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.