Segment Reporting

6 Months Ended

Jun. 30, 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 six months ended June 30, 2012.

·DISH.The DISH branded pay-TV service had 14.061 million subscribers in the United States as of June 30, 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 completed 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 financial results of DBSD North America and TerreStar were included in our financial results as of March 9, 2012.  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 submitted filings in the initial comment round and in the reply comment round.  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
	June 30,			December 31,
	2012			2011
	(In thousands)
Total assets:
DISH (1)	$	10,965,190		$	11,104,003
Blockbuster	405,608			453,661
Wireless Spectrum (1)	3,922,914			—
Eliminations	(772,549		)	(87,433		)
Total assets	$	14,521,163		$	11,470,231

	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2012			2011		2012			2011
	(In thousands)
Revenue:
DISH	$	3,324,099		$	3,336,208	$	6,577,021		$	6,560,269
Blockbuster	253,312			253,953		587,303			253,953
Wireless Spectrum	296			—		329			70
Eliminations	(5,941		)	—		(11,018		)	—
Total revenue	$	3,571,766		$	3,590,161	$	7,153,635		$	6,814,292
Operating income (loss):
DISH	$	499,373		$	707,377	$	1,065,918		$	1,690,660
Blockbuster	(13,333		)	10,405		624			10,405
Wireless Spectrum	(17,688		)	—		(25,779		)	70
Total operating income (loss)	$	468,352		$	717,782	$	1,040,763		$	1,701,135

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

Geographic Information.  Revenues are attributed to geographic regions based upon the location where the products are delivered and services are provided.  The following table summarizes revenue attributed to the United States and other foreign locations.

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2012		2011		2012		2011
	(In thousands)
Revenue:
United States	$	3,453,353	$	3,486,303	$	6,909,992	$	6,710,434
United Kingdom	69,523		63,660		140,234		63,660
Mexico	35,383		28,030		76,689		28,030
Other	13,507		12,168		26,720		12,168
Total revenue	$	3,571,766	$	3,590,161	$	7,153,635	$	6,814,292