Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting

Segment Reporting

13. 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 14.049 million subscribers in the United States as of September 30, 2013.  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.  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.  On November 6, 2013, we announced that Blockbuster expects to close all of its remaining company-owned domestic retail stores and discontinue the Blockbuster by-mail service by early January 2014.  See Note 9 for further information.

· Wireless.  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 interim and final 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 AWS-4 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 the DBSD North America and TerreStar assets was approximately $2.860 billion.  On February 15, 2013, the FCC issued an order, which became effective on March 7, 2013, modifying our AWS-4 licenses to expand our 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 12 for further information.

We currently generate an immaterial amount of revenue and incur 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 wireless network infrastructure.

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

	As of
	September 30,			December 31,
	2013			2012
	(In thousands)
Total assets: (1)
DISH	$	19,677,640		$	16,144,977
Blockbuster (2)	227,126			357,267
Wireless	4,889,632			5,066,616
Eliminations	(4,449,158		)	(4,189,252		)
Total assets	$	20,345,240		$	17,379,608

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2013			2012			2013			2012
	(In thousands)
Revenue:
DISH	$	3,507,473		$	3,298,869		$	10,375,785		$	9,875,890
Blockbuster (3)	96,665			230,885			397,597			818,188
Wireless (4)	395			305			1,607			634
Eliminations	(2,956		)	(6,712		)	(12,055		)	(17,730		)
Total revenue	$	3,601,577		$	3,523,347		$	10,762,934		$	10,676,982
Operating income (loss):
DISH	$	442,368		$	(241,674	)	$	1,462,716		$	824,244
Blockbuster (5)	(23,498		)	(11,919		)	(27,909		)	(11,295		)
Wireless (4)(6)	(21,449		)	(19,436		)	(564,460		)	(45,215		)
Total operating income (loss)	$	397,421		$	(273,029	)	$	870,347		$	767,734

(1) Certain prior period assets have been reclassified to conform to the current period presentation consistent with the separate financial information regularly evaluated by our chief operating decision maker(s).

(2) The decrease in assets from December 31, 2012 to September 30, 2013 primarily related to the deconsolidation of Blockbuster UK on January 16, 2013, Blockbuster domestic store closings during the nine months ended September 30, 2013, and the write down of Blockbuster Mexico assets during the third quarter 2013.  See Note 9 for further information.

(3) The decrease in revenue for the three and nine months ended September 30, 2013 primarily related to the deconsolidation of Blockbuster UK on January 16, 2013 and Blockbuster domestic store closings during 2013 and 2012.  See Note 9 for further information.

(4) The three and nine months ended September 30, 2012 included Wireless results from the acquisitions of DBSD North America and TerreStar on March 9, 2012.

(5) The decrease in operating income for the three and nine months ended September 30, 2013 primarily related to the write down of Blockbuster Mexico assets during the third quarter 2013.  See Note 9 for further information.

(6) The nine months ended September 30, 2013 included a $438 million impairment charge for the T2 and D1 satellites, $53 million of additional depreciation expense related to the accelerated depreciable lives of certain assets designed to support the TerreStar MSS business and $18 million of legal and financial advisory fees related to our proposed merger with Sprint.  See Note 7 for further information.

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 Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2013		2012		2013		2012
	(In thousands)
Revenue:
United States	$	3,562,670	$	3,406,088	$	10,615,673	$	10,316,080
United Kingdom (1)	—		66,744		10,883		206,978
Mexico (2)	38,129		37,507		117,715		114,196
Other	778		13,008		18,663		39,728
Total revenue	$	3,601,577	$	3,523,347	$	10,762,934	$	10,676,982

(1) The decrease for the three and nine months ended September 30, 2013 related to the deconsolidation of Blockbuster UK on January 16, 2013.  See Note 9 for further information.

(2) This revenue is related solely to our Blockbuster Mexico operations.