which varies depending upon the nature of the services provided.  The letter agreement provides that it shall continue in effect until the completion of a definitive agreement between EchoStar and us setting forth the terms of the support of the Blockbuster website.  In addition to the services expensed, during the three months ended March 31, 2012, we capitalized $4 million of these services which are included in “Property and equipment, net” and “Other noncurrent assets” on our Condensed Consolidated Balance Sheets.

Move Networks Services Agreement.  In the fourth quarter 2011, EchoStar granted us the right to use Move Network’s software and video publishing systems, which facilitate the streaming, downloading and distribution of audio and video content to set-top boxes via the Internet.  The fees for the services provided under this agreement are based upon a fixed fee which varies based upon the number of set-top boxes in a given month that access Move Network’s software.  This agreement has a term of five years with automatic renewal for successive one year terms and may be terminated for any reason upon at least 180 days notice to EchoStar.

Other Agreements — EchoStar

Tax Sharing Agreement.  In connection with the Spin-off, we 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 us, and we will indemnify EchoStar for such taxes.  However, we are 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 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 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 us 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, we and EchoStar entered into a settlement agreement with TiVo, Inc. (“TiVo”).  The settlement resolved all pending litigation between us 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, which litigation is described in our Annual Report on Form 10-K for the year ended December 31, 2011 under the caption “Item 3.  Legal Proceedings — TiVo Inc.”

Under the settlement agreement, all pending litigation has been dismissed with prejudice and all injunctions that permanently restrain, enjoin or compel any action by us or EchoStar have been dissolved.  We 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 us, we 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 us and EchoStar based on historical sales of certain licensed products, with us being responsible for 95% of each annual payment.

We and EchoStar, on the one hand, and TiVo, on the other hand, have 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.

Because both we and EchoStar were defendants in the TiVo lawsuit, we 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, we determined that we were 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.  We and EchoStar further agreed that EchoStar’s $5 million contribution would not exhaust EchoStar’s liability to us for other intellectual property claims that may arise under the receiver agreement.  We and EchoStar also agreed that we 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.

Patent Cross-License Agreements.  During December 2011, we 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) we and such third party licensed our 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, we and EchoStar may elect to extend our 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 us and EchoStar, we and EchoStar agreed to allocate our respective payments to such third party based on our respective percentage of combined total revenue.

Sprint Settlement Agreement.  On November 3, 2011, we 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 us 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, we made a net payment of approximately $114 million to Sprint.

Other Agreements

In November 2009, Mr. Roger Lynch became employed by both us 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.

Related Party Transactions with NagraStar L.L.C.

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.

The table below summarizes our transactions with NagraStar.

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Purchases (including fees):
Purchases from NagraStar	$	17,484	$	20,729

	As of
	March 31,		December 31,
	2012		2011
	(In thousands)
Amounts Payable and Commitments:
Amounts payable to NagraStar	$	12,925	$	5,853

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Long-Term Debt

3 Months Ended

Mar. 31, 2012

Long-Term Debt

Long-Term Debt

9.             Long-Term Debt

Fair Value of our Long-Term Debt

The following table summarizes the carrying and fair values of our debt facilities:

	As of
	March 31, 2012				December 31, 2011
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(In thousands)
7 % Senior Notes due 2013	$	500,000	$	535,625	$	500,000	$	535,000
6 5/8% Senior Notes due 2014	1,000,000		1,090,000		1,000,000		1,060,000
7 3/4% Senior Notes due 2015	750,000		851,970		750,000		817,500
7 1/8% Senior Notes due 2016	1,500,000		1,662,750		1,500,000		1,593,750
7 7/8% Senior Notes due 2019	1,400,000		1,610,000		1,400,000		1,589,000
6 3/4% Senior Notes due 2021	2,000,000		2,005,000		2,000,000		2,140,000
Mortgages and other notes payable	96,252		96,252		71,871		71,871
Subtotal	7,246,252		$	7,851,597	7,221,871		$	7,807,121
Capital lease obligations (1)	264,154		NA		271,908		NA
Total long-term debt and capital lease obligations (including current portion)	$	7,510,406			$	7,493,779

(1)Disclosure regarding fair value of capital leases is not required.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

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Property and Equipment

3 Months Ended

Mar. 31, 2012

Property and Equipment

Property and Equipment

7.             Property and Equipment

“Property and equipment, net” on our Condensed Consolidated Balance Sheets totaled $4.314 billion as of March 31, 2012, a $1.144 billion increase compared to December 31, 2011.  This increase was primarily related to the closing of the DBSD Transaction and the TerreStar Transaction and the associated purchase price allocation to the assets acquired and the liabilities assumed.  See Note 8 for further information.

Depreciation and Amortization Expense

Depreciation and amortization expense consists of the following:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Equipment leased to customers	$	152,443	$	182,987
Satellites	33,837		32,091
Buildings, furniture, fixtures, equipment and other	22,418		14,619
Total depreciation and amortization	$	208,698	$	229,697

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.

DBS Satellites

We currently utilize 13 DBS satellites in geostationary orbit approximately 22,300 miles above the equator, six of which we own and depreciate over the useful life of each satellite.  We currently utilize capacity on five DBS satellites from EchoStar, which are accounted for as operating leases.  See Note 13 for further discussion of our satellite leases with EchoStar.  We also lease two DBS satellites from third parties, which are accounted for as capital leases and are depreciated over the shorter of the economic life or the term of the satellite agreement.

S-band Satellites

As a result of the DBSD Transaction and the TerreStar Transaction, three S-band satellites were added to our satellite fleet, including two in-orbit satellites and one satellite under construction, discussed below.

EchoStar G1.  EchoStar G1 was launched in April 2008 by DBSD North America and is currently located at the 92.85 degree orbital location.  EchoStar G1 was designed to meet a minimum 15-year useful life.

EchoStar T1.  EchoStar T1 was launched in July 2009 by TerreStar and currently operates at the 111.1 degree orbital location.  EchoStar T1 was designed to meet a minimum 15-year useful life.  Prior to the TerreStar Transaction, this satellite experienced certain solar array anomalies.  While these anomalies did not reduce the estimated useful life of the satellite to less than 15 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

EchoStar T2.  In December 2007, TerreStar entered into an agreement with Space Systems/Loral, Inc. (“SS/L”) for the design and manufacture of EchoStar T2.  We expect EchoStar T2 to be completed during 2012.

Satellite Anomalies

Operation of our pay-TV service requires that we have adequate DBS satellite transmission capacity for the programming we offer.  Moreover, current competitive conditions require that we continue to expand our offering of new programming, particularly by expanding local high definition (“HD”) coverage and offering more HD national channels.  While we generally have had in-orbit DBS 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 2012, 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 further impact the remaining useful life and/or commercial operation of any of the satellites in our fleet.  See “Long-Lived DBS Satellite Assets” below 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 do not anticipate carrying insurance for any of the in-orbit satellites that we use, and we will bear the risk associated with any in-orbit satellite failures.  Recent developments with respect to certain of our satellites are discussed below.

Owned Satellites

EchoStar I.  EchoStar I was designed to meet a minimum 12 year useful life. During first quarter 2012, we determined that EchoStar I experienced a communications receiver anomaly.  While this anomaly did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its future commercial operation.  EchoStar I was fully depreciated during 2007.

EchoStar XI.  EchoStar XI was designed to meet a minimum 12-year useful life.  During first quarter 2012, we determined that EchoStar XI experienced solar array anomalies that reduced the total power available for use by the spacecraft.  While these anomalies did not reduce the estimated useful life of the satellite to less than 12 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

EchoStar XIV.  EchoStar XIV was designed to meet a minimum 15-year useful life.  During third quarter 2011 and first quarter 2012, we determined that EchoStar XIV experienced solar array anomalies that reduced the total power available for use by the spacecraft.  While these anomalies did not reduce the estimated useful life of the satellite to less than 15 years or impact commercial operation of the satellite, there can be no assurance that future anomalies will not reduce its useful life or impact its commercial operation.

Leased Satellites

EchoStar VI.  Prior to 2012, EchoStar VI experienced solar array anomalies which impacted the commercial operation of the satellite.  EchoStar VI also previously experienced the loss of traveling wave tube amplifiers (“TWTAs”).  During first quarter 2012, EchoStar determined that EchoStar VI experienced the loss of two additional TWTAs increasing the total number of TWTAs lost to five.  While the recent loss of TWTAs did not impact commercial operation of the satellite, there can be no assurance that future anomalies will not impact its commercial operation.

Long-Lived DBS Satellite Assets.  We evaluate our DISH branded pay-TV DBS satellite fleet for impairment as one asset group and test for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  While certain of the anomalies discussed above, and previously disclosed, may be considered to represent a significant adverse change in the physical condition of an individual satellite, based on the redundancy designed within each satellite and considering the asset grouping, these anomalies are not considered to be significant events that would require evaluation for impairment recognition.  Unless and until a specific satellite is abandoned or otherwise determined to have no service potential, the net carrying amount related to the satellite would not be written off.

FCC Authorizations

“FCC authorizations” on our Condensed Consolidated Balance Sheets totaled $3.340 billion as of March 31, 2012, a $1.949 billion increase compared to December 31, 2011.  This increase was related to the closing of the DBSD Transaction and the TerreStar Transaction and the associated purchase price allocation to the assets acquired and the liabilities assumed.  See Note 8 for further discussion of the DBSD Transaction and the TerreStar Transaction.

We currently do not have any satellites positioned at the 148 degree orbital location as a result of the retirement of EchoStar V.  While we have requested the necessary approval from the FCC for the continued use of this orbital location, there can be no assurance that the FCC will determine that our proposed future use of this orbital location complies fully with all licensing requirements.  If the FCC decides to revoke this license, we may be required to write-off its $68 million carrying value.  We cannot predict the outcome or the timing of the FCC’s decision and any associated write-off as a result of the FCC’s decision.

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Acquisitions

3 Months Ended

Mar. 31, 2012

Acquisitions.

Acquisitions

8.             Acquisitions

DBSD North America and TerreStar Transactions

On March 2, 2012, the FCC approved the transfer of 40 MHz of 2 GHz wireless spectrum licenses held by DBSD North America and TerreStar to us.  On March 9, 2012, we closed the DBSD Transaction and the TerreStar Transaction, pursuant to which we acquired, among other things, certain satellite assets and wireless spectrum licenses held by DBSD North America and TerreStar.  In addition, during the fourth quarter 2011, we and Sprint Nextel Corporation (“Sprint”) entered into a mutual release and settlement agreement (the “Sprint Settlement Agreement”) pursuant to which all disputed issues relating to the DBSD Transaction and the TerreStar Transaction were resolved between us and Sprint, including, but not limited to, issues relating to costs allegedly incurred by Sprint to relocate users from the spectrum then licensed to DBSD North America and TerreStar.  Pursuant to the Sprint Settlement Agreement, we made a net payment of approximately $114 million to Sprint.  The total consideration to acquire these assets was approximately $2.860 billion.  This amount includes $1.364 billion for the DBSD Transaction, $1.382 billion for the TerreStar Transaction, and the net payment of $114 million to Sprint pursuant to the Sprint Settlement Agreement.

Our 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 MSS “integrated service” and spare satellite requirements and various technical provisions.  The FCC denied our requests for waiver of the integrated service and spare satellite requirements.  The FCC has not yet acted on the request for waiver of various technical provisions, and we cannot predict the outcome or timing of any action by the FCC with respect to that waiver request.  Waiver of the integrated service requirement would have allowed us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On March 21, 2012, the FCC released an NPRM that could result in the elimination of the integrated service and other requirements that attach to the 2 GHz licenses.  Among other things, the FCC has proposed to modify our licenses to allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  The NPRM was published in the Federal Register on April 17, 2012.  Initial comments on the NPRM are due on or before May 17, 2012, and reply comments are due on or before June 1, 2012.  While the FCC has indicated its intent to complete the NPRM during 2012, we cannot predict the outcome or timing of the NPRM, including, without limitation, any associated build-out requirements with which we may need to comply to avail ourselves of any changes to the rules.

As a result of the completion of the DBSD Transaction and the TerreStar Transaction, we will likely be required to make significant additional investments or partner with others to, among other things, finance the commercialization and build-out requirements of these licenses and our integration efforts including compliance with regulations applicable to the acquired licenses.  Depending on the nature and scope of such commercialization and build-out, any such investment or partnership could vary significantly.  There can be no assurance that we will be able to develop and implement a business model that will realize a return on these spectrum investments or that we will be able to profitably deploy the assets represented by these spectrum investments, which may affect the carrying value of these assets and our future financial condition or results of operations.

For the purposes of acquisition accounting, management determined that the DBSD Transaction and the TerreStar Transaction, together with the net payment pursuant to the Sprint Settlement Agreement, should be accounted for as a single transaction.  In reaching this conclusion, management considered, among other things, the fact that the transactions occurred in contemplation of one another and the expectation that the acquired assets will be utilized as a single integrated service.  The total consideration of approximately $2.860 billion in connection with the DBSD Transaction and the TerreStar Transaction included $2.761 billion in cash and a $99 million non-cash gain related to the conversion of our DBSD North America 7.5% Convertible Senior Secured Notes due 2009.  Of this non-cash gain, $78 million was included as a component of “Accumulated other comprehensive income (loss)” within “Total stockholders’ equity (deficit),” on our Condensed Consolidated Balance Sheets as of December 31, 2011.  We have recognized the acquired assets and assumed liabilities based on our preliminary estimates of fair value at their acquisition date.  We expense all transaction costs related to the acquisition as incurred.

	Preliminary
	Purchase
	Price
	Allocation
	(In thousands)
Cash	$	5,230
Current assets	8,487
Property and equipment	1,207,000
Goodwill	31,000
FCC Authorizations	1,949,000
Current liabilities	(341,069		)
Total acquisition consideration	$	2,859,648

The determination of the fair value of the acquired assets and assumed liabilities requires significant analysis and judgment.  As of the date of issuance of these financial statements, we have not completed our valuation analysis and calculations in sufficient detail necessary to finalize our estimates.  The assets acquired in the DBSD Transaction and the TerreStar Transaction consist primarily of certain satellite assets and wireless spectrum licenses.  The fair value of satellite assets and wireless spectrum licenses are the most significant areas not yet finalized.  We expect to complete our final fair value determinations no later than the first quarter 2013.  Our final fair value determinations may be significantly different than those reflected in our Condensed Consolidated Financial Statements at March 31, 2012.

Pro forma revenue and earnings associated with the DBSD Transaction and the TerreStar Transaction are not included in this filing.  Due to the material ongoing modifications of the business, management has determined that insufficient information exists to accurately develop meaningful historical pro forma financial information.  Moreover, the historical results of operations of DBSD North America and TerreStar are not indicative of their potential prospective operations because DBSD North America and TerreStar were in bankruptcy proceedings and did not have significant operations in periods prior to the transactions.  As such, any historical pro forma information would not prove useful in assessing our post transaction earnings and cash flows.  We generated less than $1 million of revenue and incurred $8 million in operating expenses for the three months ended March 31, 2012 from our wireless spectrum assets.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Stock-Based Compensation

Stock-Based Compensation

10.          Stock-Based Compensation

Stock Incentive Plans

We maintain stock incentive plans to attract and retain officers, directors and key employees.  Stock awards under these plans include both performance and non-performance based stock incentives.  As of March 31, 2012, we had outstanding under these plans stock options to acquire 21.3 million shares of our Class A common stock and 1.3 million restricted stock units.  Stock options granted prior to and on March 31, 2012 were granted with exercise prices equal to or greater than the market value of our Class A common stock at the date of grant and with a maximum term of approximately ten years.  While historically we have 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 company-wide objectives.  As of March 31, 2012, we had 72.6 million shares of our Class A common stock available for future grant under our stock incentive plans.

During December 2011, we paid a dividend in cash of $2.00 per share on our 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 21.2 million stock options, affecting approximately 600 employees, was reduced by $2.00 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, we completed the distribution of our technology and set-top box business and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar.  DISH Network and EchoStar operate as separate publicly-traded companies, and neither entity has any ownership interest in the other. 

However, a substantial majority of the voting power of the shares of both companies is owned beneficially by Charles W. Ergen, our Chairman, or by certain trusts established by Mr. Ergen for the benefit of his family.

In connection with the Spin-off, as permitted by our existing stock incentive plans and consistent with the Spin-off exchange ratio, each DISH Network stock option was converted into two stock options as follows:

·an adjusted DISH Network stock option for the same number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.831219.

·a new EchoStar stock option for one-fifth of the number of shares that were exercisable under the original DISH Network stock option, with an exercise price equal to the exercise price of the original DISH Network stock option multiplied by 0.843907.

Similarly, each holder of DISH Network restricted stock units retained his or her DISH Network restricted stock units and received one EchoStar restricted stock unit for every five DISH Network restricted stock units that they held.

Consequently, the fair value of the DISH Network stock award and the new EchoStar stock award immediately following the Spin-off was equivalent to the fair value of such stock award immediately prior to the Spin-off.

The following stock awards were outstanding:

	As of March 31, 2012
	DISH Network Awards		EchoStar Awards
Stock Awards Outstanding	Stock Options	Restricted Stock Units	Stock Options	Restricted Stock Units
Held by DISH Network employees	18,762,631	1,186,376	791,554	53,620
Held by EchoStar employees	2,580,701	94,999	N/A	N/A
Total	21,343,332	1,281,375	791,554	53,620

We are 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 Condensed Consolidated Balance Sheets.

Stock Award Activity

Our stock option activity was as follows:

	For the Three Months
	Ended March 31, 2012
	Options		Weighted- Average Exercise Price
Total options outstanding, beginning of period (1)	21,336,159		$	20.53
Granted	411,000		$	32.93
Exercised	(363,027	)	$	13.66
Forfeited and cancelled	(40,800	)	$	20.45
Total options outstanding, end of period	21,343,332		$	18.90
Performance-based options outstanding, end of period (2)	9,619,075		$	17.35
Exercisable at end of period	8,538,056		$	20.05

(1)The beginning of period weighted-average exercise price of $20.53 does not reflect the 2012 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 and other employee performance awards below.

We realized tax benefits from stock awards exercised as follows:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Tax benefit from stock awards exercised	$	1,743	$	795

Based on the closing market price of our Class A common stock on March 31, 2012, the aggregate intrinsic value of our stock options was as follows:

	As of March 31, 2012
	Options Outstanding		Options Exercisable
	(In thousands)
Aggregate intrinsic value	$	299,451	$	109,990

Our restricted stock unit activity was as follows:

	For the Three Months
	Ended March 31, 2012
	Restricted Stock Units		Weighted- Average Grant Date Fair Value
Total restricted stock units outstanding, beginning of period	1,284,708		$	23.25
Granted	—		$	—
Vested	—		$	—
Forfeited and cancelled	(3,333	)	$	25.07
Total restricted stock units outstanding, end of period	1,281,375		$	23.24
Restricted Performance Units outstanding, end of period (1)	1,281,375		$	23.24

(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 and other employee performance awards below.

Long-Term Performance-Based Plans

2005 LTIP.  During 2005, we 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 company-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 management concludes achievement of the performance condition is probable.  Given the competitive nature of our 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 March 31, 2012, 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 we had determined that achievement of the goal was probable during the three months ended March 31, 2012, 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 Condensed 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 Network employees	$	38,172	$	30,587
EchoStar awards held by DISH Network employees	6,897		5,619
Total	$	45,069	$	36,206

(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, we adopted a long-term, performance-based stock incentive plan (the “2008 LTIP”).  The 2008 LTIP provides stock options and restricted stock units, either alone or in combination, which vest based on company-specific subscriber and financial goals.  Exercise of the stock awards is contingent on achieving these goals by December 31, 2015.

Although no awards vest until the Company attains the performance goals, compensation related to the 2008 LTIP will be recorded based on management’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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal.  See table below titled “Estimated Remaining Non-Cash, Stock-Based Compensation Expense.”

During the first quarter 2011, we determined that all of the 2008 LTIP performance goals are probable of achievement.  As of March 31, 2012, approximately 45% of the 2008 LTIP awards had vested.  We are recognizing the associated non-cash stock-based compensation expense on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period for vesting of the approximately 55% of the awards remaining, 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, we have other stock awards that vest based on certain other company-specific subscriber and 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 management’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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) over the estimated period to achieve the goal.  See table below titled “Estimated Remaining Non-Cash, Stock-Based Compensation Expense.”

Although no awards vest until the performance goals are attained, we determined that certain goals were probable of achievement and, as a result, recorded non-cash, stock-based compensation expense for the three months ended March 31, 2012 and 2011, as indicated in the table below titled “Non-Cash, Stock-Based Compensation Expense Recognized.”

Given the competitive nature of our 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 company-specific subscriber and financial goals was not probable as of March 31, 2012, that assessment could change in the future.

The non-cash stock-based compensation expense associated with these awards is as follows:

	For the Three Months
	Ended March 31,
Non-Cash, Stock-Based Compensation Expense Recognized	2012		2011
	(In thousands)
2008 LTIP	$	5,839	$	12,804
Other employee performance awards	3,139		75
Total non-cash, stock-based compensation expense recognized for performance-based awards	$	8,978	$	12,879

Estimated Remaining Non-Cash, Stock-Based Compensation Expense	2008 LTIP		Other Employee Performance Awards
	(In thousands)
Remaining expense estimated to be recognized during 2012	$	3,474	$	3,139
Estimated contingent expense subsequent to 2012	3,619		47,594
Total estimated remaining expense over the term of the plan	$	7,093	$	50,733

Of the 21.3 million stock options and 1.3 million restricted stock units outstanding under our stock incentive plans, the following awards were outstanding pursuant to our performance-based stock incentive plans:

	As of March 31, 2012
	Number of Awards	Weighted- Average Exercise Price
Performance-Based Stock Options
2005 LTIP	3,332,500	$	21.12
2008 LTIP	3,286,575	$	10.06
Other employee performance awards	3,000,000	$	21.16
Total	9,619,075	$	17.35
Restricted Performance Units and Other
2005 LTIP	359,830
2008 LTIP	21,545
Other employee performance awards	900,000
Total	1,281,375

Stock-Based Compensation

During the three months ended March 31, 2012, we incurred $14 million of additional non-cash, stock-based compensation expense in connection with the 2012 Stock Option Adjustment discussed previously.  This amount is included in the table below.  Total non-cash, stock-based compensation expense for all of our employees is shown in the following table and was allocated to the same expense categories as the base compensation for such employees:

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands)
Subscriber-related	$	837	$	977
General and administrative	22,345		14,200
Total non-cash, stock-based compensation	$	23,182	$	15,177

As of March 31, 2012, our total unrecognized compensation cost related to our non-performance based unvested stock awards was $29 million and includes compensation expense that we will recognize for EchoStar stock awards held by our employees as a result of the Spin-off.  This cost is based on an estimated future forfeiture rate of approximately 3.9% 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 for the three months ended March 31, 2012 and 2011 was originally estimated at the date of the grant using a Black-Scholes option valuation model with the following assumptions:

	For the Three Months
	Ended March 31,
Stock Options	2012	2011
Risk-free interest rate	0.51% - 1.29%	2.24% - 2.68%
Volatility factor	38.80% - 39.34%	35.82% - 39.59%
Expected term of options in years	3.4 - 5.9	4.9 - 6.3
Weighted-average fair value of options granted	$9.49 - $12.69	$9.16 - $9.81

On December 1, 2011, we paid a $2.00 cash dividend per share on our outstanding Class A and Class B common stock.  While we currently do not intend to declare additional dividends on our common stock, we may elect to do so from time to time.  Accordingly, the dividend yield percentage used in the Black-Scholes option valuation model is 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 the 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 our stock options as new events or changes in circumstances become known.

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Other Comprehensive Income Related Tax Effects (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Other comprehensive income, before-tax amount
Foreign currency translation adjustments, before-tax amount	$ 3,253
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss), before tax amount	(80,887)	(6,296)
Other comprehensive income, before-tax amount	(26,613)	61,504
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax	3,253
Unrealized holding gains (losses) on available-for-sale securities, net of tax	51,021	67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss), net of tax	(80,887)	(6,296)
Other comprehensive income (loss), net of tax	$ (26,613)	$ 61,504

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2012	Dec. 31, 2008	Mar. 09, 2012 Sprint Settlement Agreement	Mar. 09, 2012 TerreStar Networks, Inc. ("TerreStar")	Mar. 09, 2012 DBSD North America (ICO)
Spectrum Investments
Payment to acquire certain 700 MHz wireless licenses		$ 712
Payments to acquire wireless spectrum assets	2,860
Commitment to acquire percentage ownership interest	100.00%
Purchase price			$ 114	$ 1,382	$ 1,364

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Basic and Diluted Net Income (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2012

Basic and Diluted Net Income (Loss) Per Share

Tabular disclosure of the effect of income (loss) on the entity's basic and diluted earnings per share.

	For the Three Months
	Ended March 31,
	2012		2011
	(In thousands, except per share amounts)
Net income (loss) attributable to DISH Network	$	360,310	$	549,394
Weighted-average common shares outstanding - Class A and B common stock:
Basic	447,289		443,360
Dilutive impact of stock awards outstanding	2,591		5,490
Diluted	449,880		448,850
Earnings per share - Class A and B common stock:
Basic net income (loss) per share attributable to DISH Network	$	0.81	$	1.24
Diluted net income (loss) per share attributable to DISH Network	$	0.80	$	1.22

Schedule of dilutive securities not included in the diluted EPS calculation

	As of March 31,
	2012	2011
	(In thousands)
Performance-based options	9,619	10,859
Restricted Performance Units and other	1,281	1,101
Total	10,900	11,960

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2012

Acquisitions

Schedule of preliminary allocation of the DBSD and TerreStar assets acquired

	Preliminary
	Purchase
	Price
	Allocation
	(In thousands)
Cash	$	5,230
Current assets	8,487
Property and equipment	1,207,000
Goodwill	31,000
FCC Authorizations	1,949,000
Current liabilities	(341,069		)
Total acquisition consideration	$	2,859,648

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Stock-Based Compensation (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Stock-Based Compensation
Non-cash, stock-based compensation	$ 23,182	$ 15,177
Subscriber-related
Stock-Based Compensation
Non-cash, stock-based compensation	837	977
General and administrative
Stock-Based Compensation
Non-cash, stock-based compensation	$ 22,345	$ 14,200

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Other Income (Expense)
Marketable investment securities - gains (losses) on sales/exchanges	$ 4,619	$ 6,391
Marketable investment securities - unrealized gains (losses) on investments accounted for at fair value	8,479	(4,773)
Marketable investment securities - gains (losses) on conversion of DBSD North America	99,445
Other investment securities - gains (losses) on sales/exchanges		10,000
Marketable investment securities other-than-temporary impairments	(2,481)
Other	220	15
Total	110,282	11,633
Other investment securities:
Marketable investment securities - gains (losses) on conversion of DBSD North America	99,445
DBSD North America (ICO) | 7.5% Convertible Senior Secured Notes due 2009
Other Income (Expense)
Marketable investment securities - gains (losses) on conversion of DBSD North America	99,000
Other investment securities:
Marketable investment securities - gains (losses) on conversion of DBSD North America	$ 99,000
Interest rate (as a percent)	7.50%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash Flows From Operating Activities:
Net income (loss)	$ 360,126	$ 549,326
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	208,698	229,697
Realized and unrealized losses (gains) on investments	(110,062)	(11,618)
Non-cash, stock-based compensation	23,182	15,177
Deferred tax expense (benefit)	3,597	221,798
Other, net	6,273	3,826
Change in noncurrent assets	15,567	(4,175)
Change in long-term deferred revenue, distribution and carriage payments and other long-term liabilities	(6,014)	(8,738)
Changes in current assets and current liabilities, net	357,183	(150,998)
Net cash flows from operating activities	858,550	844,295
Cash Flows From Investing Activities:
Purchases of marketable investment securities	(289,168)	(1,214,236)
Sales and maturities of marketable investment securities	428,300	1,284,087
Purchases of property and equipment	(168,928)	(232,952)
Change in restricted cash and marketable investment securities	(1,581)	(42,000)
DBSD North America Transaction, less of cash acquired of $5,230 (Note 8)	(40,015)	(85,125)
TerreStar Transaction (Note 8)	(36,942)
Purchase of other strategic investments		(37,675)
Proceeds from sale of strategic investments		11,327
Other	(903)	(291)
Net cash flows from investing activities	(109,237)	(316,865)
Cash Flows From Financing Activities:
Repayment of long-term debt and capital lease obligations	(8,458)	(8,498)
Net proceeds from Class A common stock options exercised and stock issued under the Employee Stock Purchase Plan	5,751	3,596
Other	1,045	322
Net cash flows from financing activities	(1,662)	(4,580)
Effect of exchange rates on cash and cash equivalents	1,909
Net increase (decrease) in cash and cash equivalents	749,560	522,850
Cash and cash equivalents, beginning of period	609,108	640,672
Cash and cash equivalents, end of period	1,358,668	1,163,522
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (including capitalized interest)	114,226	114,752
Cash received for interest	10,108	7,363
Cash paid for income taxes	$ 13,788	$ 7,440

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Other Comprehensive Income Related Tax Effects

3 Months Ended

Mar. 31, 2012

Other Comprehensive Income Related Tax Effects

Other Comprehensive Income Related Tax Effects

4.Other Comprehensive Income Related Tax Effects

The following table presents the tax effects on each component of other comprehensive income.  A full valuation allowance has been established against any deferred tax assets that are capital in nature.

	For the Three Months
	Ended March 31,
	2012								2011
	Before			Tax		Net			Before			Tax		Net
	Tax			(Expense)		of Tax			Tax			(Expense)		of Tax
	Amount			Benefit		Amount			Amount			Benefit		Amount
	(In thousands)
Foreign currency translation adjustments	$	3,253		$	—	$	3,253		$	—		$	—	$	—
Unrealized holding gains (losses) on available-for-sale securities	51,021			—		51,021			67,800			—		67,800
Recognition of previously unrealized (gains) losses on available-for-sale securities included in net income (loss)	(80,887		)	—		(80,887		)	(6,296		)	—		(6,296		)
Other comprehensive income (loss)	$	(26,613	)	$	—	$	(26,613	)	$	61,504		$	—	$	61,504

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2012

Long-Term Debt

Schedule of carrying and fair values of the entity's debt facilities

	As of
	March 31, 2012				December 31, 2011
	Carrying				Carrying
	Value		Fair Value		Value		Fair Value
	(In thousands)
7 % Senior Notes due 2013	$	500,000	$	535,625	$	500,000	$	535,000
6 5/8% Senior Notes due 2014	1,000,000		1,090,000		1,000,000		1,060,000
7 3/4% Senior Notes due 2015	750,000		851,970		750,000		817,500
7 1/8% Senior Notes due 2016	1,500,000		1,662,750		1,500,000		1,593,750
7 7/8% Senior Notes due 2019	1,400,000		1,610,000		1,400,000		1,589,000
6 3/4% Senior Notes due 2021	2,000,000		2,005,000		2,000,000		2,140,000
Mortgages and other notes payable	96,252		96,252		71,871		71,871
Subtotal	7,246,252		$	7,851,597	7,221,871		$	7,807,121
Capital lease obligations (1)	264,154		NA		271,908		NA
Total long-term debt and capital lease obligations (including current portion)	$	7,510,406			$	7,493,779

(1)Disclosure regarding fair value of capital leases is not required.

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Marketable Investment Securities, Restricted Cash and Cash Equivalents, and Other Investment (Details 4) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Fair value of marketable investment securities in a loss position
Total	$ 720,569,000	$ 1,040,122,000
Unrealized loss on marketable investment securities in a loss position
Total	63,693,000	82,985,000
Debt securities
Fair value of marketable investment securities in a loss position
Less than 12 Months	439,812,000	694,199,000
12 Months or More	61,872,000	98,240,000
Unrealized loss on marketable investment securities in a loss position
Less than 12 Months	(796,000)	(4,793,000)
12 Months or More	(11,084,000)	(16,258,000)
Equity securities
Fair value of marketable investment securities in a loss position
Less than 12 Months	218,885,000	247,683,000
Unrealized loss on marketable investment securities in a loss position
Less than 12 Months	$ (51,813,000)	$ (61,934,000)

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

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.  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.

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, the useful lives and residual value surrounding our rental library inventory, estimated accruals related to revenue-sharing titles that are subject to performance guarantees, 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, capital leases, asset impairments, estimates of future cash flows used to evaluate impairments, useful lives of property, equipment and intangible assets, asset retirement obligations, 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 Condensed Consolidated Financial Statements.  Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

Fair Value Measurements

Fair Value Measurements

We determine fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.  Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs.  We apply the following hierarchy in determining fair value:

·Level 1, defined as observable inputs being quoted prices in active markets for identical assets;

·Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; 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 March 31, 2012 and December 31, 2011, the carrying value for cash and cash equivalents, marketable investment securities, 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 5.

Fair values for our publicly traded debt securities are based on quoted market prices.  The fair values of our private debt is 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 notes.  See Note 9 for the fair value of our long-term debt.