Segment Reporting

12 Months Ended

Dec. 31, 2012

Segment Reporting

Segment Reporting

17.    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.  Operating income is the primary measure used by our chief operating decision maker to evaluate segment operating performance.  We operate three primary business segments.

· DISH.  The DISH branded DBS pay-TV service had 14.056 million subscribers in the United States as of December 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 leased fiber network, in-home service and call center operations, and certain other assets utilized in our operations.  In addition, we market broadband services under the dishNET brand.

· 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 acquisitions of 100% of the equity of reorganized DBSD North America and substantially all of the assets of 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 financial results of DBSD North America and TerreStar are included in our financial results beginning 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 a settlement agreement.  We are evaluating our options to commercialize these assets.  See Note 10 for further information.

We currently generate an immaterial amount of revenue and incur operating expenses associated with certain satellite operations and regulatory compliance matters 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 Rulemaking (“NPRM”) proposing the elimination of the Mobile-Satellite Service (“MSS”) “integrated service,” spare satellite and various technical requirements attached to the 2 GHz licenses.  On December 12, 2012, the FCC approved rules that eliminated these requirements and gave notice of its proposed modification of our 2 GHz authorizations to, among other things, allow us to offer single-mode terrestrial terminals to customers who do not desire satellite functionality.  On February 15, 2013, the FCC issued an order, which will become effective on March 7, 2013, modifying our 2 GHz licenses to add terrestrial operating authority.  The FCC’s order of modification has imposed certain limitations on the use of a portion of the spectrum and also mandated certain interim and final build-out requirements for the licenses.  See Note 10 for further information.

	As of December 31,
	2012			2011
	(In thousands)
Total assets:
DISH	$	13,568,087		$	9,614,097
Blockbuster	357,267			453,661
Wireless Spectrum	4,062,383			2,113,946
Eliminations	(608,129		)	(711,473		)
Total assets	$	17,379,608		$	11,470,231

									All
						Wireless			Other &			Consolidated
	DISH		Blockbuster (1)			Spectrum (2)			Eliminations			Total
	(In thousands)
Year Ended December 31, 2012
Total revenue	$	13,198,447	$	1,087,661		$	1,427		$	(21,043	)	$	14,266,492
Depreciation and amortization	921,593		19,506			41,950			—			983,049
Operating income (loss)	1,321,284		(35,333		)	(64,116		)	—			1,221,835
Interest income												99,522
Interest expense, net of amounts capitalized												(536,879		)
Other, net												148,291
Income tax (provision) benefit, net												(307,029		)
Less: Net income (loss) attributable to noncontrolling interest												(10,947		)
Net income (loss) attributable to DISH Network												636,687
Year Ended December 31, 2011
Total revenue	$	13,073,088	$	974,875		$	430		$	—		$	14,048,393
Depreciation and amortization	911,663		10,410			—			—			922,073
Operating income (loss)	2,928,695		(1,171		)	430			—			2,927,954
Interest income												34,354
Interest expense, net of amounts capitalized												(557,910		)
Other, net												6,186
Income tax (provision) benefit, net												(895,006		)
Less: Net income (loss) attributable to noncontrolling interest												(329		)
Net income (loss) attributable to DISH Network												1,515,907
Year Ended December 31, 2010
Total revenue	$	12,640,744	$	—		$	—		$	—		$	12,640,744
Depreciation and amortization	983,965		—			—			—			983,965
Operating income (loss)	1,940,828		—			—			—			1,940,828
Interest income												25,158
Interest expense, net of amounts capitalized												(454,777		)
Other, net												30,996
Income tax (provision) benefit, net												(557,473		)
Less: Net income (loss) attributable to noncontrolling interest												3
Net income (loss) attributable to DISH Network												984,729

(1)   The year ended December 31, 2011 reflects Blockbuster results from the acquisition date of April 26, 2011 through December 31, 2011.

(2)   The year ended December 31, 2012 reflects Wireless Spectrum results from the acquisitions of DBSD North America and TerreStar on March 9, 2012 through December 31, 2012.

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 foreign locations.

	For the Year Ended December 31,
	2012		2011		2010
	(In thousands)
Revenue:
United States	$	13,751,675	$	13,637,945	$	12,640,744
United Kingdom	292,788		241,843		—
Mexico	168,362		117,123		—
Other	53,667		51,482		—
Total revenue	$	14,266,492	$	14,048,393	$	12,640,744