UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021.


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

Commission File Number: 333-31929

DISH DBS Corporation

(Exact name of registrant as specified in its charter)


Colorado	84-1328967
(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)

Securities registered pursuant to Section 12(b) of the Act: None

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 ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ⌧ No ◻

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


Large accelerated filer ◻		Accelerated filer ◻

Non-accelerated filer ⌧		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

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

As of ~~November~~August 6, ~~2020,~~2021, the registrant’s outstanding common stock consisted of 1,015 shares of common stock, $0.01 par value.

The registrant meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

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TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

	Disclosure Regarding Forward-Looking Statements	i

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets — ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (Unaudited)	1

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	2

	Condensed Consolidated Statements of Changes in Stockholder’s Equity (Deficit) For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	4

	Notes to Condensed Consolidated Financial Statements (Unaudited)	5

Item 2.	Management’s Narrative Analysis of Results of Operations	5244

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	*

Item 4.	Controls and Procedures	7158

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	7158

Item 1A.	Risk Factors	7158

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*

Item 3.	Defaults Upon Senior Securities	*

Item 4.	Mine Safety Disclosures	None

Item 5.	Other Information	None

Item 6.	Exhibits	7259

	Signatures	7360

*	This item has been omitted pursuant to the reduced disclosure format as set forth in General Instructions (H)(2) of Form 10-Q.

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PART I — FINANCIAL INFORMATION

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Unless otherwise required by the context, in this report, the words “DISH DBS,” the “Company,” “we,” “our” and “us” refer to DISH DBS Corporation and its subsidiaries, “DISH Network” refers to DISH Network Corporation, our parent company, and its subsidiaries, including ~~us.~~us, and “EchoStar” refers to EchoStar Corporation and its subsidiaries.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, in particular, statements about our plans, objectives and strategies, growth opportunities in our industries and businesses, our expectations regarding future results, financial condition, liquidity and capital requirements, our estimates regarding the impact of regulatory developments and legal proceedings, and other trends and projections. Forward-looking statements are not historical facts and may be identified by words such as “future,” “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “estimate,” “expect,” “predict,” “will,” “would,” “could,” “can,” “may,” and similar terms. These forward-looking statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q and represent management’s current views and assumptions. Forward-looking statements are not guarantees of future performance, events or results and involve known and unknown risks, uncertainties and other factors, which may be beyond our control. Accordingly, actual performance, events or results could differ materially from those expressed or implied in the forward-looking statements due to a number of factors, including, but not limited to, the following:

~~Competition and Economic Risks~~SUMMARY OF RISK FACTORS

●

As the pay-TV industry has matured and bundled offers combining video, broadband and/or wireless services have become more prevalent and competitive, we face intense and increasing competition from providers of video, broadband and/or wireless services, which may require us to further increase subscriber acquisition and retention spending or accept lower subscriber activations and higher subscriber churn.

COVID-19 Pandemic

●

Changing consumer behavior and competition from digital media companies that provide or facilitate the delivery of video content via the Internet may reduce our subscriber activations and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us.

●

~~Economic weakness and uncertainty may adversely affect our ability to grow or maintain our business.~~

●

The COVID-19 pandemic and its impact on the economic environment generally, and on us specifically, have adversely impacted our business. Furthermore, any continuation or worsening of the pandemic and economic environment could have a material adverse effect on our business, financial condition and results of operations.

Competition and Economic Risks

●

We face intense and increasing competition from providers of video, broadband and/or wireless services, which may require us to further increase subscriber acquisition and retention spending or accept lower subscriber activations and higher subscriber churn.

●

Changing consumer behavior and new technologies in our Pay-TV business may reduce our subscriber activations and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us.

●

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

●

~~Our over-the-top (“OTT”) SLING TV Internet-based services face certain risks, including, among others, significant competition.~~

●

If government regulations relating to the Internet change, we may need to alter the manner in which we conduct our SLING TV business, and/or incur greater operating expenses to comply with those regulations.

●

Changes in how network operators handle and charge for access to data that travels across their networks could adversely impact our Pay-TV business.

●

~~We face increasing competition from other distributors of unique programming services such as foreign language, sports programming~~Economic weakness and ~~original content that~~uncertainty may ~~limit~~adversely affect our ability to grow or maintain ~~subscribers that desire these unique programming services.~~our business.

~~Table of Contents~~

Operational and Service Delivery Risks

●

IfAny deterioration in our operational performance and ~~customer~~subscriber satisfaction ~~were to deteriorate, our subscriber activations and our subscriber churn rate may be negatively impacted, which~~ could ~~in turn~~ adversely affect our ~~revenue.~~business, financial condition and results of operations.

●

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

●

~~Programming~~With respect to our Pay-TV business, programming expenses are increasing, ~~and~~which may adversely affect our future financial condition and results of operations.

●

We depend on others to provide the programming that we offer to our Pay-TV subscribers and, if we fail to obtain or lose access to certain programming, our Pay-TV subscriber activations and our subscriber churn rate may be negatively impacted.

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●

We may not be able to obtain necessary retransmission consent agreements at acceptable rates, or at all, from local network stations.

●

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

●

Any failure or inadequacy of our information technology infrastructure and communications systems or those of third parties that we use in our operations, including, without limitation, those caused by cyber-attacks or other malicious activities, could disrupt or harm our business.

●

We currently depend on DISH Network to provide the vast majority of our satellite transponder capacity and other related services to us. Our business would be adversely affected if DISH Network ceases to provide these services to us and we are unable to obtain suitable replacement services from third parties.

●

~~Technology~~Our failure to effectively invest in, ~~the pay-TV industry changes rapidly,~~introduce, and ~~our success may depend in part on our timely introduction and implementation of, and effective investment in,~~implement new competitive products and services ~~and our failure to do so~~ could cause our products and services to become obsolete and could negatively impact our business.

●

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.

●

We rely 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 independent third parties to solicit orders for our ~~DISH TV~~ services that represent a meaningful percentage of our total gross new ~~DISH TV~~ subscriber activations.

●

We have limited satellite capacity and failures or reduced capacity could adversely affect our ~~DISH TV services.~~

●

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

~~Table of Contents~~

●

Satellite anomalies or technological failures could adversely affect the value of a particular satellite or result in a complete loss. Some of the satellites DISH Network acquired pursuant to the Master Transaction Agreement have experienced anomalies that may affect their useful lives or prohibit us from operating them to their currently expected capacity, and one or more of the satellites may suffer a technological failure, either of which could have an adverse effect on our business, financial condition and results of operations.

●

~~We generally do not carry commercial in-orbit insurance on any of the satellites that we own and could face significant impairment charges if any of our owned satellites fail.~~

●

We may have potential conflicts of interest with EchoStar ~~Corporation (“EchoStar”)~~ due to our and DISH Network’s common ownership and management.

●

We rely on highly skilled personnel for our business, and any inability to hire and retain key personnel ~~and the loss of their services~~or hire qualified personnel may negatively affect our ~~business.~~business, financial condition and results of operations.

Acquisition and Capital Structure Risks

●

Our parent, DISH Network, has made substantial investments to acquire certain wireless spectrum licenses and other related ~~assets. In addition,~~assets and we may make cash distributions in connection with the development of DISH Network’s wireless business.

●

Our parent, DISH Network, has made substantial non-controlling investments in the Northstar Entities and the SNR Entities related to AWS-3 wireless spectrum ~~licenses.~~

●

~~Our parent,~~licenses and we have made and may make additional cash distributions to DISH Network ~~faces certain risks related to its non-controlling investments in~~so that DISH Network may fund the Northstar Entities and the SNR Entities.

●

To the extent that our parent, DISH Network, commercializes its wireless spectrum licenses, it will face certain risks entering and competing in the wireless services industry and operating a wireless services business.

●

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 have substantial debt outstanding and may incur additional debt.

●

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.

●

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

●

Our parent, DISH Network, is controlled by one principal stockholder who is also our Chairman.

Legal and Regulatory Risks

●

The rulings in the Telemarketing litigation requiring us to pay up to an aggregate amount of $280 million and imposing certain injunctive relief against us, if upheld, would have a material adverse effect on our cash, cash equivalents and marketable investment securities balances and our business operations.

●

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

●

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

●

Our ~~ability to distribute video content via the Internet, including our SLING TV~~ services ~~involves regulatory risk.~~

~~iii~~

~~Table of Contents~~

●

~~Changes in the Cable Act of 1992 (“Cable Act”), and/or the rules of the~~depend on Federal Communications Commission (“FCC”) ~~that implement the Cable Act, may limit our ability to access programming from cable-affiliated programmers at nondiscriminatory 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 DISH TV services depend on FCC~~ licenses that can expire or be revoked or modified and applications for FCC licenses that may not be granted.

●

WeIf our internal controls are ~~subject to digital high-definition (“HD”) “carry-one, carry-all” requirements that cause capacity constraints.~~

●

~~Our~~not effective, our business, DISH Network’s stock price and investor confidence in our financial results ~~and DISH Network’s stock price~~ may be adversely ~~affected if our internal controls are not effective.~~affected.

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●

We may face other risks described from time to time in periodic and current reports we file with the Securities and Exchange Commission (“SEC”).

Other factors that could cause or contribute to such differences include, but are not limited to, those discussed under the caption “Risk Factors” ~~in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and~~ in Part I, Item 1A of our most recent Annual Report on Form 10-K (the “10-K”) filed with the SEC, those discussed in “Management’s Narrative Analysis of Results of Operations” herein and in the 10-K and those discussed in other documents we file with the SEC. All cautionary statements made or referred to herein should be read as being applicable to all forward-looking statements wherever they appear. Investors should consider the risks and uncertainties described or referred to herein and should not place undue reliance on any forward-looking statements. The forward-looking statements speak only as of the date made, and we expressly disclaim any obligation to update these forward-looking statements.

iviii

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Item 1. FINANCIAL STATEMENTS

DISH DBS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

(Unaudited)


	As of				As of
	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	827,362	$	17,426	$	1,410,164	$	1,238,409
Marketable investment securities		445,685		—		438,543		132,593
Trade accounts receivable, net of allowance for credit losses and allowance for doubtful accounts of $34,365 and $19,280, respectively		576,978		568,679
Trade accounts receivable, net of allowance for credit losses of $34,555 and $43,233, respectively						577,920		626,375
Inventory		293,034		321,983		237,803		262,297
Other current assets		176,103		164,767		204,265		272,955
Total current assets		2,319,162		1,072,855		2,868,695		2,532,629

Noncurrent Assets:
Restricted cash, cash equivalents and marketable investment securities		58,362		61,067		58,024		58,323
Property and equipment, net		1,619,524		1,751,573		1,420,164		1,564,704
FCC authorizations		611,794		611,794		611,794		611,794
Other investment securities		96,481		106,874		98,701		97,306
Operating lease assets		429,118		553,576		291,139		380,968
Other noncurrent assets, net		233,145		228,820		199,955		222,311
Total noncurrent assets		3,048,424		3,313,704		2,679,777		2,935,406
Total assets	$	5,367,586	$	4,386,559	$	5,548,472	$	5,468,035

Liabilities and Stockholder's Equity (Deficit)
Current Liabilities:
Trade accounts payable	$	438,194	$	266,417	$	380,777	$	315,661
Advances from affiliates		—		82,415
Deferred revenue and other		680,444		674,079		584,616		667,226
Accrued programming		1,330,687		1,308,531		1,212,806		1,388,407
Accrued interest		173,985		189,039		213,653		216,459
Other accrued expenses		931,032		918,333		612,399		625,342
Current portion of long-term debt and finance lease obligations		2,054,558		1,151,108		52,005		2,052,374
Total current liabilities		5,608,900		4,589,922		3,056,256		5,265,469

Long-Term Obligations, Net of Current Portion:
Long-term debt and finance lease obligations, net of current portion		8,631,217		9,671,255		10,087,755		8,619,116
Deferred tax liabilities		547,068		501,857		501,058		514,928
Operating lease liabilities		224,593		350,155		138,432		192,624
Long-term deferred revenue and other long-term liabilities		201,755		207,992		184,721		195,903
Total long-term obligations, net of current portion		9,604,633		10,731,259		10,911,966		9,522,571
Total liabilities		15,213,533		15,321,181		13,968,222		14,788,040

Commitments and Contingencies (Note 9)

Stockholder’s Equity (Deficit):
Common stock, $.01 par value, 1,000,000 shares authorized, 1,015 shares issued and outstanding		—		—		—		—
Additional paid-in capital		1,452,849		1,432,736		1,462,739		1,463,407
Accumulated other comprehensive income (loss)		(893)		(449)		(1,152)		(805)
Accumulated earnings (deficit)		(11,297,903)		(12,366,909)		(9,881,337)		(10,782,607)
Total stockholder’s equity (deficit)		(9,845,947)		(10,934,622)		(8,419,750)		(9,320,005)
Total liabilities and stockholder’s equity (deficit)	$	5,367,586	$	4,386,559	$	5,548,472	$	5,468,035

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

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Revenue:
Service revenue	$	3,109,479	$	3,070,913	$	9,357,713	$	9,285,915	$	3,176,710	$	3,117,334	$	6,314,097	$	6,248,234
Equipment sales and other revenue		41,550		51,369		109,629		140,966		34,778		31,197		60,310		68,079
Total revenue		3,151,029		3,122,282		9,467,342		9,426,881		3,211,488		3,148,531		6,374,407		6,316,313

Costs and Expenses (exclusive of depreciation shown separately below - Note 6):
Cost of services		1,849,824		2,056,701		5,911,995		6,337,170		1,949,761		1,989,738		3,908,460		4,062,170
Cost of sales - equipment and other		28,366		43,358		82,840		133,302		24,902		23,660		41,177		54,474
Selling, general and administrative expenses		379,167		438,644		1,149,782		1,215,414		332,060		348,367		665,134		770,616
Depreciation and amortization (Note 6)		125,016		145,081		382,970		435,796		111,391		122,869		226,633		257,954
Total costs and expenses		2,382,373		2,683,784		7,527,587		8,121,682		2,418,114		2,484,634		4,841,404		5,145,214

Operating income (loss)		768,656		438,498		1,939,755		1,305,199		793,374		663,897		1,533,003		1,171,099

Other Income (Expense):
Interest income		652		21,453		2,614		29,981		1,002		1,112		1,808		1,962
Interest expense, net of amounts capitalized		(171,246)		(187,784)		(517,633)		(578,286)		(162,212)		(164,047)		(336,188)		(346,387)
Other, net		(91)		1,508		702		6,072		(287)		(152)		(1,795)		793
Total other income (expense)		(170,685)		(164,823)		(514,317)		(542,233)		(161,497)		(163,087)		(336,175)		(343,632)

Income (loss) before income taxes		597,971		273,675		1,425,438		762,966		631,877		500,810		1,196,828		827,467
Income tax (provision) benefit, net		(148,098)		(68,817)		(356,432)		(195,104)		(155,134)		(125,830)		(295,558)		(208,334)
Net income (loss)		449,873		204,858		1,069,006		567,862	$	476,743	$	374,980	$	901,270	$	619,133
Less: Net income (loss) attributable to noncontrolling interests, net of tax		—		—		—		(124)
Net income (loss) attributable to DISH DBS	$	449,873	$	204,858	$	1,069,006	$	567,986

Comprehensive Income (Loss):
Net income (loss)	$	449,873	$	204,858	$	1,069,006	$	567,862	$	476,743	$	374,980	$	901,270	$	619,133
Other comprehensive income (loss):
Foreign currency translation adjustments		(132)		(237)		(454)		(52)		(144)		30		(339)		(322)
Unrealized holding gains (losses) on available-for-sale debt securities		10		(173)		10		81		(6)		11		(8)		—
Deferred income tax (expense) benefit, net		—		44		—		(21)
Total other comprehensive income (loss), net of tax		(122)		(366)		(444)		8		(150)		41		(347)		(322)
Comprehensive income (loss)		449,751		204,492		1,068,562		567,870	$	476,593	$	375,021	$	900,923	$	618,811
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of tax		—		—		—		(124)
Comprehensive income (loss) attributable to DISH DBS	$	449,751	$	204,492	$	1,068,562	$	567,994

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

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (DEFICIT)

(In thousands)

(Unaudited)


					Accumulated												Accumulated
			Additional		Other		Accumulated								Additional		Other		Accumulated
	Common		Paid-In		Comprehensive		Earnings		Noncontrolling				Common		Paid-In		Comprehensive		Earnings
	Stock		Capital		Income (Loss)		(Deficit)		Interests		Total		Stock		Capital		Income (Loss)		(Deficit)		Total
Balance, December 31, 2018	$	—	$	1,152,369	$	(376)	$	(13,194,440)	$	287	$	(12,042,160)
Non-cash, stock-based compensation		—		11,003		—		—		—		11,003
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		152		—		—		152
Deferred income tax (expense) benefit attributable to other comprehensive income (loss)		—		—		(38)		—		—		(38)
Foreign currency translation		—		—		47		—		—		47
Net income (loss) attributable to noncontrolling interests		—		—		—		—		(124)		(124)
Net income (loss) attributable to DISH DBS		—		—		—		177,760		—		177,760
Balance, March 31, 2019	$	—	$	1,163,372	$	(215)	$	(13,016,680)	$	163	$	(11,853,360)
Non-cash, stock-based compensation		—		11,528		—		—		—		11,528
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		102		—		—		102
Deferred income tax (expense) benefit attributable to other comprehensive income (loss)		—		—		(27)		—		—		(27)
Foreign currency translation		—		—		138		—		—		138
Satellite and Spectrum Transaction, net of deferred taxes		—		267,437		—		—		(163)		267,274
Net income (loss) attributable to DISH DBS		—		—		—		185,368		—		185,368
Balance, June 30, 2019	$	—	$	1,442,337	$	(2)	$	(12,831,312)	$	—	$	(11,388,977)
Non-cash, stock-based compensation		—		(14,214)		—		—		—		(14,214)
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		(173)		—		—		(173)
Deferred income tax (expense) benefit attributable to other comprehensive income (loss)		—		—		44		—		—		44
Foreign currency translation		—		—		(237)		—		—		(237)
Other		—		(806)		—		—		—		(806)
Net income (loss) attributable to DISH DBS		—		—		—		204,858		—		204,858
Balance, September 30, 2019	$	—	$	1,427,317	$	(368)	$	(12,626,454)	$	—	$	(11,199,505)

Balance, December 31, 2019	$	—	$	1,432,736	$	(449)	$	(12,366,909)	$	—	$	(10,934,622)	$	—	$	1,432,736	$	(449)	$	(12,366,909)	$	(10,934,622)
Non-cash, stock-based compensation		—		6,953		—		—		—		6,953		—		6,953		—		—		6,953
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		(11)		—		—		(11)		—		—		(11)		—		(11)
Foreign currency translation		—		—		(352)		—		—		(352)		—		—		(352)		—		(352)
Net income (loss) attributable to DISH DBS		—		—		—		244,153		—		244,153
Net income (loss)														—		—		—		244,153		244,153
Balance, March 31, 2020	$	—	$	1,439,689	$	(812)	$	(12,122,756)	$	—	$	(10,683,879)	$	—	$	1,439,689	$	(812)	$	(12,122,756)	$	(10,683,879)
Non-cash, stock-based compensation		—		3,333		—		—		—		3,333		—		3,333		—		—		3,333
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		11		—		—		11		—		—		11		—		11
Foreign currency translation		—		—		30		—		—		30		—		—		30		—		30
Net income (loss) attributable to DISH DBS		—		—		—		374,980		—		374,980
Balance, June30, 2020	$	—	$	1,443,022	$	(771)	$	(11,747,776)	$	—	$	(10,305,525)
Net income (loss)														—		—		—		374,980		374,980
Balance, June 30, 2020													$	—	$	1,443,022	$	(771)	$	(11,747,776)	$	(10,305,525)

Balance, December 31, 2020													$	—	$	1,463,407	$	(805)	$	(10,782,607)	$	(9,320,005)
Non-cash, stock-based compensation		—		9,827		—		—		—		9,827		—		7,676		—		—		7,676
Change in unrealized holding gains (losses) on available-for-sale debt securities, net		—		—		10		—		—		10		—		—		(2)		—		(2)
Foreign currency translation		—		—		(132)		—		—		(132)		—		—		(195)		—		(195)
Net income (loss) attributable to DISH DBS		—		—		—		449,873		—		449,873
Balance, September 30, 2020	$	—	$	1,452,849	$	(893)	$	(11,297,903)	$	—	$	(9,845,947)
Net income (loss)														—		—		—		424,527		424,527
Balance, March 31, 2021													$	—	$	1,471,083	$	(1,002)	$	(10,358,080)	$	(8,887,999)
Non-cash, stock-based compensation														—		(8,344)		—		—		(8,344)
Change in unrealized holding gains (losses) on available-for-sale debt securities, net														—		—		(6)		—		(6)
Foreign currency translation														—		—		(144)		—		(144)
Net income (loss)														—		—		—		476,743		476,743
Balance, June 30, 2021													$	—	$	1,462,739	$	(1,152)	$	(9,881,337)	$	(8,419,750)

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

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DISH DBS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

For the Nine Months Ended

September 30,

2020

2019

Cash Flows From Operating Activities:

Net income (loss)

$
1,069,006

$
567,862

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Depreciation and amortization

382,970

435,796

Realized and unrealized losses (gains) on investments

—

(3,117)

Non-cash, stock-based compensation

20,113

8,317

Deferred tax expense (benefit)

45,210

(41,065)

Allowance for credit losses and allowance for doubtful accounts, respectively

15,085

6,165

Other, net

142

69,851

Changes in current assets and current liabilities, net

170,372

(14,641)

Net cash flows from operating activities

1,702,898

1,029,168

Cash Flows From Investing Activities:

(Purchases) Sales and maturities of marketable investment securities, net

(445,675)

153,416

Purchases of property and equipment

(233,261)

(298,595)

Other, net

6,221

71,572

Net cash flows from investing activities

(672,715)

(73,607)

Cash Flows From Financing Activities:

Redemption and repurchases of senior notes

(1,100,000)

(1,317,372)

Proceeds from the issuance of senior notes

1,000,000

—

Advances to/from affiliates

(82,415)

332,263

Repayment of long-term debt and finance lease obligations

(38,867)

(23,086)

Debt issuance costs

(1,670)

—

Other, net

—

(444)

Net cash flows from financing activities

(222,952)

(1,008,639)

Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents

807,231

(53,078)

Cash, cash equivalents, restricted cash and cash equivalents, beginning of period (Note 4)

78,103

130,076

Cash, cash equivalents, restricted cash and cash equivalents, end of period (Note 4)

$
885,334

$
76,998


	For the Six Months Ended
	June 30,
	2021			2020
Cash Flows From Operating Activities:
Net income (loss)	$	901,270	$	619,133
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization		226,633		257,954
Realized and unrealized losses (gains) on investments		3,587		—
Non-cash, stock-based compensation expense (benefit)		(668)		10,286
Deferred tax expense (benefit)		(13,870)		19,576
Changes in allowance for credit losses		(8,678)		21,908
Other, net		13,466		25,554
Changes in current assets and current liabilities, net		(27,598)		405,709
Net cash flows from operating activities		1,094,142		1,360,120

Cash Flows From Investing Activities:
(Purchases) Sales and maturities of marketable investment securities, net		(305,958)		(31)
Purchases of property and equipment		(88,470)		(148,256)
Other, net		9,311		4,454
Net cash flows from investing activities		(385,117)		(143,833)

Cash Flows From Financing Activities:
Redemption and repurchases of senior notes		(2,000,000)		(1,100,000)
Proceeds from the issuance of senior notes		1,500,000		—
Early debt extinguishment costs		(3,368)		—
Debt issuance costs		(9,819)		—
Advances to/from affiliates		—		(82,415)
Repayment of long-term debt and finance lease obligations		(24,382)		(23,807)
Net cash flows from financing activities		(537,569)		(1,206,222)

Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents		171,456		10,065
Cash, cash equivalents, restricted cash and cash equivalents, beginning of period (Note 4)		1,296,732		78,103
Cash, cash equivalents, restricted cash and cash equivalents, end of period (Note 4)	$	1,468,188	$	88,168

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

Table of Contents

DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Organization and Business Activities

Principal Business

DISH DBS Corporation (which together with its subsidiaries is referred to as “DISH DBS,” the “Company,” “we,” “us” and/or “our,” unless otherwise required by the context) is a holding company and an indirect, wholly-owned subsidiary of DISH Network Corporation (“DISH Network”). DISH DBS was formed under Colorado law in January 1996 and its common stock is held by DISH Orbital Corporation (“DOC”), a direct subsidiary of DISH Network. Our subsidiaries operate one business segment.

Pay-TV

We offer pay-TV services under the DISH^® brand and the SLING^® brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, FCC licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, broadcast operations, ~~customer service facilities,~~ a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations (“DISH TV”). We also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. The SLING branded pay-TV services consist of, among other things, multichannel, live-linear streaming ~~OTT~~over-the-top (“OTT”) Internet-based domestic, international and Latino video programming services (“SLING TV”). As of ~~September~~June 30, ~~2020,~~2021, we had ~~11.423~~10.993 million Pay-TV subscribers in the United States, including ~~8.965~~8.554 million DISH TV subscribers and ~~2.458~~2.439 million SLING TV subscribers.

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, ~~2019.~~2020. Certain prior period amounts have been reclassified to conform to the current period presentation.

Specifically, as a result of DISH Network’s entrance into the retail wireless industry, they have reclassified certain items on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). We have made similar conforming changes to conform to our parent company. The reclassifications include:

~~(a) “Subscriber-related revenue” has been retitled “Service revenue.”~~

~~(b) “Subscriber-related expenses” has been retitled “Cost of services.”~~

~~(c) “Satellite and transmission expenses” has been reclassified to “Cost of services.”~~

(d) A new caption entitled “Selling, general and administrative expenses” has been created that includes historical “General and administrative expenses,” as well as “Subscriber acquisition costs.”

~~All prior periods have been reclassified to conform to the current period presentation for these changes.~~

~~Table of Contents~~

~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

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. Minority interests are recorded as noncontrolling interests or redeemable noncontrolling interests. Non-consolidated 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, these equity securities are classified as either marketable investment securities or other investments and recorded at fair value with changes recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All significant intercompany accounts and transactions have been eliminated in consolidation.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 credit losses, self-insurance obligations, deferred taxes and related valuation allowances, uncertain tax positions, loss contingencies, 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, relative standalone selling prices of performance obligations, finance leases, asset impairments, estimates of future cash flows used to evaluate and recognize impairments, useful lives of property, equipment and intangible assets, independent third-party retailer incentives, programming expenses and subscriber lives. Economic conditions may increase 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 our condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur.

~~Marketable Investment Securities~~

All equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

All debt securities are classified as available-for-sale and are recorded at fair value. Historically, we reported temporary unrealized gains and losses as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. Subsequent to the adoption of ASU 2016-13 ~~Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”) during the first quarter of 2020, we report the temporary unrealized gains and losses related to changes in market conditions of marketable debt securities as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. The corresponding changes in the fair value of marketable debt securities, which are determined to be company specific credit losses are recorded in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). We evaluate our debt investment portfolio to determine whether declines in the fair value of these securities are related to credit loss. Management estimates credit losses on marketable debt securities utilizing a credit loss impairment model on a quarterly basis. We estimate the expected credit losses, measured over the contractual life of marketable debt securities considering relevant issuer specific factors, including, but not limited to, a decrease in credit ratings or an entities ability to pay.

~~Table of Contents~~

~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

~~Trade Accounts Receivable~~

Prior to January 1, 2020, management estimated the amount of allowance for doubtful accounts for potential non-collectability of accounts receivable based upon past collection experience and consideration of other relevant factors. Subsequent to January 1, 2020 due to the adoption of ASU 2016-13, trade accounts receivable are recorded at amortized cost less an allowance for expected credit losses that are not expected to be recovered. We maintain allowances for credit losses resulting from the expected failure or inability of our customers to make required payments. We recognize the allowance for expected credit losses at inception and reassess quarterly based on management’s expectation of the asset’s collectability. Management estimates credit losses on financial assets, including our trade accounts receivable, utilizing a current expected credit loss impairment model. We estimate the expected credit losses, measured over the contractual life of an asset considering relevant historical loss information, credit quality of the customer base, current economic conditions and forecasts of future economic conditions.

In determining the allowance for credit losses, management groups similar types of financial assets with consistent risk characteristics. Pools identified by management include but are not limited to residential customers, commercial customers and advertising services. The risk characteristics of the financial asset portfolios are monitored by management and reviewed periodically. The forecasts for future economic conditions are based on several factors including, but not limited to, changes in the unemployment rate, external economic forecasts and current collection rates. Our estimates of the allowance for credit losses may not be indicative of our actual credit losses requiring additional charges to be incurred to reflect the actual amount collected.

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; and quoted prices for identical or similar instruments in markets that are not active; 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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying amount for cash and cash equivalents, trade accounts receivable (net of allowance for credit ~~losses or net of allowance for doubtful accounts)~~losses) and current liabilities (excluding the “Current portion of long-term debt and finance lease obligations”) was equal to or approximated fair value due to their short-term nature or proximity to current market rates. See Note 4 for the fair value of our marketable investment securities.

Fair values for our publicly traded debt securities are based on quoted market prices, when available. The fair values of private debt are based on, among other things, available trade information, and/or 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 debt securities. See Note 8 for the fair value of our long-term debt.

Table of Contents

DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

~~Revenue Recognition~~

Our revenue is primarily derived from Pay-TV programming services that we provide to our subscribers. We also generate revenue from equipment rental fees and other hardware related fees, including DVRs and fees from subscribers with multiple receivers; advertising services; fees earned from our in-home service operations; warranty services; sales of digital receivers and related equipment to third-party pay-TV providers; satellite uplink and telemetry, tracking and control (“TT&C”) services; and revenue from in-home services. See Note 11~~for further information, including revenue disaggregated by major source.~~

Our residential video subscribers contract for individual services or combinations of services, as discussed above, the majority of which are generally distinct and are accounted for as separate performance obligations. We consider our installations for first time DISH TV subscribers to be a service. However, since we provide a significant integration service combining the installation with programming services, we have concluded that the installation is not distinct from programming and thus the installation and programming services are accounted for as a single performance obligation. We generally satisfy these performance obligations and recognize revenue as the services are provided, for example as the programming is broadcast to subscribers, as this best represents the transfer of control of the services to the subscriber.

In cases where a subscriber is charged certain nonrefundable upfront fees, those fees are generally considered to be material rights to the subscriber related to the subscriber’s option to renew without having to pay an additional fee upon renewal. These fees are deferred and recognized over the estimated period of time during which the fee remains material to the customer, which we estimate to be less than ~~one year~~. Revenues arising from our in-home services that are separate from the initial installation, such as mounting a TV on a subscriber’s wall, are generally recognized when these services are performed.

~~For our residential video subscribers, we have concluded that the contract term under Accounting Standard Codification Topic 606,~~ ~~Revenue from Contracts with Customers~~ (“ASC 606”), is one month and as a result the revenue recognized for these subscribers for a given month is equal to the amount billed in that month, except for certain nonrefundable upfront fees that are accounted for as material rights, as discussed above.

Revenues from our advertising services are typically recognized as the advertisements are broadcast. Sales of equipment to subscribers or other third parties are recognized when control is transferred under the contract. Revenue from our commercial video subscribers typically follows the residential model described above, with the exception that the contract term for most of our commercial subscribers exceeds one month and can be multiple years in length. However, commercial subscribers typically do not receive time-limited discounts or free service periods and accordingly, while they may have multiple performance obligations, revenue is equal to the amount billed in a given month.

~~Contract Balances~~

The timing of revenue recognition generally differs from the timing of invoicing to customers. When revenue is recognized prior to invoicing, we record a receivable. When revenue is recognized subsequent to invoicing, we record deferred revenue. Our residential video subscribers are typically billed monthly, and the contract balances for those customers arise from the timing of the monthly billing cycle. We do not adjust the amount of consideration for financing impacts as we apply a practical expedient when we anticipate that the period between transfer of goods and services and eventual payment for those goods and services will be less than one year. See Note 12 for further information, including balance and activity detail about our allowance for credit losses and deferred revenue related to contracts with subscribers.

~~Table of Contents~~

~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

Assets Recognized Related to the Costs to Obtain a Contract with a Subscriber

We recognize an asset for the incremental costs of obtaining a contract with a subscriber if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs, including those with our independent third-party retailers, meet the requirements to be capitalized, and payments made under these programs are capitalized and amortized to expense over the estimated subscriber life. During the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we capitalized $4633 million and ~~$67~~$44 million, respectively, under these programs. The amortization expense related to these programs was ~~$33~~$38 million and ~~$21~~$29 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we capitalized $~~128~~61 million and ~~$159~~$82 million, respectively, under these programs. The amortization expense related to these programs was ~~$89~~$75 million and ~~$52~~$56 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had a total of $~~340~~325 million and ~~$300~~$339 million, respectively, capitalized ~~net of related amortization expense~~ on our Condensed Consolidated Balance Sheets. These amounts are capitalized in “Other current assets” and “Other noncurrent assets, net” on our Condensed Consolidated Balance Sheets, and then amortized in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

~~Leases~~

~~We enter into operating and finance leases for, among other things, satellites, office space, warehouses and distribution centers, vehicles, and other equipment. Our leases have remaining~~ ~~leaseterms~~ ~~from~~ ~~one~~ ~~to 12 years, some of which include renewal options, and some of which include options to terminate the leases~~ ~~within~~ ~~one year.~~

We determine if an arrangement is a lease and classify that lease as either an operating or finance lease at inception. Operating leases are included in “Operating lease assets,” “Other accrued expenses” and “Operating lease liabilities” on our Condensed Consolidated Balance Sheets. Finance leases are included in “Property and equipment, net,” “Current portion of long-term debt and finance lease obligations” and “Long-term debt and finance lease obligations, net of current portion” on our Condensed Consolidated Balance Sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 7 for further information on our lease expenses.

Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent the present value of our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes the impact of prepaid or deferred lease payments. The length of our lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We currently lease and historically have leased certain assets from EchoStar, including, among other things, satellites, office space and data centers. See Note 13 for further information on our Related Party Transactions with EchoStar. On May 19, 2019, DISH Network entered into a Master Transaction Agreement with EchoStar and effective September 10, 2019, certain satellites and real estate assets leased from EchoStar were transferred to DISH Network. See Note 14 “~~Related Party Transactions – Master Transaction Agreement”~~ ~~in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 for further information on the Master Transaction Agreement.~~

~~Table of Contents~~

~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

We have lease agreements with lease and non-lease components, which are generally accounted for separately. Our variable lease payments are immaterial and our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

DISH TV subscribers have the choice of leasing or purchasing the satellite receiver and other equipment necessary to receive our DISH TV services. Most of our new DISH TV subscribers choose to lease equipment and thus we retain title to such equipment. Equipment leased to new and existing DISH TV subscribers is capitalized and depreciated over their estimated useful lives.

For equipment leased to new and existing DISH TV subscribers we made an accounting policy election to combine the equipment with our programming services as a single performance obligation in accordance with the revenue recognition guidance as the programming services are the predominant component. The revenue related to equipment leased to new and existing DISH TV subscribers would have otherwise been accounted for as an operating lease.

~~Impact of Adoption of ASU 2016-02~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02~~ ~~Leases~~ (“ASU 2016-02”) and has modified the standard thereafter. We adopted ASU 2016-02, as modified, on January 1, 2019 using the modified retrospective method. Under the modified retrospective method, we applied the new guidance to all leases that commenced before and were existing as of January 1, 2019.

The adoption of ASU 2016-02 had no impact on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and cash flows from operating, investing and financing activities on our Condensed Consolidated Statements of Cash Flows.

Advertising Costs

We recognize advertising expense when incurred as a component of selling, general and administrative expense. Advertising expenses totaled $~~107~~96 million and ~~$141~~$90 million for ~~each of~~ the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Advertising expenses totaled $~~328~~179 million and ~~$375~~$221 million for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Research and Development

Research and development costs are expensed as ~~incurred.~~incurred and are included in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Research and development costs totaled $67 million and $4$5 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Research and development costs totaled $1714 million and ~~$15~~$11 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

~~Table of Contents~~

~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

3.	Supplemental Data - Statements of Cash Flows

The following table presents certain supplemental cash flow and other non-cash data. See Note 7 for supplemental cash flow and non-cash data related to leases.


	For the Nine Months Ended				For the Six Months Ended
	September 30,				June 30,
	2020		2019		2021		2020

	(In thousands)				(In thousands)
Cash paid for interest	$	505,664	$	609,850	$	326,004	$	329,923
Cash received for interest		2,614		29,981		1,808		1,962
Cash paid for income taxes		13,673		16,510		21,732		3,205
Cash paid for income taxes to DISH Network		293,713		218,210		290,046		176,964
Capitalized interest		—		440

Table of Contents

DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Our parent, DISH Network, provides a centralized system for the management of our cash and marketable investment securities as it does for all of its subsidiaries to, among other reasons, maximize yield of the portfolio. As a result, the cash and marketable investment securities included on our Condensed Consolidated Balance Sheets isare a component or portion of the overall cash and marketable investment securities portfolio included on DISH Network’s Condensed Consolidated Balance Sheets and are managed by DISH Network. We are reflecting the purchases and sales of marketable investment securities on a net basis for each period presented on our Condensed Consolidated Statements of Cash Flows as we believe the net presentation is more meaningful to our cash flows from investing activities.

4.	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 consisted of the following:


	As of				As of
	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020

	(In thousands)				(In thousands)
Marketable investment securities:
Current marketable investment securities	$	445,685	$	—	$	438,543	$	132,593
Restricted marketable investment securities (1)		390		390		—		—
Total marketable investment securities		446,075		390		438,543		132,593

Restricted cash and cash equivalents (1)		57,972		60,677		58,024		58,323

Other investment securities:
Other investment securities		96,481		106,874		98,701		97,306
Total other investment securities		96,481		106,874		98,701		97,306

Total marketable investment securities, restricted cash and cash equivalents, and other investment securities	$	600,528	$	167,941	$	595,268	$	288,222

(1)	Restricted marketable investment securities and restricted cash and cash equivalents are included in “Restricted cash, cash equivalents and marketable investment securities” on our Condensed Consolidated Balance Sheets.

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~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

Marketable Investment Securities

Our marketable investment securities portfolio may consist of debt and equity instruments. All equity securities are carried at fair value, with changes in fair value recognized in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All debt securities are classified as available-for-sale and are recorded at fair value. We report the temporary unrealized gains and losses related to changes in market conditions of marketable debt securities as a separate component of “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit),” net of related deferred income tax on our Condensed Consolidated Balance Sheets. The corresponding changes in the fair value of marketable debt securities, which are determined to be company specific credit losses are recorded in “Other, net” within “Other Income (Expense)” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 2 for further information.

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Current Marketable Investment Securities

Our current marketable investment securities portfolio can include investments in various debt instruments including, among others, commercial paper, corporate securities and United States treasury and/or agency securities.

Commercial paper consists mainly of unsecured short-term promissory notes, issued primarily by corporations, with maturities ranging up to 365 days. Corporate securities consist of debt instruments issued by corporations with various maturities normally less than 18 months. U.S. Treasury and agency securities consist of debt instruments issued by the federal government and other government agencies.

Restricted Cash, Cash Equivalents and Marketable Investment Securities

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our restricted marketable investment securities, together with our restricted cash and cash equivalents, included amounts required as collateral for our letters of credit and trusts.

Other Investment Securities

We have strategic investments in certain debt and/or equity securities that are included in noncurrent “Other investment securities” on our Condensed Consolidated Balance Sheets. Our debt securities are classified as available-for-sale and our equity securities are accounted for using the equity method of accounting or recorded at fair value. Certain of our equity method investments are detailed below.

NagraStar L.L.C. ~~As a result of the completion of the share exchange on February 28, 2017, we~~We own a 50% interest in NagraStar L.L.C. (“NagraStar”), a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming.

Invidi Technologies Corporation. In November 2016, we, DIRECTV, LLC, a wholly-owned indirect subsidiary of AT&T Inc., and Cavendish Square Holding B.V., an affiliate of WPP plc, entered into a series of agreements to acquire Invidi Technologies Corporation (“Invidi”), an entity that provides proprietary software for the addressable advertising market. The transaction closed in January 2017.

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~~DISH DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~

Our ability to realize value from our strategic investments in securities that are not publicly traded depends on the success of the issuers’ businesses and their ability to obtain sufficient capital, on acceptable terms or at all, and 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 September 30, 2020 and December 31, 2019, we had accumulated net unrealized gains of less than $1 million and 0, respectively. These amounts, net of related tax effect, were~~ ~~accumulated net unrealized gains of less than $1 million and 0~~, respectively. All of these amounts are included in “Accumulated other comprehensive income (loss)” within “Total stockholder’s equity (deficit).” The components of our available-for-sale investments are summarized in the table below.

As of September 30, 2020

As of December 31, 2019

Marketable

Marketable

Investment

Unrealized

Investment

Unrealized


Securities

Gains

Losses

Net

Securities

Gains

Losses

Net

(In thousands)

Debt securities (including restricted):

U.S. Treasury and agency securities

$
130,592

$
8

$
—

$
8

$
390

$
—

$
—

$
—

Commercial paper

287,124

—

—

—

—

—

—

—

Corporate securities

28,212

2

—

2

—

—

—

—

Other

147

—

—

—

—

—

—

—

Total

$
446,075

$
10

$
—

$
10

$
390

$
—

$
—

$
—

~~As of September 30, 2020, restricted and non-restricted marketable investment securities included debt securities of $446~~ ~~million with contractual maturities within 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Fair Value Measurements

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


	As of																As of
	September 30, 2020								December 31, 2019								June 30, 2021								December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3

	(In thousands)																(In thousands)
Cash equivalents (including restricted)	$	867,906	$	495,119	$	372,787	$	—	$	60,677	$	60,677	$	—	$	—	$	1,442,569	$	155,933	$	1,286,636	$	—	$	1,278,971	$	172,025	$	1,106,946	$	—

Debt securities (including restricted):
U.S. Treasury and agency securities	$	130,592	$	130,592	$	—	$	—	$	390	$	390	$	—	$	—	$	—	$	—	$	—	$	—	$	22,476	$	22,476	$	—	$	—
Commercial paper		287,124		—		287,124		—		—		—		—		—		345,252		—		345,252		—		101,959		—		101,959		—
Corporate securities		28,212		—		28,212		—		—		—		—		—		92,768		—		92,768		—		8,068		—		8,068		—
Other		147		—		147		—		—		—		—		—		523		—		523		—		90		—		90		—
Total	$	446,075	$	130,592	$	315,483	$	—	$	390	$	390	$	—	$	—	$	438,543	$	—	$	438,543	$	—	$	132,593	$	22,476	$	110,117	$	—

As of June 30, 2021, restricted and non-restricted marketable investment securities included debt securities of $439 million with contractual maturities within one year. Actual maturities may differ from contractual maturities as a result of our ability to sell these securities prior to maturity.

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

“Other, net” within “Other Income (Expense)” included on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
Other, net:	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Marketable investment securities - realized and unrealized gains (losses)	$	—	$	1	$	—	$	3,600
Costs related to early redemption of debt		—		(44)		—		(483)	$	(987)	$	—	$	(3,587)	$	—
Equity in earnings (losses) of affiliates		(77)		743		(198)		2,096		660		(399)		1,563		(121)
Other		(14)		808		900		859		40		247		229		914
Total	$	(91)	$	1,508	$	702	$	6,072	$	(287)	$	(152)	$	(1,795)	$	793

5.	Inventory

Inventory consisted of the following:

As of

September 30,

December 31,

2020

2019

(In thousands)

Finished goods

$
245,618

$
254,240

Work-in-process and service repairs

32,320

34,120

Raw materials

15,096

33,623

Total inventory

$
293,034

$
321,983


	As of
	June 30,		December 31,
	2021		2020

	(In thousands)
Finished goods	$	209,662	$	226,866
Work-in-process and service repairs		18,177		25,206
Raw materials		9,964		10,225
Total inventory	$	237,803	$	262,297

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

6.	Property and Equipment

Property and equipment consisted of the following:


	Depreciable		As of			Depreciable		As of
	Life	September 30,		December 31,		Life	June 30,		December 31,
	(In Years)	2020		2019		(In Years)	2021		2020

		(In thousands)					(In thousands)
Equipment leased to customers	2-5	$	1,753,757	$	1,837,503	2-5	$	1,626,487	$	1,719,778
EchoStar XV	15		277,658		277,658	15		277,658		277,658
EchoStar XVIII	15		411,255		411,255	15		411,255		411,255
Satellites acquired under finance lease agreements	15		398,107		398,107	15		398,107		398,107
Furniture, fixtures, equipment and other	2-20		1,956,431		1,894,629	2-20		1,994,117		1,969,107
Buildings and improvements	5-40		294,651		289,421	5-40		297,464		301,037
Land	-		13,186		13,186	-		12,505		13,186
Construction in progress	-		59,548		70,081	-		47,653		51,800
Total property and equipment			5,164,593		5,191,840			5,065,246		5,141,928
Accumulated depreciation			(3,545,069)		(3,440,267)			(3,645,082)		(3,577,224)
Property and equipment, net		$	1,619,524	$	1,751,573		$	1,420,164	$	1,564,704

Depreciation and amortization expense consisted of the following:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Equipment leased to customers	$	71,551	$	92,193	$	220,722	$	286,782	$	63,527	$	69,489	$	127,789	$	149,171
Satellites		23,796		18,070		71,389		41,645		23,796		23,796		47,593		47,593
Buildings, furniture, fixtures, equipment and other		29,669		34,818		90,859		107,369		24,068		29,584		51,251		61,190
Total depreciation and amortization	$	125,016	$	145,081	$	382,970	$	435,796	$	111,391	$	122,869	$	226,633	$	257,954

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.

Pay-TV Satellites. We currently utilize 11 satellites in geostationary orbit approximately 22,300 miles above the equator, 2 of which we own and depreciate over their estimated useful life. We currently utilize certain capacity on 6 satellites that we lease from DISH Network, 1 satellite that we lease from EchoStar, and 2 satellites that we lease from third parties. All leased satellites are accounted for as operating leases except Nimiq 5 and Anik F3, which are accounted for as financing leases and are depreciated over their economic life.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

As of ~~September~~June 30, ~~2020,~~2021, our pay-TV satellite fleet consisted of the following:


		Degree
	Launch	Orbital	Lease
Satellites	Date	Location	Termination Date
Owned:
EchoStar XV	July 2010	61.5	N/A
EchoStar XVIII	June 2016	61.5	N/A

Leased from EchoStar (1):
EchoStar IX	August 2003	121	Month to month

Leased from DISH Network (2):
EchoStar X	February 2006	110	February ~~2021~~2022
EchoStar XI	July 2008	110	September 2021
EchoStar XIV	March 2010	119	February 2023
EchoStar XVI	November 2012	61.5	January 2023
Nimiq 5 ~~(3)~~	September 2009	72.7	September 2021
QuetzSat-1	September 2011	77	November 2021

Leased from Other Third Party:
Anik F3	April 2007	118.7	April 2022
Ciel II	December 2008	129	January 2022

(1)	See Note 13 for further information on our Related Party Transactions with EchoStar.

(2)	See Note 13 for further information on our Related Party Transactions with DISH Network.

~~(3)~~

The Nimiq 5 satellite, for which we have the option to renew on a year-to-year basis through September 2024 (when DISH Network’s lease term expires) was previously classified as an operating lease. As a result of the Master Transaction Agreement and expiration of the initial lease term, we now include our options to renew the lease through September 2024 in the lease term as we are reasonably certain to exercise those options. Accordingly, Nimiq 5 is now accounted for as a finance lease.

On May 14, 2019, we and DISH Orbital II L.L.C (“DOLLC II”), an indirect wholly-owned subsidiary of DISH Network, entered into an agreement to sell our interests in the Local Multipoint Distribution Service (“LMDS”) and MVDDS licenses in exchange for the EchoStar XVIII satellite, including its related in-orbit incentive obligations of approximately

~~$18~~ million (the “Satellite and Spectrum Transaction”). As the Satellite and Spectrum Transaction is among entities under common control, we recorded the EchoStar XVIII Satellite at DOLLC II’s net historical cost basis of $320 million. The difference between the net historical cost basis of EchoStar XVIII and our net carrying value of the LMDS and MVDDS licenses of $26 million, resulted in a $267 million capital transaction, net of tax, that was recorded in “Additional paid-in capital” on our Condensed Consolidated Balance Sheets during the second quarter of 2019.

7.	Leases

We enter into operating and finance leases for, among other things, satellites, office space, warehouses and distribution centers, vehicles, and other equipment. Our leases have remaining lease terms from one to 1211 years, some of which include renewal options, and some of which include options to terminate the leases within one year.

Our Anik F3 and Nimiq 5 satellites are accounted for as financing leases. Substantially all of our remaining leases are accounted for as operating leases, including the remainder of our satellite fleet.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The components of lease expense were as follows:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Operating lease cost	$	61,750	$	72,739	$	185,273	$	234,787	$	57,682	$	61,808	$	117,705	$	123,523

Short-term lease cost (1)		3,148		3,010		9,548		34,436		6,600		3,733		10,836		6,400

Finance lease cost:
Amortization of right-of-use assets		12,374		6,773		37,122		16,686		12,374		12,300		24,748		24,748
Interest on lease liabilities		4,270		2,495		13,602		4,775		3,428		4,534		7,144		9,332
Total finance lease cost		16,644		9,268		50,724		21,461		15,802		16,834		31,892		34,080
Total lease costs	$	81,542	$	85,017	$	245,545	$	290,684	$	80,084	$	82,375	$	160,433	$	164,003

(1)

Leases that have terms of 12 months or less.

Supplemental cash flow information related to leases was as follows:


	For the Nine Months Ended				For the Six Months Ended
	September 30,				June 30,
	2020		2019		2021		2020

	(In thousands)				(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	186,059	$	237,881	$	115,658	$	123,811
Operating cash flows from finance leases	$	13,602	$	4,775	$	6,944	$	9,332
Financing cash flows from finance leases	$	35,234	$	20,469	$	24,948	$	23,227

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	32,863	$	72,947	$	15,000	$	17,967
Finance leases	$	—	$	175,311	$	—	$	—

Right-of-use assets and liabilities recognized at January 1, 2019 upon adoption of ASC 842			$	730,180

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Supplemental balance sheet information related to leases was as follows:


					As of
	As of				June 30,		December 31,
	September 30, 2020		December 31, 2019		2021		2020

	(In thousands)				(In thousands)
Operating Leases:
Operating lease assets	$	429,118	$	553,576	$	291,139	$	380,968

Other current liabilities	$	203,291	$	202,972	$	153,372	$	186,967
Operating lease liabilities		224,593		350,155		138,432		192,624
Total operating lease liabilities	$	427,884	$	553,127	$	291,804	$	379,591

Finance Leases:
Property and equipment, gross	$	398,875	$	399,764	$	398,875	$	398,875
Accumulated depreciation		(238,699)		(201,873)		(275,821)		(251,073)
Property and equipment, net	$	160,176	$	197,891	$	123,054	$	147,802

Other current liabilities	$	52,004	$	48,678	$	49,452	$	49,820
Other long-term liabilities		124,176		163,939		86,774		110,789
Total finance lease liabilities	$	176,180	$	212,617	$	136,226	$	160,609

Weighted Average Remaining Lease Term:
Operating leases		3.0 years		3.4 years		2.9 years		2.9 years
Finance leases		3.5 years		4.2 years		2.9 years		3.3 years

Weighted Average Discount Rate:
Operating leases		8.8%		9.1%		8.5%		8.7%
Finance leases		9.6%		9.5%		9.7%		9.6%

Maturities of lease liabilities as of ~~September~~June 30, ~~2020~~2021 were as follows:


	Maturities of Lease Liabilities						Maturities of Lease Liabilities
	Operating		Finance				Operating		Finance
For the Years Ending December 31,	Leases		Leases		Total		Leases		Leases		Total

	(In thousands)						(In thousands)
2020 (remaining three months)	$	61,023	$	16,223	$	77,246
2021		207,469		66,279		273,748
2021 (remaining six months)							$	96,770	$	31,306	$	128,076
2022		134,793		50,227		185,020		140,318		50,227		190,545
2023		28,931		42,862		71,793		34,120		42,862		76,982
2024		11,836		32,147		43,983		15,068		32,147		47,215
2025								8,723		—		8,723
Thereafter		43,555		—		43,555		35,542		—		35,542
Total lease payments		487,607		207,738		695,345		330,541		156,542		487,083
Less: Imputed interest		(59,723)		(31,558)		(91,281)		(38,737)		(20,316)		(59,053)
Total		427,884		176,180		604,064		291,804		136,226		428,030
Less: Current portion		(203,291)		(52,004)		(255,295)		(153,372)		(49,452)		(202,824)
Long-term portion of lease obligations	$	224,593	$	124,176	$	348,769	$	138,432	$	86,774	$	225,206

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

8.	Long-Term Debt and Finance Lease Obligations

Fair Value of our Long-Term Debt

The following table summarizes the carrying amount and fair value of our debt facilities as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


	As of								As of
	September 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value

	(In thousands)								(In thousands)
5 1/8% Senior Notes due 2020 (1)	$	—	$	—	$	1,100,000	$	1,110,208
6 3/4% Senior Notes due 2021 (2)		2,000,000		2,055,660		2,000,000		2,109,420
6 3/4% Senior Notes due 2021 (1)									$	—	$	—	$	2,000,000	$	2,047,260
5 7/8% Senior Notes due 2022		2,000,000		2,090,160		2,000,000		2,129,580		2,000,000		2,089,720		2,000,000		2,095,820
5 % Senior Notes due 2023		1,500,000		1,533,990		1,500,000		1,543,770		1,500,000		1,574,640		1,500,000		1,566,300
5 7/8% Senior Notes due 2024		2,000,000		2,064,700		2,000,000		2,049,080		2,000,000		2,151,060		2,000,000		2,099,580
7 3/4% Senior Notes due 2026		2,000,000		2,202,920		2,000,000		2,128,900		2,000,000		2,267,460		2,000,000		2,236,520
7 3/8% Senior Notes due 2028		1,000,000		1,032,270		—		—		1,000,000		1,078,150		1,000,000		1,070,130
5 1/8% Senior Notes due 2029										1,500,000		1,482,660		—		—
Other notes payable		23,566		23,566		25,996		25,996		23,565		23,565		23,565		23,565
Subtotal		10,523,566	$	11,003,266		10,625,996	$	11,096,954		10,023,565	$	10,667,255		10,523,565	$	11,139,175
Unamortized deferred financing costs and debt discounts, net		(13,971)				(16,250)				(20,031)				(12,684)
Finance lease obligations ~~(3)~~(2)		176,180				212,617				136,226				160,609
Total long-term debt and finance lease obligations (including current portion)	$	10,685,775			$	10,822,363			$	10,139,760			$	10,671,490

(1)	~~On May 1, 2020,~~During the six months ended June 30, 2021, we ~~redeemed the principal balance~~repurchased $349 million of our ~~5 1/8% Senior Notes due 2020.~~

~~(2)~~

~~Our~~ 6 3/4% Senior Notes due 2021 ~~mature~~in open market trades. The remaining balance of $1.651 billion was redeemed on June 1, ~~2021 and have been reclassified to “Current portion of long-term debt and finance lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2020.~~2021.

~~(3)~~(2)

Disclosure regarding fair value of finance 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).

~~7 3/~~5 1/8% Senior Notes due ~~2028~~2029

On ~~July 1, 2020,~~May 24, 2021, we issued ~~$1.0~~$1.5 billion aggregate principal amount of our ~~7 3/~~5 1/8% Senior Notes due ~~July~~June 1, ~~2028.~~2029. Interest accrues at an annual rate of ~~7 3/~~5 1/8% and is payable semi-annually in cash, in arrears on ~~January~~June 1 and ~~July~~December 1 of each year, commencing on ~~January~~December 1, 2021.

The ~~7 3/~~5 1/8% Senior Notes are redeemable, in whole or in part, at any time ~~prior to July 1, 2023~~ at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest. ~~On or after July 1, 2023, we may redeem the Notes, in whole or in part, at any time at the redemption prices specified under the related indenture, together with accrued and unpaid interest.~~ Prior to ~~July~~June 1, ~~2023,~~2024, we may also redeem up to 35% of the ~~7 3/~~5 1/8% Senior Notes at a specified premium with the net cash proceeds from certain equity offerings or capital contributions.

Our 5 1/8% Senior Notes are:

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general unsecured senior obligations of DISH DBS Corporation (“DISH DBS”);

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ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and

1915

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~~Our~~ ~~7 3/8%~~ ~~Senior~~ ~~Notes are:~~

●

~~general unsecured senior obligations of DISH DBS;~~

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~~ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and~~

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ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness.

The indenture related to our ~~7 3/~~5 1/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to:

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incur additional debt;

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pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock;

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make certain investments;

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create liens or enter into sale and leaseback transactions;

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enter into transactions with affiliates;

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merge or consolidate with another company; and

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transfer or sell assets.

In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s ~~7 3/~~5 1/8%Senior Notes at a purchase price equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase.

9.	9.Commitments and Contingencies

Commitments

DISH Network’s 5G Network ~~Spectrum~~Deployment

~~Since 2008,~~ DISH Network has directly invested over ~~$11~~$12 billion to acquire certain wireless spectrum licenses and related assets and made over $10 billion in non-controlling investments in certain entities, for a total of over ~~$21~~$22 billion, as described further below.

~~Table of Contents~~DISH Network Spectrum

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~~(Unaudited)~~

DISH Network has directly invested over ~~$11~~$12 billion to acquire certain wireless spectrum licenses and related assets. ~~These~~DISH Network’s wireless spectrum licenses are subject to certain interim and final build-out requirements, as well as certain renewal requirements. ~~In March 2017,~~ DISH Network ~~notified~~plans to commercialize its wireless spectrum licenses through the ~~FCC that it planned to deploy a narrowband Internet~~completion of ~~Things~~the nation’s first cloud-native, Open Radio Access Network (“~~IoT”~~O-RAN”) based 5G network on certain of these wireless licenses, which was to be the first phase of its network deployment (“First Phase”). DISH Network expected to complete the First Phase by March 2020, with subsequent phases to be completed thereafter. In light of, among other things, certain developments related to the Sprint-TMUS merger, during the first quarter 2020, DISH Network determined that the revision of certain of its build-out deadlines was probable and, therefore, DISH Network no longer intends to complete its narrowband IoT deployment. The FCC issued an order effectuating the build-out deadline changes contemplated above on September 11, 2020. DISH Network has issued requests for information and proposals (“RFI/Ps”) to various vendors in the wireless industry and is in the process of selecting certain vendors as it moves forward with its 5G broadband network deployment (“5G(the “5G Network Deployment”). DISH Network currently expects capital expenditures, excluding capitalized interest, for its 5G Network Deployment to be approximately $10 billion ~~billion, excluding capitalized interest.~~. DISH Network will need to make significant additional investments or partner with others to, among other things, complete its 5G Network Deployment and further commercialize, build-out and integrate these licenses and related assets and any additional acquired licenses and related ~~assets; and~~assets, as well as to comply with regulations applicable to such licenses. Depending on the nature and scope of such ~~commercialization, build-out, integration efforts, and regulatory compliance,~~activities, any such investments or partnerships could vary significantly.

In addition, as DISH Network ~~considers~~completes its ~~options for the commercialization of its wireless spectrum, it~~5G Network Deployment, DISH Network will incur significant additional expenses and will have to make significant investments related to, among other things, research and development, wireless testing and wireless network infrastructure. DISH Network may also determine that additional wireless spectrum licenses may be required to ~~commercialize~~complete its ~~wireless business~~5G Network Deployment and to compete with other wireless service providers.

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Asset Purchase Agreement. On July 26, 2019, DISH Network entered into an Asset Purchase Agreement (the “APA”) with T-Mobile US, Inc. (“~~TMUS”~~T-Mobile”) and Sprint Corporation (“Sprint” and together with ~~TMUS,~~T-Mobile, the “Sellers” and given the consummation of the ~~Sprint-TMUS~~Sprint T-Mobile merger, sometimes referred to as “NTM”) to acquire from NTM certain assets and liabilities associated with Sprint’s Boost Mobile and Sprint-branded prepaid mobile services businesses (the “Prepaid Business”) for an aggregate purchase price of $1.4 billion as adjusted for specific categories of net working capital on the closing date (the “Boost Mobile Acquisition”). Effective July 1, 2020 (the “Closing Date”), upon the terms and subject to the conditions set forth in the APA, DISH Network and ~~NTM~~T-Mobile completed the Boost Mobile Acquisition.

~~At the closing of~~In connection with the Boost Mobile Acquisition, DISH Network and ~~NTM~~T-Mobile entered into a transition services agreement under which DISH Network will receive certain transitional services (the “TSA”), a master network services agreement for the provision of network services by ~~NTM~~T-Mobile to DISH Network (the “MNSA”), an option agreement entitling DISH Network to acquire certain decommissioned cell sites and retail stores of ~~NTM~~T-Mobile (the “Option Agreement”) and an agreement under which DISH Network would purchase all of Sprint’s 800 MHz spectrum licenses, totaling approximately 13.5 MHz of nationwide wireless spectrum for an additional approximately $3.59 billion (the “Spectrum Purchase Agreement” and together with the APA, the TSA, the MNSA and the Option Agreement, the “Transaction Agreements”). See Note 5 “Acquisitions – ~~Sprint Asset~~Boost Mobile Acquisition” of in the Notes toDISH Network’s Quarterly Report on Form 10-Q for the ~~three months~~quarter ended ~~September~~June 30, ~~2020~~2021 for further information on the Transaction Agreements.

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~~(Unaudited)~~

In connection with the development of DISH Network’s wireless business, including, without limitation, the efforts described above, we have made cash distributions to partially finance these efforts to date and may make additional cash distributions to finance, in whole or in part, DISH Network’s future efforts. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on these wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these wireless spectrum licenses.

DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses

During 2015, through its wholly-owned subsidiaries American AWS-3 Wireless II L.L.C. (“American II”) and American AWS-3 Wireless III L.L.C. (“American III”), DISH Network initially made over $10 billion in certain non-controlling investments in Northstar Spectrum, LLC (“Northstar Spectrum”), the parent company of Northstar Wireless, LLC (“Northstar Wireless,” and collectively with Northstar Spectrum, the “Northstar Entities”), and in SNR Wireless HoldCo, LLC (“SNR HoldCo”), the parent company of SNR Wireless LicenseCo, LLC (“SNR Wireless,” and collectively with SNR HoldCo, the “SNR Entities”), respectively. On October 27, 2015, the FCC granted certain AWS-3 wireless spectrum licenses (the “AWS-3 Licenses”) to Northstar Wireless (the “Northstar Licenses”) and to SNR Wireless (the “SNR Licenses”), respectively. The Northstar Entities and/or the SNR Entities may need to raise significant additional capital in the future, which may be obtained from third party sources or from DISH Network, so that the Northstar Entities and the SNR Entities may commercialize, build-out and integrate these AWS-3 Licenses, comply with regulations applicable to such AWS-3 Licenses, and make any potential payments related to the re-auction of AWS-3 licenses retained by the FCC. Depending upon the nature and scope of such commercialization, build-out, integration efforts, regulatory compliance, and potential re-auction payments, any such loans, equity contributions or partnerships could vary significantly. For further information regarding the potential re-auction of AWS-3 licenses retained by the FCC, see Note 11 “Commitments and Contingencies – Commitments – DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020.~~2021.

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We have made and may make additional cash distributions to ~~finance, in whole or in part, loans~~DISH Network so that DISH Network ~~has made or~~ may ~~make in the future to~~fund the Northstar Entities and the SNR Entities related to DISH Network’s non-controlling investments in these entities. There can be no assurance that DISH Network will be able to obtain a profitable return on its non-controlling investments in the Northstar Entities and the SNR Entities.

We may need to raise significant additional capital in the future, which may not be available on acceptable terms or at all, to among other things, ~~make additional cash distributions to DISH Network,~~ continue investing in our business and to pursue acquisitions and other strategic transactions.

See Note 11 “Commitments and Contingencies – Commitments” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020~~2021 for further information.

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Contingencies

Separation Agreement

On January 1, 2008, DISH Network completed the distribution of its technology and set-top box business and certain infrastructure assets (the “Spin-off”) into a separate publicly-traded company, EchoStar. In connection with the Spin-off, DISH Network 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 DISH Network 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 DISH Network’s acts or omissions following the Spin-off. On February 28, 2017, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Share Exchange Agreement (the “Share Exchange Agreement”) that was previously entered into on January 31, 2017 (the “Share Exchange”), pursuant to which certain assets that were transferred to EchoStar in the Spin-off were transferred back to DISH Network. On September 10, 2019, DISH Network and EchoStar and certain of their respective subsidiaries completed the transactions contemplated by the Master Transaction Agreement (the “Master Transaction Agreement”) that was previously entered into on May 19, 2019, pursuant to which certain assets that were transferred to EchoStar in the Spin-off were transferred back to DISH Network. The Share Exchange Agreement and the Master Transaction Agreement contain additional indemnification provisions between DISH Network and EchoStar for certain liabilities and legal proceedings.

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.

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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. 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.

~~Table of Contents~~American Patents

On November 23, 2020, American Patents LLC, filed a complaint against DISH ~~DBS CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(Unaudited)~~Network and our wholly-owned subsidiaries DISH Network L.L.C. and Dish Network Service L.L.C., and a third party, Arcadyan Technology Corporation in the United States District Court for the Eastern District of Texas. The complaint alleges infringement of United States Patent No. 7,088,782 (the “782 patent”), entitled “Time and Frequency Synchronization In Multi-Input and Multi-Output (MIMO) Systems”; United States Patent No. 7,310,304 (the “304 patent”), entitled “Estimating Channel Parameters in Multi-Input, Multi-Output (MIMO) Systems”; United States Patent No. 7,706,458 (the “458 patent”), entitled “Time And Frequency Synchronization in Multi-Input, Multi-Output (MIMO) Systems”; and United States Patent No. 6,847,803 (the “803 patent”), entitled “Method for Reducing Interference in a Receiver.” The four patents are asserted against wireless 802.11 standard-compliant devices.

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. The plaintiff is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein.

Broadband iTV

On December 19, 2019, Broadband iTV, Inc. filed a complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Western District of Texas. The complaint alleges infringement of United States Patent No. 10,028,026 (the “026 patent”), entitled “System for addressing on-demand TV program content on TV services platform of a digital TV services provider”; United States Patent No. 10,506,269 (the “269 patent”), entitled “System for addressing on-demand TV program content on TV services platform of a digital TV services provider”; United States Patent No. 9,998,791 (“the 791 patent”), entitled “Video-on-demand content delivery method for providing video-on-demand services to TV service subscribers”; and United States Patent No. 9,648,388 (the “388 patent”), entitled “Video-on-demand content delivery system for providing video-on-demand services to TV services subscribers.” Generally, the asserted patents relate to providing video on demand content to subscribers.

On July 10, 2020, July 20, 2020, July 24, 2020 and July 31, 2020, DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of, respectively, the 026 patent, the 791 patent, the 269 patent and the 388 patent.On January 21, 2021, the United States Patent and Trademark Office agreed to institute proceedings on one of the petitions challenging the 026 patent; on January 27, 2021, it agreed to institute proceedings on one of the petitions challenging the 269 patent; on February 4, 2021, it agreed to institute proceedings on one of the petitions challenging the 791 patent; and on February 12, 2021, it agreed to institute proceedings on one of the petitions challenging the 388 patent. Trial in this matter has been set for November 15, 2021.

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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. ~~Each of the plaintiffs is an entity~~ ~~that seeks to license a patent portfolio without itself practicing any of the claims recited therein.~~

Cedar Lane Technologies

On October 13, 2020, Cedar Lane Technologies Inc. (“Cedar Lane Technologies”) filed a complaint against our ~~wholly owned~~wholly-owned subsidiary, DISH Network L.L.C., in the United States District Court for the Western District of Texas. The complaint alleges infringement of United States Patent No. 6,502,194 (the “194 patent”), entitled “System for playback of network audio material on demand”; United States Patent No. 6,526,411 (the “411 patent”), entitled “System and method for creating dynamic playlists”; United States Patent No. 6,721,489 (the “489 patent”), entitled “Play list manager”; United States Patent No. 7,173,177 (the “177 patent”), entitled “User interface for simultaneous management of owned and unowned inventory”; United States Patent No. 7,642,443 (the “443 patent”), entitled “User interface for simultaneous management of owned and unowned inventory”; and United States Patent No. 8,165,867 (the “867 patent”), entitled “Methods for translating a device command.” Generally, the asserted patents relate to streaming digital audio to a home audio system; aspects of play lists and purchased content; and voice control. Cedar Lane Technologies is a non-practicing entity that has filed more than 75 patent infringement lawsuits. On March 11, 2021, pursuant to a stipulation of the parties, the Court dismissed the case without prejudice. This matter is now concluded.

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. Each of the plaintiffs is an entity ~~that seeks to license a patent portfolio without itself practicing any of the claims recited therein.~~

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City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust

On July 2, 2019, a putative class action lawsuit was filed by a purported EchoStar stockholder in the District Court of Clark County, Nevada under the caption City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust (“City of Hallandale”) v. Ergen, et al., Case No. A-19-797799-B. The lawsuit named as defendants Mr. Ergen, the other members of the EchoStar Board, as well as EchoStar, certain of its officers, DISH Network and certain of DISH Network’s and EchoStar’s affiliates. Plaintiff alleges, among other things, breach of fiduciary duties in approving the transactions contemplated under the Master Transaction Agreement for inadequate consideration and pursuant to an unfair and conflicted process, and that EchoStar, DISH Network and certain other defendants aided and abetted such breaches. In the operative First Amended Complaint, filed on October 11, 2019, the plaintiff dropped as defendants the EchoStar board members other than Mr. Ergen. The Court granted, in part, the plaintiff’s motion for class certification on January 15, 2021. The trial of this matter is scheduled to start sometime during the five-week “stack” beginning September 7, 2021. See Note 14 “Related Party ~~Transactions – Master Transaction Agreement”~~Transactions” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020~~2021 for further information on the Master Transaction Agreement. Plaintiff seeks equitable relief, including the issuance of additional DISH Network Class A ~~Common Stock,~~common stock, monetary relief and other costs and disbursements, including attorneys’ fees.

The parties have entered into a global settlement agreement, subject to court approval. The parties’ joint motion for preliminary approval has been approved and the final approval hearing has been scheduled for December 6, 2021.

If the settlement is not approved, DISH Network intends to vigorously defend this case, but cannot predict with any degree of certainty the outcome of this suit or determine the extent of any potential liability or damages.

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ClearPlay, Inc.

On March 13, 2014, ClearPlay, Inc. (“ClearPlay”) filed a complaint against DISH Network, our wholly-owned subsidiary DISH Network L.L.C., EchoStar, and its then wholly-owned subsidiary EchoStar Technologies L.L.C., in the United States District Court for the District of Utah. The complaint alleges willful infringement of United States Patent Nos. 6,898,799 (the “799 patent”), entitled “Multimedia Content Navigation and Playback”; 7,526,784 (the “784 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,543,318 (the “318 patent”), entitled “Delivery of Navigation Data for Playback of Audio and Video Content”; 7,577,970 (the “970 patent”), entitled “Multimedia Content Navigation and Playback”; and 8,117,282 (the “282 patent”), entitled “Media Player Configured to Receive Playback Filters From Alternative Storage Mediums.” ClearPlay alleges that the AutoHop^™ feature of our Hopper set-top box infringes the asserted patents. On February 11, 2015, the case was stayed pending various third-party challenges before the United States Patent and Trademark Office regarding the validity of certain of the patents asserted in the action.

In those third-party challenges, the United States Patent and Trademark Office found that all claims of the 282 patent are unpatentable, and that certain claims of the 784 patent and 318 patent are unpatentable. ClearPlay appealed as to the 784 patent and the 318 patent, and on August 23, 2016, the United States Court of Appeals for the Federal Circuit affirmed the findings of the United States Patent and Trademark Office. On October 31, 2016, the stay was lifted.

On October 16, October 21, November 2, 2020 and November 9, 2020, DISH Network ~~L.L.C. and DISH Technologies~~ L.L.C. filed petitions with the United States Patent and Trademark Office requesting ex parte reexamination of the validity of the asserted claims of, respectively, the 784 patent, the 799 patent, the 318 patent and the 970 patent; and on November 3,2, November 20, December 14 and December 15, 2020, the United States Patent and Trademark Office granted ~~the~~each request for ~~reexamination~~reexamination. On May 7, 2021, May 25, 2021, June 25, 2021 and July 7, 2021, the United States Patent and Trademark Office issued Ex Parte Reexamination Certificates confirming the patentability of the challenged claims of, respectively, the 799 patent, the 784 patent, the 318 patent and the 970 patent. ~~The trial has been reset for July 26, 2021. The report issued by~~ ClearPlay’s damages expert contends that ClearPlay is entitled to $543 million in damages.

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Contemporary Display LLC

On June 4, 2018, Contemporary Display LLC (“Contemporary”) filed a complaint against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Western District of Texas. The complaint alleges infringement of United States Patent No. 6,028,643 (the “643 patent”), entitled “Multiple-Screen Video Adapter with Television Tuner”; United States Patent No. 6,429,903 (the “903 patent”), entitled “Video Adapter for Supporting at Least One Television Monitor”; United States Patent No. 6,492,997 (the “997 patent”), entitled “Method and System for Providing Selectable Programming in a Multi-Screen Mode”; United States Patent No. 7,500,202 (the “202 patent”), entitled “Remote Control for Navigating Through Content in an Organized and Categorized Fashion”; and United States Patent No. 7,809,842 (the “842 patent”), entitled “Transferring Sessions Between Devices.” The 643 patent and the 903 patent are directed to video adapters for use with multiple displays. The 997 patent is directed to a system for presenting multiple video programs on a display device simultaneously. The 202 patent is directed to a remote control for interacting with a set-top box having programmable features and “operational controls” on at least three sides of the remote control. The 842 patent is directed to a system for managing online communication sessions between multiple devices. Contemporary is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein.

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(Unaudited)

In a First Amended Complaint filed on August 6, 2018, Contemporary added our wholly-owned subsidiary DISH Network L.L.C. as a defendant. In a Second Amended Complaint filed on October 9, 2018, Contemporary named only our ~~wholly- owned~~wholly-owned subsidiary DISH Network L.L.C. as a defendant and dropped certain indirect infringement allegations. On June 10, 2019, DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of the asserted claims of the 842 patent, the 903 patent, the 643 patent and the 997 patent. On December 13, 2019 and January 7, 2020, the United States Patent and Trademark Office agreed to institute proceedings on each of our petitions. Following Contemporary’s decision not to file Patent Owner Responses to DISH Network L.L.C.’s petitions on the 842 patent and the 903 patent, on April 24, 2020, the United States Patent and Trademark Office entered judgments granting those petitions and canceling the challenged claims of those patents.On November 25, 2020 and December 18, 2020, respectively, the United States Patent and Trademark Office issued final written decisions invalidating all challenged claims of, respectively, the 643 patent and the 997 patent. On February 12, 2021, Contemporary Display noticed an appeal to the United States Court of Appeals for the Federal Circuit challenging the final written decision as to the 997 patent, and on June 15, 2021, it filed its opening brief. On July 11, 2019, the Court entered an order staying the case pending resolution of the petitions. On January 31, 2020, pursuant to the parties’ joint motion, the Court dismissed all claims arising from the 202 patent, and extended its stay of the litigation pending non-appealable determinations on all of the petitions before the United States Patent and Trademark Office.

Customedia Technologies, L.L.C.

On February 10, 2016, Customedia Technologies, L.L.C. (“Customedia”) filed a complaint against DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Eastern District of Texas. The complaint alleges infringement of four patents: United States Patent No. 8,719,090 (the “090 patent”); United States Patent No. 9,053,494 (the “494 patent”); United States Patent No. 7,840,437 (the “437 patent”); and United States Patent No. 8,955,029 (the “029 patent”). Each patent is entitled “System for Data Management And On-Demand Rental And Purchase Of Digital Data Products.” Customedia alleges infringement in connection with our addressable advertising services, our DISH Anywhere feature, and our Pay-Per-View and video-on-demand offerings. Customedia is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein.

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In December 2016 and January 2017, DISH Network L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of the asserted claims of each of the asserted patents. On June 12, 2017, the United States Patent and Trademark Office agreed to institute proceedings on our petitions challenging the 090 patent and the 437 patent; on July 18, 2017, it agreed to institute proceedings on our petitions challenging the 029 patent; and on July 28, 2017, it agreed to institute proceedings on our petitions challenging the 494 patent. These instituted proceedings cover all asserted claims of each of the asserted patents. ~~The litigation in the District Court has been stayed since August 8, 2017 pending resolution of the proceedings at the United States Patent and Trademark Office.~~

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Pursuant to an agreement between the parties, on December 20, 2017, DISH Network L.L.C. dismissed its petitions challenging the 029 patent in the United States Patent and Trademark Office, and on January 9, 2018, the parties dismissed their claims, counterclaims and defenses as to that patent in the litigation. On March 5, 2018, the United States Patent and Trademark Office conducted a trial on the remaining petitions. On June 11, 2018, the United States Patent and Trademark Office issued final written decisions on DISH Network L.L.C.’s petitions challenging the 090 patent and it invalidated all of the asserted claims. On July 25, 2018, the United States Patent and Trademark Office issued final written decisions on DISH Network L.L.C.’s petitions challenging the 437 patent and the 494 patent and it invalidated all of the asserted claims. Customedia appealed its ~~losses before the United States Patent and Trademark Office.~~losses. The Court of Appeals for the Federal Circuit heard oral argument on November 6, 2019 on the appeal involving the 437 patent, and summarily affirmed the patent’s invalidity on November 8, 2019. On January 7, 2020, Customedia petitioned the Court of Appeals for rehearing or rehearing en banc, raising issues about the constitutionality of the appointment of the administrative patent judges that heard the petition before the Patent and Trademark Office, but the Court of Appeals denied rehearing on March 5, 2020. On July 31, 2020, Customedia filed a petition with the United States Supreme Court asking it to hear a further appeal, but its petition was denied on October 13, 2020. On November 6, 2020, it filed a petition for rehearing on the United States Supreme Court’s decision not to hear a further appeal, but on November 17, 2020, the Supreme Court rejected that petition.

The Court of Appeals heard oral argument on the appeal involving the 090 patent and the 494 patent on December 3, 2019, and affirmed those patents’ invalidity on March 6, 2020. On May 5, 2020, Customedia filed petitions in the Federal Circuit for rehearing and rehearing en banc, ~~seeking to reverse our appellate victories on the 090 and 494 patents,~~ but those petitions were denied on June 9, 2020. On November 6, 2020, Customedia served a petition to the United States Supreme Court asking it to hear a further appeal. On June 16, 2021, the Patent and Trademark Office issued a certificate cancelling the challenged claims of the 437 patent and, on July 9, 2021, it issued certificates cancelling the challenged claims of the 090 and 494 patents. The litigation in the District Court has been stayed since August 8, 2017 pending resolution of the proceedings at the United States Patent and Trademark Office.

Innovative Foundry Technologies LLC

On December 20, 2019, Innovative Foundry Technologies LLC filed a complaint against DISH Network (as well as Semiconductor Manufacturing International Corporation; Broadcom Incorporated; Broadcom Corporation; and Cypress Semiconductor Corporation) in the United States District Court for the Western District of Texas. The complaint alleges infringement of United States Patent No. 6,580,122 (the “122 patent”), entitled “Transistor Device Having an Enhanced Width Dimension and a Method of Making Same”; United States Patent No. 6,806,126 (the “126 patent”), entitled “Method of Manufacturing a Semiconductor Component”; United States Patent No. 6,933,620 (the “620 patent”), entitled “Semiconductor Component and Method of Manufacture”; and United States Patent No. 7,009,226 (the “226 patent”), entitled “In-Situ Nitride/Oxynitride Processing with Reduced Deposition Surface Pattern Sensitivity.” On April 9, 2020, Semiconductor Manufacturing International Corporation filed a petition with the United States Patent and Trademark Office challenging the validity of the asserted claims of the 226 patent, and on April 14, 2020, it filed petitions challenging the validity of the asserted claims of the 126 patent and 620 patent.

On December 30, 2020, the Court entered an order severing and staying the claims against DISH Network and certain other defendants not involved in the manufacturing of the accused chips. On April 22, 2021, the parties filed a stipulation of dismissal with prejudice of all claims against DISH Network. This matter is now concluded.

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DISH Network intends 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. Each of the plaintiffs is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein.

~~Mobile Networking Solutions~~Optic153

On ~~August 12, 2019, Mobile Networking Solutions,~~January 29, 2021, Optic153 LLC (“~~Mobile Networking Solutions”~~Optic 153”) filed a complaint against our wholly-owned subsidiary Sling Media L.L.C. for infringement of two patents: United States Patent No. 7,543,177 (the “177 patent”) and United States Patent No. 7,958,388 (the “388 patent”), each entitled “Methods and Systems for a Storage System.” Mobile Networking Solutions alleges infringement in connection with Sling Media L.L.C.’s use of a Hadoop Distributed File System for storage and processing of large data files. Pursuant to a stipulation of the parties, on December 16, 2019, the Court entered an order staying the case for six months so the parties may discuss settling the case. On May 12, 2020, pursuant to the parties’ joint request, the Court ordered dismissal of the case with prejudice. This matter is now concluded.

~~Multimedia Content Management LLC~~

~~On July 25, 2018, Multimedia Content Management LLC (“Multimedia”) filed a complaint against DISH Network~~ in the United States District Court for the Western District of ~~Texas. Multimedia alleges that~~Texas against DISH Network ~~infringes United States~~and our wholly-owned subsidiaries DISH Network L.L.C and Dish Network Service L.L.C. The complaint alleges infringement of U.S. Patent No. ~~8,799,468~~6,115,174 (the ~~“468~~“174 patent”), entitled ~~“System for Regulating Access to and Distributing Content in a Network,” and United States~~“Optical Signal Varying Devices”; U.S. Patent No. ~~9,465,925~~6,236,487 (the ~~“925~~“487 patent”), entitled ~~“System for Regulating Access~~“Optical Communication Control System”; U.S. Patent No. 6,344,922 (the “922 patent”), entitled “Optical Signal Varying Devices”; U.S. Patent No. 6,356,383 (the “383 patent”), entitled “Optical Transmission Systems Including Optical Amplifiers Apparatuses and Methods”; U.S. Patent No. 6,587,261 (the “261 patent”), entitled “Optical Transmission Systems Including Optical Amplifiers Apparatuses and Methods of Use Therein”; and U.S. Patent No. 6,771,413 (the “413 patent”), entitled “Optical Transmission Systems Including Optical Amplifiers, Apparatuses and Methods.” In general, the patents relate to and Distributing Content in a Network,” in connection with impulse pay per view content offerings on certain set-top boxes. Multimedia is an entity that seeks to license a patent portfolio without itself practicing anyvarious aspects of the provisioning of fiber optics communications. On April 26, 2021, Optic153 filed a request for dismissal of its claims ~~recited therein. On March 7, 2019, pursuant to stipulation, the Court substituted our wholly-owned subsidiary~~ against DISH Network, DISH Network L.L.C. ~~as the defendant in our place. On April 23, 2019, DISH~~and Dish Network Service L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of the asserted claims of each of the asserted patents. On November 13, 2019, the United States Patent and Trademark Office denied institution on both of the petitions. On December 13, 2019, DISH Network L.L.C. filed a motion for reconsideration, which the United States Patent and Trademark Office denied on March 10, 2020. On March 26, 2020, pursuant to the parties’ joint request, the Court dismissed the matter with prejudice. This matter is now concluded.

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Realtime Data LLC and Realtime Adaptive Streaming LLC

On June 6, 2017, Realtime Data LLC d/b/a IXO (“Realtime”) filed an amended complaint in the United States District Court for the Eastern District of Texas (the “Original Texas Action”) against DISH Network; our wholly-owned subsidiaries DISH Network L.L.C., DISH Technologies L.L.C. (then known as EchoStar Technologies L.L.C.), Sling TV L.L.C. and Sling Media L.L.C.; EchoStar, and EchoStar’s wholly-owned subsidiary Hughes Network Systems, L.L.C. (“HNS”); and Arris Group, Inc. Realtime’s initial complaint in the Original Texas Action, filed on February 14, 2017, had named only EchoStar and HNS as defendants. The amended complaint in the Original Texas Action alleges infringement of United States Patent No. 8,717,204 (the “204 patent”), entitled “Methods for encoding and decoding data”; United States Patent No. 9,054,728 (the “728 patent”), entitled “Data compression systems and methods”; United States Patent No. 7,358,867 (the “867 patent”), entitled “Content independent data compression method and system”; United States Patent No. 8,502,707 (the “707 patent”), entitled “Data compression systems and methods”; United States Patent No. 8,275,897 (the “897 patent”), entitled “System and methods for accelerated data storage and retrieval”; United States Patent No. 8,867,610 (the “610 patent”), entitled “System and methods for video and audio data distribution”; United States Patent No. 8,934,535 (the “535 patent”), entitled “Systems and methods for video and audio data storage and distribution”; and United States Patent No. 8,553,759 (the “759 patent”), entitled “Bandwidth sensitive data compression and decompression.”

Realtime alleges that DISH Network, Sling TV L.L.C., Sling Media L.L.C. and Arris Group, Inc. streaming video products and services compliant with various versions of the H.264 video compression standard infringe the 897 patent, the 610 patent and the 535 patent, and that the data compression system in Hughes’ products and services infringe the 204 patent, the 728 patent, the 867 patent, the 707 patent and the 759 patent.

On July 19, 2017, the Court severed Realtime’s claims against DISH Network, DISH Network L.L.C., Sling TV L.L.C., Sling Media L.L.C. and Arris Group, Inc. (alleging infringement of the 897 patent, the 610 patent and the 535 patent) from the Original Texas Action into a separate action in the United States District Court for the Eastern District of Texas (the “Second Texas Action”). On August 31, 2017, Realtime dismissed the claims against DISH Network, Sling TV L.L.C., Sling Media Inc., and Sling Media L.L.C. from the Second Texas Action and refiled these claims (alleging infringement of the 897 patent, the 610 patent and the 535 patent) against Sling TV L.L.C., Sling Media Inc., and Sling Media L.L.C. in a new action in the United States District Court for the District of Colorado (the “Colorado Action”). Also on August 31, 2017, Realtime dismissed DISH Technologies L.L.C. from the Original Texas Action, and on September 12, 2017, added it as a defendant in an amended complaint in the Second Texas Action. On November 6, 2017, Realtime filed a joint motion to dismiss the Second Texas Action without prejudice, which the Court entered on November 8, 2017.

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On October 10, 2017, Realtime Adaptive Streaming LLC (“Realtime Adaptive Streaming”) filed suit against our wholly-owned subsidiaries DISH Network L.L.C. and DISH Technologies L.L.C., as well as Arris Group, Inc., in a new action in the United States District Court for the Eastern District of Texas (the “Third Texas Action”), alleging infringement of the 610 patent and the 535 patent. Also on October 10, 2017, an amended complaint was filed in the Colorado Action, substituting Realtime Adaptive Streaming as the plaintiff instead of Realtime, and alleging infringement of only the 610 patent and the 535 patent, but not the 897 patent. On November 6, 2017, Realtime Adaptive Streaming filed a joint motion to dismiss the Third Texas Action without prejudice, which the court entered on November 8, 2017. Also on November 6, 2017, Realtime Adaptive Streaming filed a second amended complaint in the Colorado Action, adding our wholly-owned subsidiaries DISH Network L.L.C. and DISH Technologies L.L.C., as well as Arris Group, Inc., as defendants.

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As a result, neither DISH Network nor any of its subsidiaries is a defendant in the Original Texas Action; the Court has dismissed without prejudice the Second Texas Action and the Third Texas Action; and our wholly-owned subsidiaries DISH Network L.L.C., DISH Technologies L.L.C., Sling TV L.L.C. and Sling Media L.L.C. as well as Arris Group, Inc., are defendants in the Colorado Action, which now has Realtime Adaptive Streaming as the named plaintiff.

On July 3, 2018, Sling TV L.L.C., Sling Media L.L.C., DISH Network L.L.C., and DISH Technologies L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of each of the asserted patents. On January 31, 2019, the United States Patent and Trademark Office agreed to institute proceedings on our petitions challenging all asserted claims of each of the asserted patents, and it held trial on the petitions on December 5, 2019. On January 17, 2020, the United States Patent and Trademark Office terminated the petitions as time-barred, but issued a final written decision invalidating the 535 patent to third parties that had timely joined in our petition (and, on January 10, 2020, issued a final written decision invalidating the 535 patent in connection with a third party’s independent petition). On March 16, 2020, Sling TV L.L.C., Sling Media L.L.C., DISH Network L.L.C., and DISH Technologies L.L.C. filed a notice of appeal from the terminated petitions to the United States Court of Appeals for the Federal Circuit. On June 29, 2020, the United States Patent and Trademark Office filed a notice of intervention in the appeal. ~~The~~On March 16, 2021, the Court of Appeals dismissed the appeal ~~has been fully briefed since September 9, 2020. The Colorado Action~~for lack of jurisdiction. On April 29, 2021, Sling TV L.L.C., Sling Media L.L.C., DISH Network L.L.C., and DISH Technologies L.L.C. filed a petition for rehearing, which was denied on June 28, 2021.On January 12, 2021, Realtime Adaptive Streaming filed a notice of dismissal of its claims on the 535 patent.

On July 30, 2021, the District Court granted summary judgment in favor of DISH Network L.L.C., DISH Technologies L.L.C., Sling TV L.L.C. and Sling Media L.L.C., holding that the ~~district court has been stayed since February 26, 2019, pending resolution of~~remaining asserted patent, the ~~petitions.~~ 610 patent, is invalid because it claims patent-ineligible abstract subject matter.On August 7, 2020, the United States Patent and Trademark Office granted a request for ex parte reexamination of the validity of the 610 patent.

~~Realtime Adaptive Streaming 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. Realtime Adaptive Streaming is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

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Sound View Innovations, LLC

On December 30, 2019, Sound View Innovations, LLC filed one complaint against our wholly-owned subsidiaries DISH Network L.L.C. and DISH Technologies L.L.C. and a second complaint against our wholly-owned subsidiary Sling TV L.L.C. in the United States District Court for the District of Colorado. The complaint against DISH Network L.L.C. and DISH Technologies L.L.C. alleges infringement of United States Patent No 6,502,133 (the “133 patent”), entitled ~~Real-Time~~“Real-Time Event Processing System with Analysis Engine Using Recovery Information” and both complaints allege infringement of United States Patent No. 6,708,213 (the “213 patent), entitled “Method for Streaming Multimedia Information Over Public Networks”; United States Patent No. 6,757,796 (the “796 patent”), entitled “Method and System for Caching Streaming Live Broadcasts transmitted Over a Network”; and United States Patent No. 6,725,456 (the “456 patent”), entitled “Methods and Apparatus for Ensuring Quality of Service in an Operating System.” All but the 133 patent is also asserted in the complaint against Sling TV L.L.C.

On May 21, 2020, June 3, 2020, June 5, 2020 and July 10, 2020, DISH Network L.L.C., DISH Technologies L.L.C. and Sling TV L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of, respectively, the 213 patent, the 133 patent, the 456 patent and the 796 patent.On November 25, 2020, the United States Patent and Trademark Office declined to review the validity of the 213 patent, and on December 18, 2020, DISH Network L.L.C., DISH Technologies L.L.C. and Sling TV L.L.C. filed a request for rehearing of that decision. On January 19, 2021, the United States Patent and Trademark Office agreed to institute proceedings on the 456 patent but declined to review the 133 patent. On February 24, 2021, the United States Patent and Trademark Office agreed to institute proceedings on the 796 patent. On January 26, 2021, the District Court agreed to stay the case pending the outcome of the petitions to the United States Patent and Trademark Office.

We intend to vigorously defend these cases. 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. ~~Each of the plaintiffs~~The plaintiff is an entity that seeks to license a patent portfolio without itself practicing any of the claims recited therein.

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~~Telemarketing Litigation~~

~~On March~~ 25, 2009, our wholly-owned subsidiary DISH Network L.L.C. was sued in a civil action by the United States Attorney General and several states in the United States District Court for the Central District of Illinois (the “FTC Action”), alleging violations of the Telephone Consumer Protection Act (“TCPA”) and the Telemarketing Sales Rule (“TSR”), as well as analogous state statutes and state consumer protection laws. The plaintiffs alleged that we, directly and through certain independent third-party retailers and their affiliates, committed certain telemarketing violations. On December 23, 2013, the plaintiffs filed a motion for summary judgment, which indicated for the first time that the state plaintiffs were seeking civil penalties and damages of approximately ~~$270~~ million and that the federal plaintiff was seeking an unspecified amount of civil penalties (which could substantially exceed the civil penalties and damages being sought by the state plaintiffs). The plaintiffs were also seeking injunctive relief that if granted would, among other things, enjoin DISH Network L.L.C., whether acting directly or indirectly through authorized telemarketers or independent third-party retailers, from placing any outbound telemarketing calls to market or promote its goods or services for ~~five years~~, and enjoin DISH Network L.L.C. from accepting activations or sales from certain existing independent third-party retailers and from certain new independent third-party retailers, except under certain circumstances. We also filed a motion for summary judgment, seeking dismissal of all claims. On December 12, 2014, the Court issued its opinion with respect to the parties’ summary judgment motions. The Court found that DISH Network L.L.C. was entitled to partial summary judgment with respect to 1 ~~claim in the action. In addition, the Court found that the plaintiffs were entitled to partial summary judgment with respect to~~ 10 claims in the action, which included, among other things, findings by the Court establishing DISH Network L.L.C.’s liability for a substantial amount of the alleged outbound telemarketing calls by DISH Network L.L.C. and certain of its independent third-party retailers that were the subject of the plaintiffs’ motion. The Court did not issue any injunctive relief and did not make any determination on civil penalties or damages, ruling instead that the scope of any injunctive relief and the amount of any civil penalties or damages were questions for trial.

~~The first phase of the bench trial took place January 19, 2016 through February 11, 2016, and the second phase took place October 25, 2016 through November 2, 2016.~~

On June 5, 2017, the Court issued Findings of Fact and Conclusions of Law and entered Judgment ordering DISH Network L.L.C. to pay an aggregate amount of $280 million to the federal and state plaintiffs. The Court also issued a Permanent Injunction (the “Injunction”) against DISH Network L.L.C. that imposes certain ongoing compliance requirements on DISH Network L.L.C., which include, among other things: (i) the retention of a telemarketing-compliance expert to prepare a plan to ensure that DISH Network L.L.C. and certain independent third-party retailers will continue to comply with telemarketing laws and the Injunction; (ii) certain telemarketing records retention and production requirements; and (iii) certain compliance reporting and monitoring requirements. In addition to the compliance requirements under the Injunction, within ninety (90) days after the effective date of the Injunction, DISH Network L.L.C. is required to demonstrate that it and certain independent third-party retailers are in compliance with the Safe Harbor Provisions of the TSR and TCPA and have made no prerecorded telemarketing calls during the ~~five~~ (5) years prior to the effective date of the Injunction (collectively, the “Demonstration Requirements”). If DISH Network L.L.C. fails to prove that it meets the Demonstration Requirements, it will be barred from conducting any outbound telemarketing for ~~two~~ (2) years. If DISH Network L.L.C. fails to prove that a particular independent third-party retailer meets the Demonstration Requirements, DISH Network L.L.C. will be barred from accepting orders from that ~~independent third-party retailer for~~ ~~two~~ ~~(2) years. On July 3, 2017, DISH Network L.L.C. filed~~ 2 motions with the Court: (1) to alter or amend the Judgment or in the alternative to amend the Findings of Fact and Conclusions of Law; and (2) to clarify, alter and amend the Injunction. On August 10, 2017, the Court: (a) denied the motion to alter or amend the Judgment or in the alternative to amend the Findings of Fact and Conclusions of Law; and (b) allowed, in part, the motion to clarify, alter and amend the Injunction, and entered an Amended Permanent Injunction (the “Amended Injunction”).

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Among other things, the Amended Injunction provided DISH Network L.L.C. a thirty (30) day extension to meet the Demonstration Requirements, expanded the exclusion of certain independent third-party retailers from the Demonstration Requirements, and clarified that, with regard to independent third-party retailers, the Amended Injunction only applied to their telemarketing of DISH TV goods and services. On October 10, 2017, DISH Network L.L.C. filed a notice of appeal to the United States Court of Appeals for the Seventh Circuit, which heard oral argument on September 17, 2018. On March 26, 2020, the United States Court of Appeals for the Seventh Circuit issued an opinion largely affirming DISH Network L.L.C.’s liability, but vacating and remanding the damages award. On June 25, 2020, the United States Court of Appeals for the Seventh Circuit denied DISH Network L.L.C.’s petition for rehearing and/or rehearing en banc. Pursuant to the parties’ stipulation, on July 13, 2020, the Court entered a schedule for additional briefing on the remanded damages issue~~, which schedule has been extended at the parties’ requests to accommodate settlement discussions.~~

~~Our total accrual at September 30, 2020 and December 31, 2019 related to the FTC Action was $280~~ million, which was recorded in prior periods and is included in “Other accrued expenses” on our Condensed Consolidated Balance Sheets. Any eventual payments made with respect to the FTC Action may not be deductible for tax purposes, which had a negative impact on our effective tax rate for the year ended December 31, 2017. The tax deductibility of any eventual payments made with respect to the FTC Action may change, based upon, among other things, further developments in the FTC Action, including final adjudication of the FTC Action.

We may also from time to time be subject to private civil litigation alleging telemarketing violations. For example, a portion of the alleged telemarketing violations by an independent third-party retailer at issue in the FTC Action are also the subject of a certified class action filed against DISH Network L.L.C. in the United States District Court for the Middle District of North Carolina (the “Krakauer Action”). Following a five-day trial, on January 19, 2017, a jury in that case found that the independent third-party retailer was acting as DISH Network L.L.C.’s agent when it made the ~~51,119 calls at issue in that case, and that class members are eligible to recover $400~~ ~~in damages for each call made in violation of the TCPA. On May 22, 2017, the Court ruled that the violations were willful and knowing, and trebled the damages award to~~ ~~$1,200~~ ~~for each call made in violation of TCPA. On April 5, 2018, the Court entered a~~ ~~$61~~ million judgment in favor of the class. DISH Network L.L.C. appealed and on May 30, 2019, the United States Court of Appeals for the Fourth Circuit affirmed. On October 15, 2019, DISH Network L.L.C. filed a petition for writ of certiorari, requesting that the United States Supreme Court agree to hear a further appeal, but it denied the petition on December 16, 2019. On January 21, 2020, DISH Network L.L.C. filed a second notice of appeal relating to the district court’s orders on the claims administration process to identify, and disburse funds to, individual class members. ~~On June~~ ~~29, 2020, Krakauer filed a motion to dismiss the appeal for lack of jurisdiction. The district court currently is deciding how to handle the~~ ~~$10.76 million in disbursable judgment funds for which no corresponding class member was identified, but has indicated that it will not refund those monies to DISH Network L.L.C.~~ ~~During the third quarter 2019, the judgment was paid to the court.~~

~~We intend to vigorously defend these cases. We cannot predict with any degree of certainty the outcome of these suits.~~

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Telemarketing Shareholder Derivative Litigation

On October 19, 2017, Plumbers Local Union No. 519 Pension Trust Fund (“Plumbers Local 519”), a purported shareholder of DISH Network, filed a putative shareholder derivative action in the District Court for Clark County, Nevada alleging, among other things, breach of fiduciary duty claims against the following current and former members of DISH Network’s Board of Directors: Charles W. Ergen; James DeFranco; Cantey M. Ergen; Steven R. Goodbarn; David K. Moskowitz; Tom A. Ortolf; Carl E. Vogel; George R. Brokaw; and Gary S. Howard (collectively, the “Director Defendants”). In its complaint, Plumbers Local 519 contends that, by virtue of their alleged failure to appropriately ensure DISH Network’s compliance with telemarketing laws, the Director Defendants exposed DISH Network to liability for telemarketing violations, including those in the Krakauer Action. It also contends that the Director Defendants caused DISH Network to pay improper compensation and benefits to themselves and others who allegedly breached their fiduciary duties to DISH Network. Plumbers Local 519 alleges causes of action for breach of fiduciary duties of loyalty and good faith, gross mismanagement, abuse of control, corporate waste and unjust enrichment. Plumbers Local 519 is seeking an unspecified amount of damages.

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On November 13, 2017, City of Sterling Heights Police and Fire Retirement System (“Sterling Heights”), a purported shareholder of DISH Network, filed a putative shareholder derivative action in the District Court for Clark County, Nevada. Sterling Heights makes substantially the same allegations as Plumbers Union 519, and alleges causes of action against the Director Defendants for breach of fiduciary duty, waste of corporate assets and unjust enrichment. Sterling Heights is seeking an unspecified amount of damages. Pursuant to a stipulation of the parties, on January 4, 2018, the District Court agreed to consolidate the Sterling Heights action with the Plumbers Local 519 action, and on January 12, 2018, the derivative plaintiffs filed an amended consolidated complaint that largely duplicates the original Plumbers Local 519 complaint. DISH Network’s Board of Directors has established a Special Litigation Committee to review the factual allegations and legal claims in this action. On May 15, 2018, the District Court granted the Special Litigation Committee’s motion to stay the case pending its investigation. The Special Litigation Committee’s report was filed on November 27, 2018, and recommended that the Company not pursue the claims asserted by the derivative plaintiffs. On December 20, 2018, the Special Litigation Committee filed a motion seeking deferral to its determination that the claims should be dismissed. Following a two-day evidentiary hearing on July 6-7, 2020, on July 17, 2020, the District Court entered an order granting the Special Litigation Committee’s motion. On August 25, 2020, the derivative plaintiffs filed a notice of appeal to the Nevada Supreme ~~Court.~~Court and that appeal has been fully briefed since June 25, 2021.

DISH Network cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential liability or damages.

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TQ Delta, LLC

On July 17, 2015, TQ Delta, LLC (“TQ Delta”) filed a complaint against us, DISH Network and our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the District of Delaware. The Complaint alleges infringement of United States Patent No. 6,961,369 (the “369 patent”), which is entitled “System and Method for Scrambling the Phase of the Carriers in a Multicarrier Communications System”; United States Patent No. 8,718,158 (the “158 patent”), which is entitled “System and Method for Scrambling the Phase of the Carriers in a Multicarrier Communications System”; United States Patent No. 9,014,243 (the “243 patent”), which is entitled “System and Method for Scrambling Using a Bit Scrambler and a Phase Scrambler”; United States Patent No. 7,835,430 (the “430 patent”), which is entitled “Multicarrier Modulation Messaging for Frequency Domain Received Idle Channel Noise Information”; United States Patent No. 8,238,412 (the “412 patent”), which is entitled “Multicarrier Modulation Messaging for Power Level per Subchannel Information”; United States Patent No. 8,432,956 (the “956 patent”), which is entitled “Multicarrier Modulation Messaging for Power Level per Subchannel Information”; and United States Patent No. 8,611,404 (the “404 patent”), which is entitled “Multicarrier Transmission System with Low Power Sleep Mode and Rapid-On Capability.”

On September 9, 2015, TQ Delta filed a first amended complaint that added allegations of infringement of United States Patent No. 9,094,268 (the “268 patent”), which is entitled “Multicarrier Transmission System With Low Power Sleep Mode and Rapid-On Capability.” On May 16, 2016, TQ Delta filed a second amended complaint that added EchoStar Corporation and its then wholly-owned subsidiary EchoStar Technologies L.L.C. as defendants. TQ Delta alleges that our satellite TV service, Internet service, set-top boxes, gateways, routers, modems, adapters and networks that operate in accordance with one or more Multimedia over Coax Alliance Standards infringe the asserted patents. TQ Delta has filed actions in the same court alleging infringement of the same patents against Comcast Corp., Cox Communications, Inc., DirecTV, Time Warner Cable Inc. and Verizon Communications, Inc. TQ Delta is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

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On July 14, 2016, TQ Delta stipulated to dismiss with prejudice all claims related to the 369 patent and the 956 patent. On July 20, 2016, we filed petitions with the United States Patent and Trademark Office challenging the validity of all of the patent claims of the 404 patent and the 268 patent that have been asserted against us. Third parties have filed petitions with the United States Patent and Trademark Office challenging the validity of all of the patent claims that have been asserted against us in the action. On November 4, 2016, the United States Patent and Trademark Office agreed to institute proceedings on the third-party petitions related to the 158 patent, the 243 patent, the 412 patent and the 430 patent.

On December 20, 2016, pursuant to a stipulation of the parties, the Court stayed the case until the resolution of all petitions to the United States Patent and Trademark Office challenging the validity of all of the patent claims at issue. On January 19, 2017, the United States Patent and Trademark Office granted our motions to join the instituted petitions on the 430 and 158 patents.

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On February 9, 2017, the United States Patent and Trademark Office agreed to institute proceedings on our petition related to the 404 patent, and on February 13, 2017, the United States Patent and Trademark Office agreed to institute proceedings on our petition related to the 268 patent. On February 27, 2017, the United States Patent and Trademark Office granted our motions to join the instituted petitions on the 243 and 412 patents. On October 26, 2017, the United States Patent and Trademark Office issued final written decisions on the petitions challenging the 158 patent, the 243 patent, the 412 patent and the 430 patent, and it invalidated all of the asserted claims of those patents. On February 7, 2018, the United States Patent and Trademark Office issued final written decisions on the petitions challenging the 404 patent, and it invalidated all of the asserted claims of that patent on the basis of our petition. On February 10, 2018, the United States Patent and Trademark Office issued a final written decision on our petition challenging the 268 patent, and it invalidated all of the asserted claims.

On March 12, 2018, the United States Patent and Trademark Office issued a final written decision on a third-party petition challenging the 268 patent, and it invalidated all of the asserted claims. All asserted claims have now been invalidated by the United States Patent and Trademark Office. TQ Delta has filed notices of appeal from the final written decisions adverse to it. On May 9, 2019, the United States Court of Appeals for the Federal Circuit affirmed the invalidity of the 430 patent and the 412 patent. On July 10, 2019, the United States Court of Appeals for the Federal Circuit affirmed the invalidity of the asserted claims of the 404 patent. On July 15, 2019, the United States Court of Appeals for the Federal Circuit affirmed the invalidity of the asserted claims of the 268 patent. On November 22, 2019, the United States Court of Appeals for the Federal Circuit reversed the invalidity finding on the 243 patent and the 158 patent, and then, on March 29, 2020, denied a petition for panel rehearing as to those findings. On April 13, 2021, the Court lifted the stay. On April 23 and April 26, 2021, the United States Patent and Trademark Office issued orders granting requests for ex parte reexamination of, respectively, the 158 patent and the 243 patent.

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Turner Network Sales

On October 6, 2017, Turner Network Sales, Inc. (“Turner”) filed a complaint against our wholly-owned subsidiary DISH Network L.L.C. in the United States District Court for the Southern District of New York. The operative First Amended Complaint alleges that DISH Network L.L.C. improperly calculated and withheld licensing fees owing to Turner in connection with its carriage of CNN and other networks. On December 14, 2017, DISH Network L.L.C. filed its operative first amended counterclaims against Turner. In the counterclaims, DISH Network L.L.C. seeks a declaratory judgment that it properly calculated the licensing fees owed to Turner for carriage of CNN, and also alleges claims for unrelated breaches of the parties’ affiliation agreement. ~~In its October 1, 2018 damage expert’s report, Turner claimed damages of~~ ~~$159 million, plus $24~~ ~~million in interest.~~ On September 27, 2019, the Court granted, in part, Turner’s motion for summary judgment, holding, in part, that Turner was entitled to recover approximately $20 million in license fee payments that DISH Network L.L.C. had withheld after it discovered previous over-payments. On February 12, 2020, the parties filed a stipulation to dismiss certain of their respective claims. Trial on the remaining claims in this matter has been re-set for ~~March 1, 2021, where DISH Network L.L.C.’s incremental exposure (per~~October 3, 2021. Turner’s damages ~~expert’s amended report)~~expert contends that Turner is entitled to approximately $206 ~~million.~~

~~We intend~~ million in damages. On July 13, 2021, pursuant to ~~vigorously defend this case. We cannot predict with any degree of certainty the outcome~~a joint request of the ~~suit or determine~~parties, the ~~extent of any potential liability or damages.~~Court dismissed the case with prejudice. This matter is now concluded.

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Uniloc

On January 31, 2019, Uniloc 2017 LLC (“Uniloc”) filed a complaint against our wholly-owned subsidiary Sling TV L.L.C. in the United States District Court for the District of Colorado. The Complaint alleges infringement of United States Patent No. 6,519,005 (the “005 patent”), which is entitled “Method of Concurrent Multiple-Mode Motion Estimation for Digital Video”; United States Patent No. 6,895,118 (the “118 patent”), which is entitled “Method of Coding Digital Image Based on Error Concealment”; United States Patent No. 9,721,273 (the “273 patent”), which is entitled “System and Method for Aggregating and Providing Audio and Visual Presentations Via a Computer Network”); and United States Patent No. 8,407,609 (the “609 patent”), which is entitled “System and Method for Providing and Tracking the Provision of Audio and Visual Presentations Via a Computer Network.” Uniloc is an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.

On June 25, 2019, Sling TV L.L.C. filed a petition with the United States Patent and Trademark Office challenging the validity of all of the asserted claims of the 005 patent. On July 19, 2019 and July 22, 2019, respectively, Sling TV L.L.C. filed petitions with the United States Patent and Trademark Office challenging the validity of all asserted claims of the 273 patent and the 609 patent. On August 12, 2019, Sling TV L.L.C. filed a petition with the United States Patent and Trademark Office challenging the validity of all of the asserted claims of the 118 patent. On October 18, 2019, pursuant to a stipulation of the parties, the Court entered a stay of the trial proceedings. On January 9, 2020, the United States Patent and Trademark Office agreed to institute proceedings on the petition challenging the 005 patent. On January 15, 2020, the United States Patent and Trademark Office agreed to institute proceedings on the petition challenging the 273 patent. On February 4, 2020, the United States Patent and Trademark Office agreed to institute proceedings on the petition challenging the 609 patent. On February 25, 2020, the United States Patent and Trademark Office declined to institute proceedings on the petition challenging the 118 patent. On December 28, 2020, the United States Patent and Trademark Office issued a final written decision upholding the validity of the challenged claims of the 273 patent, and Sling TV L.L.C. has filed a notice of appeal from that decision. On January 5, 2021, the United States Patent and Trademark Office issued a final written decision invalidating all challenged claims of the 005 patent. On January 19, 2021, the United States Patent and Trademark Office issued a final written decision invalidating all challenged claims of the 609 patent (and a second final written decision invalidating all challenged claims of the 609 patent based on a third party’s petition).

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Vermont National Telephone Company

On September 23, 2016, the United States District Court for the District of Columbia unsealed a qui tam complaint that was filed by Vermont National Telephone Company (“Vermont National”) against DISH Network; DISH Network’s wholly-owned subsidiaries, American AWS-3 Wireless I L.L.C., American II, American III, and DISH Wireless Holding L.L.C.; Charles W. Ergen (our Chairman) and Cantey M. Ergen (a member of DISH Network’s board of directors); Northstar Wireless; Northstar Spectrum; Northstar Manager, LLC; SNR Wireless; SNR HoldCo; SNR Wireless Management, LLC; and certain other parties. The complaint was unsealed after the United States Department of Justice notified the Court that it had declined to intervene in the action. The complaint is a civil action that was filed under seal on May 13, 2015 by Vermont National, which participated in the AWS-3 Auction through its wholly-owned subsidiary, VTel Wireless. The complaint alleges violations of the federal civil False Claims Act (the “FCA”) based on, among other things, allegations that Northstar Wireless and SNR Wireless falsely claimed bidding credits of 25% in the AWS-3 Auction when they were allegedly under the de facto control of DISH Network and, therefore, were not entitled to the bidding credits as designated entities under applicable FCC rules.

Vermont National seeks to recover on behalf of the United States government approximately ~~$10~~$10 billion, which reflects the $3.3 billion in bidding credits that Northstar Wireless and SNR Wireless claimed in the AWS-3 Auction, trebled under the FCA. Vermont National also seeks civil penalties of not less than $5,500 and not more than $11,000 for each violation of the FCA.

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On March 2, 2017, the United States District Court for the District of Columbia entered a stay of the litigation until such time as the United States Court of Appeals for the District of Columbia (the “D.C. Circuit”) issued its opinion in SNR Wireless LicenseCo, LLC, et al. v. F.C.C. The D.C. Circuit issued its opinion on August 29, 2017 and remanded the matter to the FCC for further proceedings. See Note 11 “Commitments – DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses” in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020~~2021 for further information.

Thereafter, the Court maintained the stay until October 26, 2018. On February 11, 2019, the Court granted Vermont National’s unopposed motion for leave to file an amended complaint. On March 28, 2019, the defendants filed a motion to dismiss Vermont National’s amended complaint, ~~which has been fully briefed since June 3, 2019.~~and on March 23, 2021, the Court granted the motion to dismiss. On April 21, 2021, Vermont National filed a notice of appeal.

DISH Network intends to vigorously defend this case. DISH Network cannot predict with any degree of certainty the outcome of this proceeding or determine the extent of any potential liability or damages.

Waste Disposal Inquiry

The California Attorney General and the Alameda County (California) District Attorney are investigating whether certain of our waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. We expect that these entities will seek injunctive and monetary relief. The investigation appears to be part of a broader effort to investigate waste handling and disposal processes of a number of industries. While we are unable to predict the outcome of this investigation, we do not believe that the outcome will have a material effect on our results of operations, financial condition or cash flows.

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Other

In addition to the above actions, we are subject to various other legal proceedings and claims that 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 condition, 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.

10.

Financial Information for Subsidiary Guarantors

Our senior notes are fully and unconditionally ~~and~~guaranteed, jointly and severally on a senior unsecured basis by certain of our wholly-owned subsidiaries (the “Guarantors”).

Our 7 3/8% Senior Notes due 2028 and 5 1/8% Senior Notes due 2029 are guaranteed by our current principal operating subsidiaries. Our 5 7/8% Senior Notes due 2022, 5% Senior Notes due 2023, 5 7/8% Senior Notes due 2024 and 7 3/4% Senior Notes due 2026 are guaranteed by our current principal operating subsidiaries other than Sling TV Holding L.L.C. (“Sling TV Holding”). However, Sling TV Holding, including all of its assets and operations, is a wholly-owned subsidiary of DISH Network L.L.C., which is a Guarantor on all of our outstanding senior notes. Certain of our wholly-owned subsidiaries ~~other~~are designated as “Unrestricted Subsidiaries” and do not guarantee any of our senior notes. These Unrestricted Subsidiaries are non-operating entities that hold minimal or 0 assets.

We and our subsidiaries participate with our parent company, DISH Network, in a centralized system for the management of our cash and marketable investment securities. Please see Note 3 for further information.

The assets, liabilities and results of operations of the combined issuer and guarantors (excluding Unrestricted Subsidiaries) of the guaranteed securities are not materially different than ~~minor subsidiaries, and~~corresponding amounts presented in the ~~stand-alone entity DISH DBS has no independent assets or operations.~~condensed consolidated financial statements of the parent company issuer. Therefore, ~~supplemental~~summarized financial information ~~on a condensed consolidating basis~~ of the issuer and the guarantor subsidiaries is not required.

The below descriptions apply to all of our existing senior notes. There are no material differences between our senior notes guaranteed by all of our current principal operating subsidiaries and our senior notes guaranteed by our current principal operating subsidiaries other than Sling TV Holding, a wholly-owned subsidiary of DISH Network L.L.C., which is a Guarantor on all of our outstanding senior notes.

The guarantee of a Guarantor will be deemed automatically discharged and released in accordance with the terms of the applicable indenture (i) in connection with any direct or indirect sale, conveyance or other disposition of all of the capital stock or all or substantially all of the assets of that Guarantor (including by way of merger or consolidation), if such sale or disposition is made in compliance with the applicable provisions of the indenture; (ii) if such Guarantor is dissolved or liquidated in accordance with the provisions of the indenture; (iii) if we designate any such Guarantor as an “Unrestricted Subsidiary” in compliance with the terms of the indenture; or (iv) with respect to a Guarantor which constitutes a Non-Core Asset (as such term is defined in the applicable indenture), upon the sale or other disposition of certain equity interests of such Guarantor, if such sale or disposition is made in compliance with the applicable provisions of the indenture. There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the ~~guarantor subsidiaries,~~Guarantors, except those imposed by applicable law.

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The rights of holders of the senior notes against the Guarantors may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law. Under certain circumstances (including a finding that a Guarantor was insolvent at the time its guarantee of the senior notes was issued), a court could hold that the obligations of a Guarantor under a guarantee may be voided or are subordinate to other obligations of the Guarantor. Each guarantee contains a provision intended to limit the Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent conveyance or transfer under U.S. federal or state law.

11.

Disaggregation of Revenue

Geographic Information. Revenue is attributed to geographic regions based upon the location where the goods and services are provided. All service revenue was derived from the United States. Substantially all of our long-lived assets reside in the United States.

The following table summarizes revenue by geographic region:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
Revenue:	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
United States	$	3,139,811	$	3,112,046	$	9,442,107	$	9,394,983	$	3,203,181	$	3,144,992	$	6,358,798	$	6,302,296
Canada and Mexico		11,218		10,236		25,235		31,898		8,307		3,539		15,609		14,017
Total revenue	$	3,151,029	$	3,122,282	$	9,467,342	$	9,426,881	$	3,211,488	$	3,148,531	$	6,374,407	$	6,316,313

The revenue from external customers disaggregated by major revenue source was as follows:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
Category:	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Pay-TV video and related revenue	$	3,109,479	$	3,070,913	$	9,357,713	$	9,285,915
Pay-TV subscriber and related revenue									$	3,176,710	$	3,117,334	$	6,314,097	$	6,248,234
Equipment sales and other revenue		41,550		51,369		109,629		140,966		34,778		31,197		60,310		68,079
Total	$	3,151,029	$	3,122,282	$	9,467,342	$	9,426,881	$	3,211,488	$	3,148,531	$	6,374,407	$	6,316,313

12.

Contract Balances

Our valuation and qualifying accounts as of ~~September~~June 30, ~~2020~~2021 were as follows:


Allowance for credit losses	Balance at Beginning of Period		Current Period Provision for Expected Credit Losses		Write-offs Charged Against Allowance		Balance at End of Period		Balance at Beginning of Period		Current Period Provision for Expected Credit Losses		Write-offs Charged Against Allowance		Balance at End of Period

	(In thousands)								(In thousands)
For the nine months ended September 30, 2020	$	19,280	$	56,398	$	(41,313)	$	34,365
For the six months ended June 30, 2021									$	43,233	$	19,014	$	(27,692)	$	34,555

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~~Deferred revenue related to contracts with~~Contract liabilities arise when we bill our customers isand receive consideration in advance of providing the service.Contract liabilities are recognized as revenue when the service has been provided to the customer. Contract liabilities are recorded in “Deferred revenue and other” and “Long-term deferred revenue and other long-term liabilities” on our Condensed Consolidated Balance Sheets. ~~Changes in deferred revenue related to contracts with our customers were as follows:~~


	Contract		As of
	Liabilities		June 30,		December 31,
	(In thousands)		2021		2020
Balance as of December 31, 2019	$	609,054
Recognition of unearned revenue		(4,369,230)
Deferral of revenue		4,365,480
Balance as of September 30, 2020	$	605,304

			(In thousands)
Contract liabilities			$	564,129	$	593,797

Our beginning of period contract liability recorded as customer contract revenue during 2021 was $553 million.

We apply a practical expedient and do not disclose the value of the remaining performance obligations for contracts that are less than one year in duration, which represent a substantial majority of our revenue. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of our future revenue.

13.

Related Party Transactions

~~Master Transaction Agreement~~Spin-off from EchoStar

~~On May 19, 2019,~~Following the Spin-off, DISH Network and EchoStar have operated 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, and by certain entities established by Mr. Ergen for the benefit of his family.

Related Party Transactions with EchoStar

In connection with and following 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. Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses. Pursuant to the Master Transaction Agreement, ~~pursuant to which, on September 10, 2019,~~among other things, EchoStar transferred to DISH Network certain assets and liabilities of its EchoStar Satellite Services segment. ~~As a result of~~In connection with the Share Exchange and the Master Transaction Agreement, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. In addition, certain agreements that we had with EchoStar have ~~been transferred to DISH Network.~~terminated, and we entered into certain new agreements with EchoStar. 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 ~~DISH Network~~EchoStar that may have an impact on our financial condition and results of operations.

“Trade accounts receivable”

As of June 30, 2021 and December 31, 2020, trade accounts receivable from EchoStar was $1 million. These amounts are recorded in “Trade accounts receivable” on our Condensed Consolidated Balance Sheets.

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“Trade accounts payable”

As of June 30, 2021 and December 31, 2020, trade accounts payable to EchoStar was $3 million and $1 million, respectively. These amounts are recorded in “Trade accounts payable” on our Condensed Consolidated Balance Sheets.

“Equipment sales and other revenue”

During each of the three months ended June 30, 2021 and 2020, we received $1 million for services provided to EchoStar. During each of the six months ended June 30, 2021 and 2020, we received $2 million for services provided to EchoStar. These amounts are recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these revenues are discussed below.

Real Estate Lease Agreements. DISH Network has entered into lease agreements pursuant to which DISH Network leases certain real estate to 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 areas, and EchoStar is responsible for its portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below:

●

El Paso Lease Agreement. During 2012, DISH Network began leasing certain space at 1285 Joe Battle Blvd., El Paso, Texas to EchoStar for an initial period ending on August 1, 2015, which also provides EchoStar with renewal options for 4 consecutive three-year terms. During the second quarter 2015, EchoStar exercised its first renewal option for a period ending on August 1, 2018 and in April 2018 EchoStar exercised its second renewal option for a period ending in July 2021 and in May 2021 EchoStar exercised its third renewal option for a period ending in July 2024.

●

90 Inverness Lease Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar leases certain space from us at 90 Inverness Circle East, Englewood, Colorado for a period ending in February 2022. EchoStar has the option to renew this lease for 4 three-year periods.

●

Cheyenne Lease Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar began leasing certain space from us at 530 EchoStar Drive, Cheyenne, Wyoming for a period ending in February 2019. In August 2018, EchoStar exercised its option to renew this lease for a one-year period ending in February 2020. EchoStar has the option to renew this lease for 12 one-year periods. In connection with the Master Transaction Agreement, DISH Network and EchoStar amended this lease to provide EchoStar with certain space for a period ending in September 2021, with the option for EchoStar to renew for a one-year period upon 180 days’ written notice prior to the end of the term. In March 2021, EchoStar exercised its option to renew this lease for a one-year period ending September 2022 and amended the lease to provide the option for EchoStar to renew this lease for up to three additional years.

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Collocation and Antenna Space Agreements. In connection with the completion of the Share Exchange, effective March ~~See~~1, 2017, we entered into certain agreements pursuant to which we provide certain collocation and antenna space to HNS through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Englewood, Colorado; and Spokane, Washington. During August 2017, we entered into certain other agreements pursuant to which we provide certain collocation and antenna space to HNS through August 2022 at the following locations: Monee, Illinois and Spokane, Washington. HNS has the option to renew each of these agreements for ~~Note 14 “~~~~Related Party Transactions –~~4 three-year periods. HNS may terminate certain of these agreements with 180 days’ prior written notice to us at the following locations: New Braunfels, Texas; Englewood, Colorado; and Spokane, Washington. In September 2019, in connection with the Master Transaction ~~Agreement”~~Agreement, we entered into an agreement pursuant to which we provide HNS with certain additional collocation space in ~~the Notes to DISH Network’s Quarterly Report on Form 10-Q~~Cheyenne, Wyoming, which expired in September 2020. In October 2019, HNS provided a termination notice for its New Braunfels, Texas agreement effective as of May 2020. The fees for the ~~quarter ended~~ services provided under these agreements depend, among other things, on the number of racks leased and/or antennas present at the location.~~September~~

~~30, 2020 for further information on~~

Also in connection with the Master Transaction Agreement, in September 2019, we entered into an agreement pursuant to which we provide HNS with antenna space and power in Cheyenne, Wyoming for a period of five years commencing no later than October 2020, with 4 three-year renewal terms, with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term.

“Cost of services”

During each of the three months ended June 30, 2021 and 2020, we incurred less than $1 million of costs for services provided to us by EchoStar. During each of the six months ended June 30, 2021 and 2020, we incurred $1 million of costs for services provided to us by EchoStar. The agreements pertaining to these expenses are discussed below.

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.

“Selling, general and administrative expenses”

During the three months ended June 30, 2021 and 2020, we incurred $5 million and $3 million, respectively, for selling, general and administrative expenses for services provided to us by EchoStar. During the six months ended June 30, 2021 and 2020, we incurred $8 million and $7 million, respectively, for selling, general and administrative expenses for services provided to us by EchoStar. These amounts are recorded in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

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 we are responsible for our portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below:

●

Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado was for a period ending on December 31, 2019. In December 2020, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2021.

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●

100 Inverness Lease Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, we lease certain space from EchoStar at 100 Inverness Terrace East, Englewood, Colorado for a period ending in December 2021. This agreement may be terminated by either party upon 180 days’ prior notice.

Professional Services Agreement. Prior to 2010, in connection with the Spin-off, DISH Network 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, DISH Network and EchoStar agreed that EchoStar shall continue to have the right, but not the obligation, to receive the following services from DISH Network, 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, DISH Network and EchoStar agreed that DISH Network shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for DISH Network (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement) and other support services. In connection with the completion of the Share Exchange on February 28, 2017, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Share Exchange Agreement. In addition, pursuant to the Master Transaction Agreement, DISH Network and EchoStar amended the Professional Services Agreement effective September 10, 2019 to, among other things, provide certain transition services to each other related to the Master Transaction Agreement and to remove certain services no longer necessary as a result of the Master Transaction Agreement. The Professional Services Agreement renewed on January 1, 2021 for an additional one-year period until January 1, 2022 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. Revenue for services provided by us to EchoStar under the Professional Services Agreement is recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Other Agreements - EchoStar

Tax Sharing Agreement. In connection with the Spin-off, DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) with EchoStar which governs their 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 DISH Network, and DISH Network will indemnify EchoStar for such taxes. However, DISH Network is 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 Internal Revenue Code of 1986, as amended (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 Internal Revenue Service (“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 DISH Network 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.

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Tax Matters Agreement. In connection with the completion of the Share Exchange, DISH Network and EchoStar entered into a Tax Matters Agreement, which governs certain rights, responsibilities and obligations with respect to taxes of the Transferred Businesses pursuant to the Share Exchange. Generally, EchoStar is responsible for all tax returns and tax liabilities for the Transferred Businesses for periods prior to the Share Exchange, and DISH Network are responsible for all tax returns and tax liabilities for the Transferred Businesses from and after the Share Exchange. Both DISH Network and EchoStar have made certain tax-related representations and are subject to various tax-related covenants after the consummation of the Share Exchange. Both DISH Network and EchoStar have agreed to indemnify each other if there is a breach of any such tax representation or violation of any such tax covenant and that breach or violation results in the Share Exchange not qualifying for tax free treatment for the other party. In addition, DISH Network has agreed to indemnify EchoStar if the Transferred Businesses are acquired, either directly or indirectly (e.g., via an acquisition of DISH Network), by one or more persons and such acquisition results in the Share Exchange not qualifying for tax free treatment. The Tax Matters Agreement supplements the Tax Sharing Agreement described above, which continues in full force and effect.

Rovi License Agreement. On August 19, 2016, we entered into a ten-year patent license agreement (the “Rovi License Agreement”) with Rovi Corporation (“Rovi”) and, for certain limited purposes, EchoStar. EchoStar is a party to the Rovi License Agreement solely with respect to certain provisions relating to the prior patent license agreement between EchoStar and Rovi. There are 0 payments between us and EchoStar under the Rovi License Agreement.

Hughes Broadband Master Services Agreement.In March 2017, DISH Network L.L.C. (“DNLLC”) and HNS entered into a master service agreement (the “MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders for the Hughes broadband satellite service and related equipment; and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS will make certain payments to DNLLC for each Hughes service activation generated, and installation performed, by DNLLC. Payments from HNS for services provided are recorded in “Service revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For the three months ended June 30, 2021 and 2020, these payments were $2 million and $5 million, respectively. For the six months ended June 30, 2021 and 2020, these payments were $4 million and $9 million, respectively. The MSA has an initial term of five years with automatic renewal for successive one year terms. After the first anniversary of the MSA, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA. For the three months ended June 30, 2021 and 2020, we purchased broadband equipment from HNS of $2 million and $3 million, respectively, under the MSA. For the six months ended June 30, 2021 and 2020, we purchased broadband equipment from HNS of $3 million and $7 million, respectively, under the MSA.

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Employee Matters Agreement – Share Exchange. In connection with the completion of the Share Exchange, effective March 1, 2017, DISH Network and EchoStar entered into an Employee Matters Agreement that addresses the transfer of employees from EchoStar to DISH Network, including certain benefit and compensation matters and the allocation of responsibility for employee-related liabilities relating to current and past employees of the Transferred Businesses. DISH Network assumed employee-related liabilities relating to the Transferred Businesses as part of the Share Exchange, except that EchoStar will be responsible for certain existing employee-related litigation as well as certain pre-Share Exchange compensation and benefits for employees transferring to DISH Network in connection with the Share Exchange.

Intellectual Property and Technology License Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, DISH Network and EchoStar entered into an Intellectual Property and Technology License Agreement (“IPTLA”), pursuant to which DISH Network and EchoStar license to each other certain intellectual property and technology. The IPTLA will continue in perpetuity, unless mutually terminated by the parties. Pursuant to the IPTLA, EchoStar granted to DISH Network a license to its intellectual property and technology for use by DISH Network, among other things, in connection with its continued operation of the Transferred Businesses acquired pursuant to the Share Exchange Agreement, including a limited license to use the “ECHOSTAR” trademark during a transition period. EchoStar retains full ownership of the “ECHOSTAR” trademark. In addition, DISH Network granted a license back to EchoStar, among other things, for the continued use of all intellectual property and technology transferred to DISH Network pursuant to the Share Exchange Agreement that is used in EchoStar’s retained businesses.

Spin-off from EchoStar

Following the Spin-off, DISH Network and EchoStar have operated 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, and by certain entities established by Mr. Ergen for the benefit of his family.

Related Party Transactions with ~~DISH Network~~EchoStar

~~“Cost of services”~~

~~During~~In connection with and following the ~~three months ended September 30, 2020~~Spin-off, we and ~~2019,~~EchoStar have entered into certain agreements pursuant to which we ~~incurred expenses of $56 million~~obtain certain products, services and ~~$12~~ ~~million, respectively, for satellite capacity leased~~rights from ~~DISH Network~~EchoStar, EchoStar obtains certain products, services and ~~telemetry, tracking~~rights from us, and ~~control~~we and EchoStar have indemnified each other ~~professional services provided~~against certain liabilities arising from our respective businesses. Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us ~~by DISH Network. During~~certain assets and liabilities of the ~~nine months ended September 30, 2020~~EchoStar technologies and ~~2019, we incurred expenses of~~ ~~$168 million and $37~~ ~~million, respectively, for satellite capacity leased from DISH Network and telemetry, tracking and control and other professional services provided~~EchoStar broadcasting businesses. Pursuant to ~~us by DISH Network. As a result of~~ the Master Transaction Agreement, ~~discussed above,~~among other things, EchoStar transferred to DISH Network ~~is now a supplier~~certain assets and liabilities of the vast majority of our transponder capacity. These amounts are recorded in “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

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its EchoStar Satellite ~~Capacity Leased from DISH Network~~~~. On September 10, 2019, in~~Services segment. In connection with the Share Exchange and the Master Transaction Agreement, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. In addition, certain agreements that we had with EchoStar have terminated, and we entered into certain new agreements with EchoStar. 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 ~~May 19, 2019, we began leasing satellite capacity on satellites owned or leased by DISH Network from a wholly-owned subsidiary~~our financial condition and results of ~~DISH Network. See “Pay-TV Satellites” in Note 6 for further information. The term of each lease is set forth below:~~operations.

“Trade accounts receivable”

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~~EchoStar X, XI and XIV.~~ ~~On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar X, XI and XIV satellites.~~The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement 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. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, the satellite capacity agreement we previously had with EchoStar for EchoStar X, XI and XIV was transferred to DISH Network and we began leasing satellite capacity on these satellites from a wholly-owned subsidiary of DISH Network as of the same date.

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~~EchoStar XVI.~~ ~~In December~~ 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched in November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Effective December 21, 2012, we and EchoStar amended the transponder service agreement to, among other things, change the initial term to generally expire 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) ~~four years~~ ~~following the actual service commencement date. In July 2016, we and EchoStar amended the transponder service agreement to, among other things, extend the initial term by~~ ~~one~~ ~~additional year and to reduce the term of the first renewal option by one year. Prior to expiration of the initial term, we had the option to renew for an additional~~ ~~five-year~~ ~~period. In May 2017, we exercised our first renewal option for an additional~~ ~~five-year~~ ~~period ending in January 2023. We also have the option to renew for an additional~~ ~~five-year~~ period prior to expiration of the first renewal period in January 2023. There can be no assurance that the option to renew this agreement will be exercised. During 2018, we and EchoStar further amended the agreement to, among other things, allow us to place and use certain satellites at the 61.5 degree orbital location. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, the transponder service agreement we previously had with EchoStar for EchoStar XVI was transferred to DISH Network and we began receiving transponder services from a wholly-owned subsidiary of DISH Network as of the same date.

~~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 received serviceAs of June 30, 2021 and December 31, 2020, trade accounts receivable from EchoStar was $1 million. These amounts are recorded in “Trade accounts receivable” on ~~all~~ 32 ~~of the DBS transponders covered by the Telesat Transponder Agreement.~~

our Condensed Consolidated Balance Sheets.

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~~Under the terms~~“Trade accounts payable”

“Equipment sales and other revenue”

During each of the ~~DISH Nimiq 5 Agreement,~~three months ended June 30, 2021 and 2020, we ~~made certain monthly payments~~received $1 million for services provided to ~~EchoStar that commenced in 2009 when the Nimiq 5 satellite was placed into service and continued through the service term, which expired ten years~~ ~~following the date the Nimiq 5 satellite was placed into service. Upon expiration~~EchoStar. During each of the ~~initial term,~~six months ended June 30, 2021 and 2020, we ~~have the option~~received $2 million for services provided to renew on a year-to-year basis through the end-of-life of the Nimiq 5 satellite. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, the Telesat Transponder Agreement was transferred to DISH Network and we began receiving transponder services on the Nimiq 5 satellite from a wholly-owned subsidiary of DISH Network as of the same date and exercised our option to renew for a ~~one-year~~ period through September 2020. As discussed in Note 6, “Property and Equipment and Intangible Assets,” the Nimiq 5 satellite lease has been accounted for as a finance lease since September 2019. Accordingly, expenses related to this leaseEchoStar. These amounts are ~~no longer~~ recorded in ~~“Cost of services,” but rather in “Depreciation~~“Equipment sales and ~~amortization” and “Interest expense, net of amounts capitalized”~~other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). ~~During the three months ended September 30, 2020 and 2019, we recorded~~ ~~$9 million and $3 million of “Depreciation and amortization expense,” respectively, and $3 million and $1~~ ~~million of “Interest expense, net of amounts capitalized,”respectively, related~~The agreements pertaining to ~~Nimiq 5. During the nine months ended September 30, 2020 and 2019, we recorded~~ ~~$26 million and $3 million of “Depreciation and amortization expense,” respectively, and $11 million and $1~~ ~~million of “Interest expense, net of amounts capitalized,”respectively, related to Nimiq 5.~~these revenues are discussed below.

~~QuetzSat-1~~Real Estate Lease ~~Agreement.~~Agreements. ~~During 2008, EchoStar~~DISH Network has entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provided, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite (“SES Transponder Agreement”)~~. During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us~~lease agreements pursuant to which ~~we received service from~~DISH Network leases certain real estate to 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 areas, and EchoStar on 24 ~~DBS transponders. QuetzSat-1 was launched on September 29, 2011~~is responsible for its portion of the taxes, insurance, utilities and ~~was placed into service during~~maintenance of the fourth quarter 2011 at the 67.1 degree orbital location. In January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013.premises. The term of each lease is set forth below:

~~Unless earlier terminated under the terms and conditions of the SES Transponder Agreement and 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 SES Transponder Agreement on a year-to-year basis through the end-of-life of the QuetzSat-1 satellite. There can be no assurance that any options to renew the SES Transponder Agreement will be exercised. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, the SES Transponder Agreement was transferred to DISH Network and we began receiving transponder services on QuetzSat-1 from a wholly-owned subsidiary of DISH Network as of the same date. Our lease arrangement with DISH Network expires in November 2021.

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~~EchoStar XVIII Satellite.~~ The EchoStar XVIII satellite was launched on June 18, 2016 and became operational as an in-orbit spare at the 61.5 degree orbital location during the third quarter 2016, at which time we began leasing it from a wholly-owned subsidiary of DISH Network. On May 14, 2019, we and DOLLC II entered into an agreement to sell our interests in the LMDS and MVDDS licenses in exchange for the EchoStar XVIII satellite. See Note 6 for further information.

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~~TT&C Agreement.~~ Collocation and Antenna Space Agreements~~Effective January~~ . In connection with the completion of the Share Exchange, effective March 1, ~~2012,~~2017, we entered into ~~a TT&C~~certain agreements pursuant to which we provide certain collocation and antenna space to HNS through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Englewood, Colorado; and Spokane, Washington. During August 2017, we entered into certain other agreements pursuant to which we provide certain collocation and antenna space to HNS through August 2022 at the following locations: Monee, Illinois and Spokane, Washington. HNS has the option to renew each of these agreements for 4 three-year periods. HNS may terminate certain of these agreements with 180 days’ prior written notice to us at the following locations: New Braunfels, Texas; Englewood, Colorado; and Spokane, Washington. In September 2019, in connection with the Master Transaction Agreement, we entered into an agreement pursuant to which we ~~receive TT&C~~provide HNS with certain additional collocation space in Cheyenne, Wyoming, which expired in September 2020. In October 2019, HNS provided a termination notice for its New Braunfels, Texas agreement effective as of May 2020. The fees for the services ~~from EchoStar for certain satellites (the “TT&C Agreement”). In February 2018, we amended the TT&C Agreement to,~~provided under these agreements depend, among other things, ~~extend~~on the ~~term~~number of racks leased and/or antennas present at the location.

Also in connection with the Master Transaction Agreement, in September 2019, we entered into an agreement pursuant to which we provide HNS with antenna space and power in Cheyenne, Wyoming for ~~one-year~~a period of five years commencing no later than October 2020, with 4 ~~automatic one-year~~three-year renewal terms, with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term.

“Cost of services”

During each of the three months ended June 30, 2021 and 2020, we incurred less than $1 ~~renewal periods. The fees~~million of costs for services provided ~~under the 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~~to us by EchoStar. During each of the six months ended June 30, 2021 and 2020, we incurred $1 million of costs for services ~~provided.~~provided to us by EchoStar. The agreements pertaining to these expenses are discussed below.

EchoStar IX. We ~~and~~lease certain satellite capacity from EchoStar ~~are able~~on EchoStar IX. Subject to ~~terminate~~availability, we generally have the ~~TT&C Agreement for any reason upon~~ ~~12 months’ notice. On May 19, 2019, DISH Network entered into~~right to continue to lease satellite capacity from EchoStar on EchoStar IX on a Master Transaction Agreement pursuant to which, on September 10, 2019, the assets and employees that provide these services were transferred to DISH Network. We began receiving TT&C services from a wholly-owned subsidiary of DISH Network as of the same date.month-to-month basis.

“Selling, general and administrative expenses”

During the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we incurred $2$5 million and ~~less than $1~~$3 million, respectively, for selling, general and administrative expenses for services provided to us by ~~DISH Network.~~EchoStar. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we incurred $68 million and ~~less than $1~~$7 million, respectively, for selling, general and administrative expenses for services provided to us by ~~DISH Network.~~EchoStar. These amounts are recorded in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

Real Estate Lease Agreements. ~~On September 10, 2019,~~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 ~~connection with~~ the ~~Master Transaction Agreement discussed above,~~same geographic area, and we ~~began leasing office space owned or leased by DISH Network from a wholly-owned subsidiary~~are responsible for our portion of ~~DISH Network.~~the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below:

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~~Santa Fe~~Meridian Lease Agreement. The lease for all of ~~5701~~9601 S. ~~Santa Fe Dr.~~Meridian Blvd. in ~~Littleton,~~Englewood, Colorado ~~originally from EchoStar to us~~ was for a period ending on December 31, ~~2018.~~2019. In December ~~2018,~~2020, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2019. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, this lease was transferred to DISH Network and we began leasing all of 5701 S. Santa Fe Dr. in Littleton, Colorado from a wholly-owned subsidiary of DISH Network as of the same date. In December 2019, we and DISH Network amended this lease to, among other things, extend the term thereof for ~~one~~ ~~additional year until December 31, 2020.~~2021.

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~~Cheyenne~~100 Inverness Lease ~~Agreement.~~Agreement ~~The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031.~~. In connection with the completion of the Share Exchange, ~~EchoStar transferred ownership of a portion of this property to DISH Network, and,~~ effective March 1, 2017, ~~DISH Network and EchoStar amended this~~we lease agreement to (i) terminate the lease of certain space at the portion of the property that was transferred to us and (ii) provide for the continued lease to us of certain space at the portion of the property that EchoStar retained. Pursuant to the Master Transaction Agreement, discussed above, the portion of the property EchoStar retained was transferred to DISH Network, and on September 10, 2019, this lease was transferred to DISH Network and we began leasing certain space from EchoStar at 100 Inverness Terrace East, Englewood, Colorado for a ~~wholly-owned subsidiary of DISH Network as of the same date.~~period ending in December 2021. This agreement may be terminated by either party upon 180 days’ prior notice.

Other Agreements ~~– DISH Network~~- EchoStar

~~Broadband, Wireless~~Tax Sharing Agreement. In connection with the Spin-off, DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) with EchoStar which governs their respective rights, responsibilities and ~~Other Operations.~~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 DISH Network, and DISH Network will indemnify EchoStar for such taxes. However, DISH Network is 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 Internal Revenue Code of 1986, as amended (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 Internal Revenue Service (“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 DISH Network 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.

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Rovi License Agreement. ~~We provide~~On August 19, 2016, we entered into a ten-year patent license agreement (the “Rovi License Agreement”) with Rovi Corporation (“Rovi”) and, for certain ~~administrative, call center,~~limited purposes, EchoStar. EchoStar is a party to the Rovi License Agreement solely with respect to certain provisions relating to the prior patent license agreement between EchoStar and Rovi. There are 0 payments between us and EchoStar under the Rovi License Agreement.

Hughes Broadband Master Services Agreement.In March 2017, DISH Network L.L.C. (“DNLLC”) and HNS entered into a master service agreement (the “MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders for the Hughes broadband satellite service and related equipment; and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS will make certain payments to DNLLC for each Hughes service activation generated, and installation ~~marketing~~performed, by DNLLC. Payments from HNS for services provided are recorded in “Service revenue” on our Condensed Consolidated Statements of Operations and ~~other services to DISH Network’s broadband, wireless and other operations. During~~Comprehensive Income (Loss). For the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, the costs associated with~~ these ~~services was~~ ~~$16~~payments were $2 million and ~~$14~~$5 million, respectively. ~~During~~For the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, the costs associated with~~ these ~~services was~~ ~~$55~~payments were $4 million and ~~$40~~$9 million, respectively.The MSA has an initial term of five years with automatic renewal for successive one year terms. After the first anniversary of the MSA, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA. For the three months ended June 30, 2021 and 2020, we purchased broadband equipment from HNS of $2 million and $3 million, respectively, under the MSA. For the six months ended June 30, 2021 and 2020, we purchased broadband equipment from HNS of $3 million and $7 million, respectively, under the MSA.

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Spin-off from EchoStar

Related Party Transactions with EchoStar

In connection with and following 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. Pursuant to the Share Exchange Agreement, among other things, EchoStar transferred to us certain assets and liabilities of the EchoStar technologies and EchoStar broadcasting businesses. Pursuant to the Master Transaction Agreement, among other things, EchoStar transferred to DISH Network certain assets and liabilities of its EchoStar Satellite Services segment. In connection with the Share Exchange and the Master Transaction Agreement, DISH Network and EchoStar and certain of their respective subsidiaries entered into certain agreements covering, among other things, tax matters, employee matters, intellectual property matters and the provision of transitional services. In addition, certain agreements that we had with EchoStar have terminated, and we entered into certain new agreements with EchoStar. 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 condition and results of operations.

“Trade accounts receivable”

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, trade accounts receivable from EchoStar was ~~$3 million and~~ $1 ~~million, respectively.~~million. These amounts are recorded in “Trade accounts receivable” on our Condensed Consolidated Balance Sheets.

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“Trade accounts payable”

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, trade accounts payable to EchoStar was $4$3 million and $3$1 million, respectively. These amounts are recorded in “Trade accounts payable” on our Condensed Consolidated Balance Sheets.

“Equipment sales and other revenue”

During each of the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we received $1 ~~million and $2~~ million for services provided to EchoStar. During each of the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we received $~~3 million and $5~~2 million ~~respectively,~~ for services provided to EchoStar. These amounts are recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these revenues are discussed below.

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El Paso Lease Agreement. During 2012, DISH Network began leasing certain space at 1285 Joe Battle Blvd., El Paso, Texas to EchoStar for an initial period ending on August 1, 2015, which also provides EchoStar with renewal options for 4 consecutive three-year terms. During the second quarter 2015, EchoStar exercised its first renewal option for a period ending on August 1, 2018 and in April 2018 EchoStar exercised its second renewal option for a period ending in ~~August 2021.~~July 2021 and in May 2021 EchoStar exercised its third renewal option for a period ending in July 2024.

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Cheyenne Lease Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, EchoStar ~~leases~~began leasing certain space from us at 530 EchoStar Drive, Cheyenne, Wyoming for a period ending in February 2019. In August 2018, EchoStar exercised its option to renew this lease for a one-year period ending in February 2020. EchoStar has the option to renew this lease for 12 one-year periods. In connection with the Master Transaction Agreement, DISH Network and EchoStar amended this lease to provide EchoStar with certain space for a period ending in September 2021, with the option for EchoStar to renew for a one-year period upon 180 ~~days’~~days’ written notice prior to the end of the term.

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~~Gilbert Lease Agreement~~. In ~~connection with the completion of the Share Exchange, effective~~ March ~~1, 2017, EchoStar leased certain space from us at 801 N. DISH Dr., Gilbert, Arizona for a period ending in March 2019.~~2021, EchoStar exercised its option to renew this lease for a ~~one-year~~one-year period ending ~~in February 2020. This~~September 2022 and amended the lease ~~was terminated effective September 10, 2019.~~to provide the option for EchoStar to renew this lease for up to three additional years.

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~~American Fork Occupancy License Agreement.~~ In connection with the completion of the Share Exchange, effective March 1, 2017, we acquired the lease for certain space at 796 East Utah Valley Drive, American Fork, Utah, and we sublease certain space at this location to EchoStar for a period ending in August 2017. In June 2017, EchoStar exercised its five-year ~~renewal option for a period ending in August 2022. This lease was terminated effective March 2019.~~

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Collocation and Antenna Space Agreements. In connection with the completion of the Share Exchange, effective March 1, 2017, we entered into certain agreements pursuant to which we ~~will~~ provide certain collocation and antenna space to HNS through February 2022 at the following locations: Cheyenne, Wyoming; Gilbert, Arizona; New Braunfels, Texas; Monee, Illinois; Englewood, Colorado; and Spokane, Washington. During August 2017, we entered into certain other agreements pursuant to which we ~~will~~ provide certain collocation and antenna space to HNS through August 2022 at the following locations: Monee, Illinois and Spokane, Washington. HNS has the option to renew each of these agreements for 4 three-year periods. HNS may terminate certain of these agreements with 180 days’ prior written notice to us at the following locations: New Braunfels, Texas; Englewood, Colorado; and Spokane, Washington. In September 2019, in connection with the Master Transaction Agreement, we entered into an agreement pursuant to which we provide HNS with certain additional collocation space in Cheyenne, Wyoming, ~~for a period ending~~which expired in September ~~2020, with the option for HNS to renew for a~~ ~~one-year period, with prior written notice no more than 120 days but no less than 90 days~~ ~~prior to the end of the term.~~2020. In October 2019, HNS provided a termination notice for its New Braunfels, Texas agreement ~~to be~~ effective as of May 2020. The fees for the services provided under these agreements depend, among other things, on the number of racks leased and/or antennas present at the location.

~~Table~~Also in connection with the Master Transaction Agreement, in September 2019, we entered into an agreement pursuant to which we provide HNS with antenna space and power in Cheyenne, Wyoming for a period of ~~Contents~~five years commencing no later than October 2020, with 4 three-year renewal terms, with prior written notice no more than 120 days but no less than 90 days prior to the end of the then-current term.

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“Cost of services”

During each of the three months ended ~~September~~June 30 ~~30, 2020~~, 2021 and ~~2019,~~2020, we incurred ~~expenses of~~less than $1 ~~million and $55~~ million ~~respectively,~~of costs for ~~satellite capacity leased from EchoStar and telemetry, tracking and control and other professional~~ services provided to us by EchoStar. During each of the ~~nine~~six months ended ~~September~~June 30 ~~30, 2020~~, 2021 and ~~2019,~~2020, we incurred ~~expenses of $2 million and $198~~$1 million ~~respectively,~~of costs for ~~satellite capacity leased from EchoStar and telemetry, tracking and control and other professional~~ services provided to us by EchoStar. EchoStar was the supplier of the vast majority of our transponder capacity. On May 19, 2019, DISH Network entered into the Master Transaction Agreement pursuant to which, on September 10, 2019, certain of these satellites were transferred to DISH Network. We are now leasing this satellite capacity from DISH Network. These amounts are recorded in “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

~~Satellite Capacity Leased from~~ EchoStar IX. We ~~have entered into~~lease certain satellite capacity ~~agreements pursuant~~from EchoStar on EchoStar IX. Subject to ~~which~~availability, we ~~lease certain capacity on certain satellites owned or leased by EchoStar. The fees for~~generally have the ~~services provided under these~~right to continue to lease satellite capacity ~~agreements depend, among other things, upon the orbital location of the applicable satellite, the number of transponders that are leased~~from EchoStar on ~~the applicable satellite and the length of the lease. See “Pay-TV Satellites” in Note 6 for further information. The term of each lease is set forth below:~~EchoStar IX on a month-to-month basis.

●

~~EchoStar VII, X, XI and XIV.~~ On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar VII, X, XI and XIV satellites. The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement 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. The satellite capacity agreement for EchoStar VII expired on June 30, 2018. On May 19, 2019, DISH Network entered into the Master Transaction Agreement pursuant to which, on September 10, 2019, these satellites were transferred to DISH Network.

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~~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.

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~~EchoStar XVI.~~ ~~In December~~ 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched in November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Effective December 21, 2012, we and EchoStar amended the transponder service agreement to, among other things, change the initial term to generally expire 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) ~~four years~~ ~~following the actual service commencement date. In July 2016, we and EchoStar amended the transponder service agreement to, among other things, extend the initial term by~~ ~~one~~ ~~additional year and to reduce the term of the first renewal option by one year. Prior to expiration of the initial term, we had the option to renew for an additional~~ ~~five-year~~ ~~period. In May 2017, we exercised our first renewal option for an additional~~ ~~five-year~~ ~~period ending in January 2023. We also have the option to renew for an additional~~ ~~five-year~~ period prior to expiration of the first renewal period in January 2023. There can be no assurance that the option to renew this agreement will be exercised. During 2018, we and EchoStar further amended the agreement to, among other things, allow us to place and use certain satellites at the 61.5 degree orbital location. On May 19, 2019, DISH Network entered into the Master Transaction Agreement pursuant to which, on September 10, 2019, this satellite was transferred to DISH Network.

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~~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 received service from EchoStar on all 32 ~~of the DBS transponders covered by the Telesat Transponder Agreement.~~

~~QuetzSat-1 Lease Agreement.~~ ~~During 2008, EchoStar entered into a~~ ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provided, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite (“SES Transponder Agreement”)~~. During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we received service from EchoStar on~~ 24 DBS transponders. 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. In January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013. During the first quarter 2013, DISH Network and EchoStar entered into an agreement pursuant to which DISH Network subleased ~~5 DBS transponders back to EchoStar.~~

~~Unless earlier terminated under the terms and conditions of the SES Transponder Agreement and 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 SES Transponder Agreement on a year-to-year basis through the end-of-life of the QuetzSat-1 satellite. There can be no assurance that any options to renew the SES Transponder Agreement will be exercised. On May 19, 2019, DISH Network entered into the Master Transaction Agreement, discussed above, pursuant to which, on September 10, 2019, the SES Transponder Agreement was transferred~~to DISH Network and we began leasing it from an indirect wholly-owned subsidiary of DISH Network.~~

~~TT&C Agreement.~~ Effective January 1, 2012, we entered into a telemetry, tracking and control (“TT&C”) agreement pursuant to which we receive TT&C services from EchoStar for certain satellites (the “TT&C Agreement”). In February 2018, we amended the TT&C Agreement to, among other things, extend the term for ~~one-year with 4 automatic one-year~~ renewal periods. The fees for services provided under the 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. We and EchoStar are able to terminate the TT&C Agreement for any reason upon ~~12 months~~’ notice. On May 19, 2019, DISH Network entered into the Master Transaction Agreement, discussed above, pursuant to which, on September 10, 2019, the assets and employees that provide these services were transferred~~to DISH Network and now DISH Network provides these services to us.~~

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“Selling, general and administrative expenses”

During the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we incurred $3$5 million and $5$3 million, respectively, for selling, general and administrative expenses for services provided to us by EchoStar. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we incurred $108 million and ~~$16~~$7 million, respectively, for selling, general and administrative expenses for services provided to us by EchoStar. These amounts are recorded in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

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~~we are responsible for ~~its~~our portion of the taxes, insurance, utilities and maintenance of the premises. The term of each lease is set forth below:

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Meridian Lease Agreement. The lease for all of 9601 S. Meridian Blvd. in Englewood, Colorado was for a period ending on December 31, 2019. In December ~~2019,~~2020, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, ~~2020.~~2021.

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~~Santa Fe Lease Agreement.~~ ~~The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado was for a period ending on December~~ ~~31, 2018. In December 2018, we and EchoStar amended this lease to, among other things, extend the term thereof for~~ ~~one~~ additional year until December 31, 2019. Pursuant to the Master Transaction Agreement, discussed above, on September 10, 2019, this lease was transferred to DISH Network and we now lease it from DISH Network. In December 2019, we and DISH Network amended this lease to, among other things, extend the term thereof for ~~one~~ ~~additional year until December 31, 2020.~~

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~~Cheyenne Lease Agreement.~~ The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. In connection with the completion of the Share Exchange, EchoStar transferred ownership of a portion of this property to us, and, effective March 1, 2017, we and EchoStar amended this lease agreement to (i) terminate the lease of certain space at the portion of the property that was transferred to us and (ii) provide for the continued lease to us of certain space at the portion of the property that EchoStar retained. ~~Pursuant to the Master Transaction Agreement, discussed above, the portion of the property EchoStar retained was transferred to DISH Network, and on September 10, 2019, this~~ ~~lease was~~ ~~transferred to DISH Network and we now lease it from DISH Network.~~

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100 Inverness Lease Agreement. In connection with the completion of the Share Exchange, effective March 1, 2017, we lease certain space from EchoStar at 100 Inverness Terrace East, Englewood, Colorado for a period ending in December ~~2020.~~2021. This agreement may be terminated by either party upon 180 days’ prior notice.

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Additionally, DISH Network and EchoStar agreed that DISH Network shall continue to have the right, but not the obligation, to engage EchoStar to manage the process of procuring new satellite capacity for DISH Network (previously provided under the Satellite Procurement Agreement) and receive logistics, procurement and quality assurance services from EchoStar (previously provided under the Services Agreement) and other support services. In connection with the completion of the Share Exchange on February 28, 2017, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Share Exchange Agreement. In addition, pursuant to the Master Transaction Agreement, DISH Network and EchoStar amended the Professional Services Agreement effective September 10, 2019 to, among other things, provide certain transition services to each other related to the Master Transaction Agreement and to remove certain services no longer necessary as a result of the Master Transaction Agreement. The Professional Services Agreement renewed on January 1, ~~2020~~2021 for an additional one-year period until January 1, ~~2021~~2022 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. In connection with the completion of the Share Exchange on February 28, 2017, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Share Exchange Agreement. In addition, on May 19, 2019, DISH Network entered into the Master Transaction Agreement, pursuant to which, effective September 10, 2019, DISH Network and EchoStar amended the Professional Services Agreement to, among other things, provide certain transition services to each other related to the Master Transaction Agreement and to remove certain services no longer necessary as a result of the Master Transaction Agreement. Revenue for services provided by us to EchoStar under the Professional Services Agreement is recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Other Agreements - EchoStar

Tax Sharing Agreement. In connection with the Spin-off, DISH Network entered into a tax sharing agreement (the “Tax Sharing Agreement”) with EchoStar which governs ~~our~~their 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 DISH Network, and DISH Network will indemnify EchoStar for such taxes. However, DISH Network is 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 Internal Revenue Code of 1986, as amended (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 Internal Revenue Service (“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 DISH Network 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.

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Patent Cross-License Agreements. In December 2011, DISH Network 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) DISH Network and such third-party licensed their 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~~In December 2016, DISH Network and EchoStar independently exercised their respective options to extend each Cross-License Agreement to include patents acquired by the respective party prior to January 1, 2022. ~~In December 2016, DISH Network and EchoStar independently exercised their respective options to extend each Cross-License Agreement.~~ ~~The aggregate additional payments to such third-party was less than $3~~ million. Since the aggregate payments under both Cross-License Agreements were based on the combined annual revenues of DISH Network and EchoStar, DISH Network and EchoStar agreed to allocate their respective payments to such third party based on their respective percentage of combined total revenue.

Hughes Broadband Master Services Agreement. In March 2017, DISH Network L.L.C. (“DNLLC”) and HNS entered into a master service agreement (the “MSA”) pursuant to which DNLLC, among other things: (i) has the right, but not the obligation, to market, promote and solicit orders for the Hughes broadband satellite service and related equipment; and (ii) installs Hughes service equipment with respect to activations generated by DNLLC. Under the MSA, HNS will make certain payments to DNLLC for each Hughes service activation generated, and installation performed, by DNLLC. Payments from HNS for services provided are recorded in “Service revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For ~~each of~~ the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, these payments were $4$2 million and $5 ~~million.~~million, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, these payments were ~~$13~~$4 million and ~~$15~~$9 million, respectively. The MSA has an initial term of five years with automatic renewal for successive one year terms. After the first anniversary of the MSA, either party has the ability to terminate the MSA, in whole or in part, for any reason upon at least 90 days’ notice to the other party. Upon expiration or termination of the MSA, HNS will continue to provide the Hughes service to subscribers and make certain payments to DNLLC pursuant to the terms and conditions of the MSA. For the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we purchased broadband equipment from HNS of $42 million and $2$3 million, respectively, under the MSA. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we purchased broadband equipment from HNS of $113 million and ~~$10~~$7 million, respectively, under the ~~MSA, respectively.~~MSA.

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Related Party Transactions with DISH Network

As a result of the Master Transaction Agreement in September 2019, certain agreements that we had with EchoStar were transferred to DISH Network. The following is a summary of the terms of our principal agreements with DISH Network that may have an impact on our financial condition and results of operations.

“Cost of services”

During each of the three months ended June 30, 2021 and 2020, we incurred expenses of $56 million for satellite capacity leased from DISH Network and telemetry, tracking and control (“TT&C”) and other professional services provided to us by DISH Network. During each of the six months ended June 30, 2021 and 2020, we incurred expenses of $112 million for satellite capacity leased from DISH Network and TT&C and other professional services provided to us by DISH Network. As a result of the Master Transaction Agreement, DISH Network is now a supplier of the vast majority of our transponder capacity. These amounts are recorded in “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

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Satellite Capacity Leased from DISH Network. On September 10, 2019, in connection with the Master Transaction Agreement DISH Network entered into with EchoStar on May 19, 2019, we began leasing satellite capacity on satellites owned or leased by DISH Network from a wholly-owned subsidiary of DISH Network. See “Pay-TV Satellites” in Note 6 for further information. The term of each lease is set forth below:

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EchoStar X, XI and XIV. On March 1, 2014, we began leasing all available capacity from EchoStar on the EchoStar X, XI and XIV satellites. The term of each satellite capacity agreement generally terminates upon the earlier of: (i) the end-of-life of the satellite; (ii) the date the satellite fails; or (iii) a certain date, which depends upon, among other things, the estimated useful life of the satellite. We generally have the option to renew each satellite capacity agreement 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. Pursuant to the Master Transaction Agreement, on September 10, 2019, the satellite capacity agreement we previously had with EchoStar for EchoStar X, XI and XIV was transferred to DISH Network and we began leasing satellite capacity on these satellites from a wholly-owned subsidiary of DISH Network as of the same date.

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EchoStar XVI. In December 2009, we entered into a transponder service agreement with EchoStar to lease all of the capacity on EchoStar XVI, a DBS satellite, after its service commencement date. EchoStar XVI was launched in November 2012 to replace EchoStar XV at the 61.5 degree orbital location and is currently in service. Effective December 21, 2012, we and EchoStar amended the transponder service agreement to, among other things, change the initial term to generally expire 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) four years following the actual service commencement date. In July 2016, we and EchoStar amended the transponder service agreement to, among other things, extend the initial term by one additional year and to reduce the term of the first renewal option by one year. Prior to expiration of the initial term, we had the option to renew for an additional five-year period. In May 2017, we exercised our first renewal option for an additional five-year period ending in January 2023. We also have the option to renew for an additional five-year period prior to expiration of the first renewal period in January 2023. There can be no assurance that the option to renew this agreement will be exercised. During 2018, we and EchoStar further amended the agreement to, among other things, allow us to place and use certain satellites at the 61.5 degree orbital location. Pursuant to the Master Transaction Agreement, on September 10, 2019, the transponder service agreement we previously had with EchoStar for EchoStar XVI was transferred to DISH Network and we began receiving transponder services from a wholly-owned subsidiary of DISH Network as of the same date.

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 received service from EchoStar on all 32 of the DBS transponders covered by the Telesat Transponder Agreement.

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Under the terms of the DISH Nimiq 5 Agreement, we made certain monthly payments to EchoStar that commenced in 2009 when the Nimiq 5 satellite was placed into service and continued through the service term, which expired ten years following the date the Nimiq 5 satellite was placed into service. Upon expiration of the initial term, we had the option to renew on a year-to-year basis through the end-of-life of the Nimiq 5 satellite. Pursuant to the Master Transaction Agreement, on September 10, 2019, the Telesat Transponder Agreement was transferred to DISH Network and we began receiving transponder services on the Nimiq 5 satellite from a wholly-owned subsidiary of DISH Network as of the same date. We have exercised our option to renew for a one-year period through September 2021. The Nimiq 5 satellite lease has been accounted for as a finance lease since September 2019. Accordingly, expenses related to this lease are no longer recorded in “Cost of services,” but rather in “Depreciation and amortization” and “Interest expense, net of amounts capitalized” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). During the three months ended June 30, 2021 and 2020, we recorded $8 million and $8 million, respectively, of “Depreciation and amortization expense” and $3 million and $4 million of “Interest expense, net of amounts capitalized,” respectively, related to Nimiq 5. During the six months ended June 30, 2021 and 2020, we recorded $17 million and $17 million, respectively, of “Depreciation and amortization expense” and $6 million and $8 million of “Interest expense, net of amounts capitalized,” respectively, related to Nimiq 5.

QuetzSat-1 Lease Agreement. During 2008, EchoStar entered into a ten-year satellite service agreement with SES Latin America S.A. (“SES”), which provided, among other things, for the provision by SES to EchoStar of service on 32 DBS transponders on the QuetzSat-1 satellite (“SES Transponder Agreement”). During 2008, EchoStar also entered into a transponder service agreement (“QuetzSat-1 Transponder Agreement”) with us pursuant to which we received service from EchoStar on 24 DBS transponders. 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. In January 2013, QuetzSat-1 was moved to the 77 degree orbital location and we commenced commercial operations at that location in February 2013.

Unless earlier terminated under the terms and conditions of the SES Transponder Agreement and 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 SES Transponder Agreement on a year-to-year basis through the end-of-life of the QuetzSat-1 satellite. There can be no assurance that any options to renew the SES Transponder Agreement will be exercised. Pursuant to the Master Transaction Agreement, on September 10, 2019, the SES Transponder Agreement was transferred to DISH Network and we began receiving transponder services on QuetzSat-1 from a wholly-owned subsidiary of DISH Network as of the same date. Our lease arrangement with DISH Network expires in November 2021.

EchoStar XVIII Satellite. The EchoStar XVIII satellite was launched on June 18, 2016 and became operational as an in-orbit spare at the 61.5 degree orbital location during the third quarter 2016, at which time we began leasing it from a wholly-owned subsidiary of DISH Network. On May 14, 2019, we and DOLLC II entered into an agreement to sell our interests in the LMDS and MVDDS licenses in exchange for the EchoStar XVIII satellite. See Note 6 for further information.

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TT&C Agreement. Effective January 1, 2012, we entered into a TT&C agreement pursuant to which we receive TT&C services from EchoStar for certain satellites (the “TT&C Agreement”). In February 2018, we amended the TT&C Agreement to, among other things, extend the term for one-year with 4 automatic one-year renewal periods. The fees for services provided under the 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. We and EchoStar are able to terminate the TT&C Agreement for any reason upon 12 months’ notice. On May 19, 2019, DISH Network entered into a Master Transaction Agreement pursuant to which, on September 10, 2019, the assets and employees that provide these services were transferred to DISH Network. We began receiving TT&C services from a wholly-owned subsidiary of DISH Network as of the same date.

“Selling, general and administrative expenses”

During the three months ended June 30, 2021 and 2020, we incurred $1 million and $2 million, respectively, for selling, general and administrative expenses for services provided to us by DISH Network. During each of the six months ended June 30, 2021 and 2020, we incurred $3 million and $4 million, respectively, for selling, general and administrative expenses for services provided to us by DISH Network. These amounts are recorded in “Selling, general and administrative expenses” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The agreements pertaining to these expenses are discussed below.

Real Estate Lease Agreements. On September 10, 2019, in connection with the Master Transaction Agreement, we began leasing office space owned or leased by DISH Network from a wholly-owned subsidiary of DISH Network. The term of each lease is set forth below:

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Santa Fe Lease Agreement. The lease for all of 5701 S. Santa Fe Dr. in Littleton, Colorado originally from EchoStar to us was for a period ending on December 31, 2018. In December 2018, we and EchoStar amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2019. Pursuant to the Master Transaction Agreement, on September 10, 2019, this lease was transferred to DISH Network and we began leasing all of 5701 S. Santa Fe Dr. in Littleton, Colorado from a wholly-owned subsidiary of DISH Network as of the same date. In December 2020, we and DISH Network amended this lease to, among other things, extend the term thereof for one additional year until December 31, 2021.

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Cheyenne Lease Agreement. The lease for certain space at 530 EchoStar Drive in Cheyenne, Wyoming is for a period ending on December 31, 2031. In connection with the completion of the Share Exchange, EchoStar transferred ownership of a portion of this property to DISH Network, and, effective March 1, 2017, DISH Network and EchoStar amended this lease agreement to (i) terminate the lease of certain space at the portion of the property that was transferred to us and (ii) provide for the continued lease to us of certain space at the portion of the property that EchoStar retained. Pursuant to the Master Transaction Agreement, the portion of the property EchoStar retained was transferred to DISH Network, and on September 10, 2019, this lease was transferred to DISH Network and we began leasing certain space from a wholly-owned subsidiary of DISH Network as of the same date.

Other Agreements – DISH Network

Broadband, Wireless and Other Operations. We provide certain administrative, call center, installation, marketing and other services to DISH Network’s broadband, wireless and other operations. During the three months ended June 30, 2021 and 2020, the costs associated with these services was $20 million and $18 million, respectively. During the six months ended June 30, 2021 and 2020, the costs associated with these services was $40 million and $39 million, respectively.

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(Unaudited)

Related Party Transactions with NagraStar L.L.C.

~~As a result of the completion of the Share Exchange on February 28, 2017, we~~We own a 50% interest in NagraStar, a joint venture that is our primary provider of encryption and related security systems intended to assure that only authorized customers have access to our programming. Certain payments related to NagraStar are recorded in “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). In addition, certain other payments are initially included in “Inventory” and are subsequently capitalized as “Property and equipment, net” on our Condensed Consolidated Balance Sheets or expensed as “Selling, general and administrative expenses” or “Cost of services” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when the equipment is deployed. We record all payables in “Trade accounts payable” or “Other accrued expenses” on our Condensed Consolidated Balance Sheets. Our investment in NagraStar is accounted for using the equity method.

The table below summarizes our transactions with NagraStar:


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Purchases (including fees):
Purchases from NagraStar	$	14,073	$	14,434	$	41,424	$	43,148	$	11,903	$	13,259	$	23,673	$	27,351

	As of								As of
	September 30,		December 31,						June 30,		December 31,
	2020		2019						2021		2020

	(In thousands)								(In thousands)
Amounts Payable and Commitments:
Amounts payable to NagraStar	$	8,745	$	9,630					$	7,816	$	9,038
Commitments to NagraStar	$	4,260	$	4,893					$	4,473	$	3,260

Related Party Transactions with Dish Mexico

Dish Mexico, S. de R.L. de C.V. (“Dish Mexico”) is an entity that provides direct-to-home satellite services in Mexico, which is owned 49% by EchoStar. We provide certain broadcast services and certain satellite services to Dish Mexico, which are recorded in “Equipment sales and other revenue” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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DISH DBS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The table below summarizes our transactions with Dish Mexico:

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,


2020

2019

2020

2019

(In thousands)
Sales:

Uplink services

$
1,207

$
1,406

$
3,875

$
4,222
Total

$
1,207

$
1,406

$
3,875

$
4,222

As of

September 30,

December 31,

2020

2019

(In thousands)

Amounts Receivable:

Amounts receivable from Dish Mexico

$
2,603

$
1,191

For the Three Months Ended

For the Six Months Ended

June 30,

2021

2020

2021

2020

(In thousands)

Sales:

Uplink services

1,150

1,288

2,445

2,669

As of

June 30,

December 31,

2021

2020

(In thousands)

Amounts Receivable:

Amounts receivable from Dish Mexico

2,638

3,343

5143

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Item 2.MANAGEMENT’S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

You should read the following narrative analysis of our financial condition and results of operations together with the condensed consolidated financial statements and notes to our financial statements included elsewhere in this Quarterly Report on Form 10-Q. This management’s narrative 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 ~~under the caption “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 under the caption “Item 1A. Risk Factors.”. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation to update any forward-looking statements.

Overview

We currently operate one business segment.

Our Pay-TV business strategy is to be the best provider of video services in the United States by providing products with the best technology, outstanding customer service, and great value. We offer pay-TV services under the DISH® brand and the SLING®brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, FCC licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, broadcast operations, a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations (“DISH TV”). We also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. The SLING branded pay-TV services consist of, among other things, multichannel, live-linear streaming over-the-top (“OTT”) Internet-based domestic, international and Latino video programming services (“SLING TV”). We promote our Pay-TV services as providing our subscribers with a better “price-to-value” relationship than those available from other subscription television service providers. ~~In connection with the growth in the OTT industry, we promote~~We market our SLING TV services ~~primarily~~ to consumers who do not subscribe to traditional satellite and cable pay-TV ~~services.~~services, as well as to current and recent traditional pay-TV subscribers who desire a lower cost alternative.

~~Financial Highlights~~

~~2020 Third Quarter Consolidated Results of Operations and Key Operating Metrics~~

●

~~Revenue of $3.151 billion~~

●

~~Net income attributable to DISH DBS of $450 million~~

●

~~Addition of approximately 116,000 net Pay-TV subscribers~~

●

~~Loss of approximately 87,000 net DISH TV subscribers~~

●

~~Addition of approximately 203,000 net SLING TV subscribers~~

●

~~Pay-TV ARPU of $91.79~~

●

~~Gross new DISH TV subscriber activations of approximately 292,000~~

●

~~DISH TV churn rate of 1.41%~~

●

~~DISH TV SAC of $864~~

~~Consolidated Financial Condition as of September 30, 2020~~

●

~~Cash, cash equivalents and current marketable investment securities of $1.273 billion~~

●

~~Total assets of $5.368 billion~~

●

~~Total long-term debt and finance lease obligations of $10.686 billion~~

~~We currently operate one business segment.~~

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Recent Developments

COVID-19 Update

A novel strain of coronavirus which causes the disease COVID-19 has resulted in a worldwide ~~health~~ pandemic. ~~To date,~~ COVID-19 has surfaced in nearly all regions around the world and resulted in global travel restrictions and business slowdowns or shutdowns. The COVID-19 pandemic has also created unanticipated circumstances and uncertainty, disruption, and significant volatility in the economic environment generally, which have adversely affected, and may continue to adversely affect, our business operations and ~~may~~could materially and adversely affect our business, financial condition and results of operations. As the COVID-19 pandemic continues, many of our ~~customers~~subscribers are impacted by recommendations and/or mandates from federal, state, and local authorities to practice social distancing, to refrain from gathering in groups and, in some areas, to refrain from non-essential movements outside of their homes. ~~Governmental~~While certain government regulations and/or mandates have eased, or are expected to ease in 2021 and COVID-19 vaccines have become broadly available in certain areas, governmental authorities are ~~taking~~continuing to monitor the situation and take various actions in an effort to slow or prevent an increase in the spread of COVID-19. COVID-19 ~~has impacted~~continues to impact our business during 2021, in particular in the following areas:

●

In response to the outbreak and business disruption, first and foremost, we have prioritized the health and safety of our employees. We have implemented increased health and safety practices including, increased use of personal protective equipment for employees to protect them and our subscribers, and temperature checks at certain locations.

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● Our commercial business is impacted as many bars, restaurants, and other commercial establishments have been and continue to be recommended and/or mandated to suspend all non-essential “in-person” business operations ~~and/or operate at reduced capacity. In addition, airlines and hotels significantly reduced operations as a result of government actions and/or related lower consumer demand.~~

●

Beginning in the second half of March 2020, COVID-19 and the related governmental recommendations and/or mandates created reduced in person selling opportunities, and a reduction in customers’ willingness to open direct mail marketing and allow in-home technicians into their homes. As a result, we reduced our marketing expenditures and our gross new DISH TV subscribers began to decrease.

●

Our DISH ~~Smart Home Services brand was impacted as in-~~TV business ~~home installation and support~~ has been and may be further impacted byby: (i) government ~~actions~~recommendations and/or ~~related lower consumer demand~~mandates for ~~these services.~~commercial establishments to operate at reduced capacity; and (ii) reduced in person selling opportunities due to subscriber preferences and actions as well as government restrictions.

●

Widespread unemployment may impact our subscribers’ ability to pay for the services they receive and, as a result, we have increased our allowance for credit losses as a component of “Trade accounts receivable, net” as of ~~September~~ 30, 2020 on our Condensed Consolidated Balance Sheets. We continue to monitor the health of our business, including the potential impact of widespread unemployment on our subscribers’ ability to pay for the services they receive.

●

Our supply chain has been impacted by COVID-19, and there have been and could be additional significant and unanticipated interruptions and/or delays in the supply of materials and/or equipment across our supply chain, due to, among other things, surges in COVID-19. Moreover, the recent surges in COVID-19 cases in areas outside the United States and the stringent lockdowns implemented in response to such surges are causing interruptions and/or delays that are adversely impacting our business. In addition, during 2021 there have been worldwide interruptions and delays in the supply of electronic components including semi-conductors, which may significantly impact our ability to obtain set-top boxes. Furthermore, we may not be able to diversify sources of supply in a timely manner to mitigate these interruptions and/or delays. These interruptions and/or delays in our supply chain could have a material adverse effect on our business.

●

Due to the current economic climate, combined with changing needs of our customers and how we can best serve them, during the second quarter of 2020, we made the decision to reevaluate our organization. This included a focused set of staffing reductions to align our workforce to best serve our customers.

We continue to monitor the ~~rapidly~~ evolving situation and guidance from international and domestic authorities, including federal, state and local public health agencies and may take additional actions based on their recommendations. In these circumstances, there may be developments beyond our control requiring us to adjust our operating plan. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

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Pay-TV

We ~~are the nation’s fourth largest pay-TV provider and~~ offer ~~pay-TV~~Pay-TV services under the DISH^® brand and the SLING^® brand (collectively “Pay-TV” services). The DISH branded pay-TV service consists of, among other things, Federal Communications Commission (“FCC”) licenses authorizing us to use direct broadcast satellite (“DBS”) and Fixed Satellite Service (“FSS”) spectrum, our owned and leased satellites, receiver systems, broadcast operations, customer service facilities, a leased fiber optic network, in-home service and call center operations, and certain other assets utilized in our operations (“DISH TV”). We also design, develop and distribute receiver systems and provide digital broadcast operations, including satellite uplinking/downlinking, transmission and other services to third-party pay-TV providers. The SLING branded pay-TV services consist of, among other things, multichannel, live-linear streaming over-the-top (“OTT”), Internet-based domestic, international and Latino video programming services (“SLING TV”).brand. As of ~~September~~June 30, ~~2020,~~2021, we had ~~11.423~~10.993 million Pay-TV subscribers in the United States, including ~~8.965~~8.554 million DISH TV subscribers and ~~2.458~~2.439 million SLING TV subscribers.

~~Competition has intensified in recent years~~ We promote our Pay-TV services as providing our subscribers with better service, technology and value than those available from other subscription television service providers. We offer a wide selection of video services under the ~~pay-TV industry has matured. To differentiate our~~ DISH TV ~~services from our competitors, we~~brand, with access to hundreds of channels depending on the level of subscription. Our standard programming packages generally include programming provided by national and regional cable networks. We also offer ~~the Hopper whole-home DVR~~programming packages that include local broadcast networks, specialty sports channels, premium movie channels and ~~have continued to add functionality~~Latino and ~~simplicity for a more intuitive user experience. Our Hopper and Joey~~® whole-home DVR promotes a suite of integrated features and functionality designed to maximize the convenience and ease of watching TV anytime and anywhere. It also has several innovative features that a consumer can use, at his or her option, to watch and record television programming, through their televisions, streaming media devices, tablets, phones and computers. The Hopper 3, among other things, features 16 tuners, delivers an enhanced 4K Ultra HD experience, and supports up to seven TVs simultaneously.

international programming. We market our SLING TV services ~~primarily~~ to consumers who do not subscribe to traditional satellite and cable pay-TV ~~services.~~services, as well as to current and recent traditional pay-TV subscribers who desire a lower cost alternative. Our SLING TV services require an Internet connection and are available on multiple streaming-capable devices including streaming media devices, TVs, tablets, computers, game consoles and phones. We offer SLING domestic, SLING International, and SLING Latino ~~and SLING domestic~~ video programming services. Our domestic SLING TV services have a single-stream service branded SLING Orange and a multi-stream service branded SLING Blue, which includes, among other things, the ability to stream on up to three devices simultaneously.

We face competition from providers of video content distributed over the Internet including services with live-linear television programming, as well as single programmer offerings and offerings of large libraries of on-demand content, including in certain cases original content. These providers include, among others, Netflix, Hulu, Apple, Amazon, Alphabet, Disney, AT&T, ViacomCBS, STARZ, Peacock, Fubo and Philo. Many of these companies have larger customer bases, stronger brand recognition and greater financial, marketing and other resources than we do. In addition, traditional providers of video entertainment, including broadcasters, cable channels and MVPDs, are increasing their Internet-based video offerings. Some of these services charge nominal or no fees for access to their content, which could adversely affect demand for our Pay-TV services. Moreover, new technologies have been, and will likely continue to be, developed that further increase the number of competitors we face with respect to video services, including competition from piracy-based video offerings. This competition, among other things, has caused the rate of growth in subscribers to our SLING TV services to decrease. In June 2018, we launched additional SLING TV services which include offering consumers a la carte channel subscriptions, access to pay-per-view events and movies, and access to free content. There can be no assurance that these additional services and other offers will positively affect our results of operations or our net SLING TV subscribers.

Trends

Competition

Competition has intensified in recent years as the pay-TV industry has matured. ~~With respect to our DISH TV services, we~~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.

~~Table~~ We face substantial competition from established pay-TV providers and broadband service providers and increasing competition from companies providing/facilitating the delivery of ~~Contents~~

video content via the Internet to computers, televisions, and other streaming and mobile devices, including wireless service providers. In recent years, industry consolidation and convergence has created competitors with greater scale and multiple product/service offerings. These developments, among others, have contributed to intense and increasing competition, and we expect such competition to continue. We incur significant costs to retain our existing DISH TV subscribers, mostly as a result of upgrading their equipment to next generation receivers, primarily including our Hopper receivers, and by providing retention credits. Our DISH TV subscriber retention costs may vary significantly from period to period.

Many of our competitors have been especially aggressive by offering discounted programming and services for both new and existing subscribers, including bundled offers combining broadband, video and/or wireless services and other promotional offers. Certain competitors have been able to subsidize the price of video services with the price of broadband and/or wireless services.

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Our Pay-TV services also face increased competition from programmers and other companies who distribute video directly to consumers over the ~~Internet. Our SLING TV services face increased competition from content providers and other companies,~~Internet, as well as traditional satellite television providers, cable companies and large telecommunications companies that are increasing their Internet-based video offerings. We also face competition from providers of video content ~~distributed~~, many of which are providers of our programming content, that distribute content over the Internet including services with live-linear television programming, as well as single programmer offerings and offerings of large libraries of on-demand content, including in certain cases original content. These providers include, among others, Netflix, Hulu, Apple, Amazon, Alphabet, Disney, Verizon, AT&T, ViacomCBS, STARZ, Peacock, Fubo and Philo. Furthermore, our DISH TV services face increased competition as programming offered over the Internet has become more prevalent and consumers are spending an increasing amount of time accessing video content via the Internet on their mobile devices.

Significant changes in consumer behavior with regard to the means by which consumers obtain video entertainment and information in response to digital media competition could have a material adverse effect on our business, results of operations and financial condition or otherwise disrupt our business. In particular, consumers have shown increased interest in viewing certain video programming in any place, at any time and/or on any broadband-connected device they choose. Online content providers may cause our subscribers to disconnect our DISH TV services (“cord cutting”), downgrade to smaller, less expensive programming packages (“cord shaving”) or elect to purchase through these online content providers a certain portion of the services that they would have historically purchased from us, such as pay per view ~~movies, resulting in less revenue to us.~~movies.

Mergers and acquisitions, joint ventures and alliances among cable television providers, telecommunications companies, programming providers and others may result in, among other things, greater scale and financial leverage and increase the availability of offerings from providers capable of bundling video, broadband and/or wireless services in competition with our services and may exacerbate the risks described in our public filings. In October 2016, AT&T announced its acquisition of Time Warner, which was completed in June 2018. In December 2017, Walt Disney Company announced its acquisition of certain assets of Twenty-First Century Fox, Inc., which was completed in March 2019. These transactions may affect us adversely by, among other things, making it more difficult for us to obtain access to certain programming networks on nondiscriminatory and fair terms, or at all. For example, in connection with AT&T’s acquisition of Time Warner, Turner sent all of its distributors written, irrevocable offers to submit disputes over the price and other terms of Turner programming to binding arbitration and to guarantee continued access to that programming while any arbitration is pending. However, in October 2018, AT&T removed its HBO and Cinemax channels, which are not part of Turner, from our DISH TV and SLING TV programming lineup, as we and AT&T have been unable to negotiate the terms and conditions of a new programming carriage contract.

We implement new marketing promotions from time to time that are intended to increase our Pay-TV subscriber activations. For our DISH TV services, we have launched various marketing promotions offering certain DISH TV programming packages without a price increase for a commitment period. We also launched our Flex Pack skinny bundle with a core package of programming consisting of more than 50 channels and the choice of one of ten themed add-on channel packs, which include, among others, local broadcast networks and kids and general entertainment programming. Subscribers can also add or remove additional channel packs to best suit their entertainment needs. In addition, certain streaming apps, including, among others, Netflix, Amazon Prime Video and YouTube, have been integrated into select Hopper receiver systems. While we plan to implement new marketing efforts for our DISH TV services, there can be no assurance that we will ultimately be successful in increasing our gross new DISH TV subscriber activations.

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Additionally, in response to our efforts, we may face increased competitive pressures, including aggressive marketing and retention efforts, bundled discount offers combining broadband, video and/or wireless services and other discounted promotional offers.

For our SLING TV services, we offer a personalized TV experience with a customized channel line-up and two of the lowest priced multichannel live-linear online streaming services in the industry, our SLING Orange service and our SLING Blue service. While we plan to implement new marketing efforts for our SLING TV services, there can be no assurance that we will ultimately be successful in increasing our net SLING TV subscriber activations.

Our Pay-TV subscriber base has been declining due to, among other things, the factors described above. There can be no assurance that our Pay-TV subscriber base will not continue to decline and that the pace of such decline will not accelerate. As our Pay-TV subscriber base continues to decline, it could have a material adverse long-term effect on our business, results of operations, financial condition and cash flow.

Programming

Our ability to compete successfully will depend, among other things, on our ability to continue to obtain desirable programming and deliver it to our subscribers at competitive prices. Programming costs represent a large percentage of our “Cost of services” and the largest component of our total expense. We expect these costs to continue to increase due to contractual price increases and the renewal of long-term programming contracts on less favorable pricing terms and certain programming costs are rising at a much faster rate than wages or inflation. In particular, the rates we are charged for retransmitting local broadcast channels have been increasing substantially and may exceed our ability to increase our prices to our ~~customers.~~subscribers. Going forward, our margins may face pressure if we are unable to renew our long-term programming contracts on acceptable pricing and other economic terms or if we are unable to pass these increased programming costs on to our ~~customers.~~subscribers.

Increases in programming costs have caused us to increase the rates that we charge to our subscribers, which could in turn cause our existing Pay-TV subscribers to disconnect our service or cause potential new Pay-TV subscribers to choose not to subscribe to our service. Additionally, even if our subscribers do not disconnect our services, they may purchase through new and existing online content providers a certain portion of the services that they would have historically purchased from us, such as pay-per-view ~~movies, resulting in less revenue to us.~~movies.

Furthermore, our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate may be negatively impacted if we are unable to renew our long-term programming carriage contracts before they expire. In the past, our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate have been negatively impacted as a result of programming interruptions and threatened programming interruptions in connection with the scheduled expiration of programming carriage contracts with content providers. For example, in June 2018 and November 2018, Univision Communications Inc. (“Univision”) removed certain of its channels from our DISH TV and SLING TV programming lineup. On March 26, 2019, we and Univision signed a new programming carriage contract which restored certain of these Univision channels to our DISH TV programming lineup. In October 2018, AT&T removed its HBO and Cinemax channels from our DISH TV and SLING TV programming lineup, as we and AT&T have been unable to negotiate the terms and conditions of a new programming carriage contract. AT&T offers its programming, including its HBO and Cinemax channels, directly to consumers over the Internet and provides HBO for free to its subscribers under certain offers. In July 2019, Fox Regional Sports Networks (“RSNs”) also removed certain of its channels from our DISH TV and SLING TV programming lineup. In August 2019, Sinclair Broadcast Group acquired the Fox RSNs. We experienced a higher DISH TV churn rate, higher net Pay-TV subscriber losses and lower gross new DISH TV subscriber activations during 2018 and 2019, when Univision, AT&T and Sinclair RSNs removed certain of their channels from our DISH TV and SLING TV programming lineup. There can be no assurance that channel removals ~~such as the removal of the channels discussed above or others,~~ will not have a material adverse effect on our business, results of operations and financial condition or otherwise disrupt our business.

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We cannot predict with any certainty the impact to our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV churn rate resulting from additional programming interruptions or threatened programming interruptions that may occur in the future. As a result, we may at times suffer from periods of lower net Pay-TV subscriber additions or higher net Pay-TV subscriber losses.

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~~Operations and Customer Service~~

While competitive factors have impacted the entire pay-TV industry, our relative performance has also been driven by issues specific to us. In the past, our subscriber growth has been adversely affected by signal theft and other forms of fraud and by our operational inefficiencies. For our DISH TV services, in order to combat signal theft and improve the security of our broadcast system, we use microchips embedded in credit card sized access cards, called “smart cards,” or security chips in our DBS receiver systems to control access to authorized programming content (“Security Access Devices”). We expect that future replacements of these devices may be necessary to keep our system secure. To combat other forms of fraud, among other things, we monitor our independent third-party distributors’ and independent third-party retailers’ adherence to our business rules. Furthermore, for our SLING TV services, we encrypt programming content and use digital rights management software to, among other things, prevent unauthorized access to our programming content.

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 condition and results of operations. To improve our operational performance, we continue to make 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 be certain, however, that our spending will ultimately be successful in improving our operational performance.

Operational Liquidity

We make general investments in property such as satellites, set-top boxes, information technology and facilities that support our ~~overall~~ Pay-TV business. Moreover, since we are a subscriber-based company, 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, but there can be no assurances that over time we will recoup or earn a return on the upfront investment.

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 our ~~DISH TV~~ churn rate and how successful we are at retaining our current ~~Pay-TV~~ subscribers. To the extent we lose ~~Pay-TV~~ 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 service margins. To the extent our “Cost of services” grow faster than our “Service revenue,” the amount of cash flow that is generated per existing subscriber is reduced. Our Pay-TV service margins have been reduced by, among other things, a shift to lower priced Pay-TV programming packages and higher programming costs. 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 acquiring new subscribers. Conversely, the slower we acquire subscribers, the more our operating cash flow is enhanced in that period. Finally, our future cash flow is impacted by the rate at which we make general investments, incur litigation expense, and any cash flow from financing activities. Declines in our Pay-TV subscriber base and ~~service~~subscriber-related margins continue to negatively impact our cash flow, and there can be no assurances that these declines will not continue.

Availability of Credit and Effect on Liquidity

The ability to raise capital has generally existed for us despite economic weakness and uncertainty. While modest fluctuations in the cost of capital will not likely impact our current operational plans, significant fluctuations could have a material adverse effect on our business, results of operations and financial condition.

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~~Future Liquidity~~

Debt Issuances and Maturity

~~Our 5 1/8% Senior Notes with an aggregate principal balance of $1.1 billion~~ ~~were redeemed~~ ~~on May 1, 2020.~~

Our 6 3/4% Senior Notes due 2021 with an aggregate principal balance of $2.0 billion mature on June 1, 2021. We expect to fund this obligation from cash and marketable investment securities balances at that time. But, depending on market conditions, we may refinance this obligation in whole or in part.

On ~~July 1, 2020,~~May 24, 2021, we issued ~~$1.0~~$1.5 billion aggregate principal amount of our 7 3/5 1/8% Senior Notes due ~~July~~June 1, ~~2028.~~2029. Interest accrues at an annual rate of ~~7 3/~~5 1/8% and is payable semi-annually in cash, in arrears on ~~January~~June 1 and ~~July~~December 1 of each year, commencing on ~~January~~December 1, 2021.

~~DISH Network Spectrum~~

~~Since 2008, DISH Network has directly invested over $11~~During the six months ended June 30, 2021, we repurchased $349 million of our 6 3/4% Senior Notes due 2021 in open market trades. The remaining balance of $1.651 billion to acquire certain wireless spectrum licenses and related assets and made over $10 billion in non-controlling investments in certain entities, for a total of over $21 billion, as described further below.

DISH Network has directly invested over $11 billion to acquire certain wireless spectrum licenses and related assets. These wireless spectrum licenses are subject to certain interim and final build-out requirements, as well as certain renewal requirements. In March 2017, DISH Network notified the FCC that it planned to deploy a narrowband Internet of Things (“IoT”) networkwas redeemed on certain of these wireless licenses, which was to be the first phase of its network deployment (“First Phase”). DISH Network expected to complete the First Phase by March 2020, with subsequent phases to be completed thereafter. In light of, among other things, certain developments related to the Sprint-TMUS merger, during the first quarter 2020, DISH Network determined that the revision of certain of its build-out deadlines was probable and, therefore, DISH Network no longer intends to complete its narrowband IoT deployment. The FCC issued an order effectuating the build-out deadline changes contemplated above on September 11, 2020. DISH Network has issued requests for information and proposals (“RFI/Ps”) to various vendors in the wireless industry and is in the process of selecting certain vendors as it moves forward with its 5G broadband network deployment (“5G Network Deployment”). DISH Network currently expects expenditures for its 5G Network Deployment to be approximately $10 billion, excluding capitalized interest. DISH Network will need to make significant additional investments or partner with others to, among other things, commercialize, build-out, and integrate these licenses and related assets, and any additional acquired licenses and related assets; and comply with regulations applicable to such licenses. Depending on the nature and scope of such commercialization, build-out, integration efforts, and regulatory compliance, any such investments or partnerships could vary significantly.June 1, 2021.

In addition, as DISH Network considers its options for the commercialization of its wireless spectrum, it will incur significant additional expenses and will have to make significant investments related to, among other things, research and development, wireless testing and wireless network infrastructure. DISH Network may also determine that additional wireless spectrum licenses may be required to commercialize its wireless business and to compete with other wireless service providers.

~~Asset Purchase Agreement.~~ ~~On July 26, 2019, DISH Network entered into an Asset Purchase Agreement (the “APA”) with T-~~Mobile US, Inc. (“TMUS”) and Sprint Corporation (“Sprint” and together with TMUS, the “Sellers” and given the consummation of the Sprint-TMUS merger, sometimes referred to as “NTM”) to acquire from NTM certain assets and liabilities associated with Sprint’s Boost Mobile and Sprint-branded prepaid mobile services businesses (the “Prepaid Business”) for an aggregate purchase price of $1.4 billion as adjusted for specific categories of net working capital on the closing date (the “Boost Mobile Acquisition”). Effective July 1, 2020 (the “Closing Date”), upon the terms and subject to the conditions set forth in the APA, DISH Network and NTM completed the Boost Mobile Acquisition.Future Liquidity

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At the closing of the Boost Mobile Acquisition, DISH Network and NTM entered into a transition services agreement under which DISH Network will receive certain transitional services (the “TSA”), a master network services agreement for the provision of network services by NTM to DISH Network (the “MNSA”), an option agreement entitling DISH Network to acquire certain decommissioned cell sites and retail stores of NTM (the “Option Agreement”) and an agreement under which DISH Network would purchase all of Sprint’s 800 MHz spectrum licenses, totaling approximately 13.5 MHz of nationwide wireless spectrum for an additional approximately $3.59 billion (the “Spectrum Purchase Agreement” and together with the APA, the TSA, the MNSA and the Option Agreement, the “Transaction Agreements”). See Note 5 “~~Acquisitions – Sprint Asset Acquisition~~~~” of DISH Network’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020 for further information on the Transaction Agreements.~~

~~In connection with the development of DISH Network’s wireless business, including, without limitation, the efforts described above, we~~We have made cash distributions to partially finance ~~these efforts~~the development of DISH Network’s 5G Network Deployment and retail wireless business to date and may make additional cash distributions to finance, in whole or in part, DISH Network’s future efforts. There can be no assurance that DISH Network will be able to develop and implement a business model that will realize a return on these wireless spectrum licenses or that DISH Network will be able to profitably deploy the assets represented by these wireless spectrum licenses.

~~DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses~~

During 2015, through its wholly-owned subsidiaries American AWS-3 Wireless II L.L.C. (“American II”) and American AWS-3 Wireless III L.L.C. (“American III”), DISH Network initially made over $10 billion in certain non-controlling investments in Northstar Spectrum, LLC (“Northstar Spectrum”), the parent company of Northstar Wireless, LLC (“Northstar Wireless,” and collectively with Northstar Spectrum, the “Northstar Entities”), and in SNR Wireless HoldCo, LLC (“SNR HoldCo”), the parent company of SNR Wireless LicenseCo, LLC (“SNR Wireless,” and collectively with SNR HoldCo, the “SNR Entities”), respectively. On October 27, 2015, the FCC granted certain AWS-3 wireless spectrum licenses (the “AWS-3 Licenses”) to Northstar Wireless (the “Northstar Licenses”) and to SNR Wireless (the “SNR Licenses”), respectively. The Northstar Entities and/or the SNR Entities may need to raise significant additional capital in the future, which may be obtained from third party sources or from DISH Network, so that the Northstar Entities and the SNR Entities may commercialize, build-out and integrate these AWS-3 Licenses, comply with regulations applicable to such AWS-3 Licenses, and make any potential payments related to the re-auction of AWS-3 licenses retained by the FCC. Depending upon the nature and scope of such commercialization, build-out, integration efforts, regulatory compliance, and potential re-auction payments, any such loans, equity contributions or partnerships could vary significantly. For further information regarding the potential re-auction of AWS-3 licenses retained by the FCC, see Note 11 “~~Commitments and Contingencies – Commitments – DISH Network Non-Controlling Investments in the Northstar Entities and the SNR Entities Related to AWS-3 Wireless Spectrum Licenses”~~ ~~in the Notes toDISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.~~

We have made and may make cash distributions to finance, in whole or in part, loans that DISH Network has made or may make in the future to the Northstar Entities and the SNR Entities related to DISH Network’s non-controlling investments in these entities. There can be no assurance that DISH Network will be able to obtain a profitable return on its non-controlling investments in the Northstar Entities and the SNR Entities.

We may need to raise significant additional capital in the future, which may not be available on acceptable terms or at all, to among other things, make additional cash distributions to DISH Network, continue investing in our business and to pursue acquisitions and other strategic transactions.

See Note 11 ~~“Commitments and Contingencies – Commitments”~~9 in the Notes to~~DISH Network’s Quarterly Report on Form 10-Q for~~ the ~~quarter ended September 30, 2020~~Condensed Consolidated Financial Statements for further information.

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~~Master Transaction Agreement~~

On May 19, 2019, DISH Network entered into a Master Transaction Agreement with EchoStar (the “Master Transaction Agreement”) and effective September 10, 2019, certain satellites and real estate assets leased from EchoStar were transferred to DISH Network.~~As a result of the Master Transaction Agreement, DISH Network is now a supplier of the vast majority of our transponder capacity. See Note 14 “~~~~Related Party Transactions – Master Transaction Agreement”~~ ~~in the Notes to DISH Network’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 for further information on the Master Transaction Agreement.~~

Covenants and Restrictions Related to our ~~Senior Notes~~Long-Term Debt

~~The~~We are subject to the covenants and restrictions set forth in the indentures related to our long-term debt. In particular, the indentures related to our outstanding senior notes contain restrictive covenants that, among other things, impose limitations on our ability to: (i) incur additional indebtedness; (ii) enter into sale and leaseback transactions; (iii) pay dividends or make distributions on our capital stock or repurchase our 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 of this Quarterly Report on Form 10-Q, we were in compliance with the covenants and restrictions related to our ~~senior notes.~~respective long-term debt.

EXPLANATION OF KEY METRICS AND OTHER ITEMS

Service revenue. “Service revenue” consists principally of Pay-TV subscriber revenue. Certain of the amounts included in “Service revenue” are not recurring on a monthly basis.

Equipment sales and other revenue. “Equipment sales and other revenue” principally includes the non-subsidized sales of ~~pay-TV~~Pay-TV equipment.

Cost of services. “Cost of services” principally include ~~pay-TV~~Pay-TV programming expenses and other operating costs ~~associated with~~related to our ~~DISH TV and SLING TV~~Pay-TV services.

Cost of sales - equipment and other. “Cost of sales – equipment and other” principally includes the cost of the non-subsidized sales of ~~pay-TV~~Pay-TV equipment. Costs are generally recognized as products are delivered to customers and the related revenue is recognized.

Selling, general and administrative expenses. “Selling, general and administrative expenses” consists primarily of direct sales costs, advertising, third-party commissions related to the acquisition of subscribers, costs related to the installation of our new Pay-TV subscribers, the cost of subsidized sales of Pay-TV equipment for new subscribers and employee-related costs associated with administrative services such as legal, information systems, and accounting and finance.

Interest expense, net of amounts capitalized. “Interest expense, net of amounts capitalized” primarily includes interest expense associated with our long-term debt (net of capitalized interest), prepayment premiums, amortization of debt discounts and debt issuance costs associated with our ~~senior~~long-term debt, and interest expense associated with our finance 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 certain marketable investment securities 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 DBS”~~” plus “Interest expense, net of amounts capitalized” net of “Interest income,” “Income tax (provision) benefit, net” and “Depreciation and amortization.” This “non-GAAP measure” is reconciled to “Net income (loss) ~~attributable to DISH DBS”~~” in our discussion of “Results of Operations” below.

Operating income before depreciation and amortization (“OIBDA”). OIBDA is defined as “Operating income (loss)” plus “Depreciation and amortization.” This “non-GAAP measure” is reconciled to “Operating income (loss)” in our discussion of “Results of Operations” below.

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DISH TV subscribers. We include customers obtained through direct sales, independent third-party retailers and other independent third-party distribution relationships in our DISH TV subscriber count. We also provide DISH TV services to hotels, motels and other commercial accounts. For certain of these commercial accounts, we divide our total revenue for these commercial accounts by $34.99, and include the resulting number, which is substantially smaller than the actual number of commercial units served, in our DISH TV subscriber count.

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SLING TV subscribers. We include customers obtained through direct sales and third-party marketing agreements in our SLING TV subscriber count. SLING TV subscribers are recorded net of disconnects. SLING TV customers receiving service for no charge, under certain new subscriber promotions, are excluded from our SLING TV subscriber count. For customers who subscribe to multiple SLING TV packages, each customer is only counted as one SLING TV subscriber.

Pay-TV subscribers. Our Pay-TV subscriber count includes all DISH TV and SLING TV subscribers discussed above. For customers who subscribe to both our DISH TV services and our SLING TV services, each subscription is counted as a separate Pay-TV subscriber.

Pay-TV average monthly revenue per subscriber (“Pay-TV ARPU”). 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 Pay-TV average monthly revenue per Pay-TV subscriber, or Pay-TV ARPU, by dividing average monthly Pay-TV “Service revenue,” for the period by our average number of Pay-TV subscribers for the period. The average number of Pay-TV subscribers is calculated for the period by adding the average number of Pay-TV subscribers for each month and dividing by the number of months in the period. The average number of Pay-TV subscribers for each month is calculated by adding the beginning and ending Pay-TV subscribers for the month and dividing by two. SLING TV subscribers on average purchase lower priced programming services than DISH TV subscribers, and therefore, as SLING TV subscribers increase as a percentage of total Pay-TV subscribers, it has had a negative impact on Pay-TV ARPU.

DISH TV average monthly subscriber churn rate (“DISH TV 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 DISH TV churn rate for any period by dividing the number of DISH TV subscribers who terminated service during the period by the average number of DISH TV subscribers for the same period, and further dividing by the number of months in the period. The average number of DISH TV subscribers is calculated for the period by adding the average number of DISH TV subscribers for each month and dividing by the number of months in the period. The average number of DISH TV subscribers for each month is calculated by adding the beginning and ending DISH TV subscribers for the month and dividing by two.

DISH TV SAC. Subscriber acquisition cost measures are commonly used by those evaluating traditional companies in the pay-TV industry. We are not aware of any uniform standards for calculating the “average subscriber acquisition costs per new DISH TV subscriber activation,” or DISH TV SAC, and we believe presentations of pay-TV SAC may not be calculated consistently by different companies in the same or similar businesses. Our DISH TV SAC is calculated using all of costs of acquiring DISH TV subscribers (e.g., subsidized equipment, advertising, installation, commissions and direct sales, etc.), which are included in “Selling, general and administrative expenses,” plus capitalized payments made under certain sales incentive programs and the value of equipment capitalized under our lease program for new DISH TV subscribers, divided by gross new DISH TV subscriber activations. We include all new DISH TV subscribers in our calculation, including DISH TV subscribers added with little or no subscriber acquisition costs. ~~Although we no longer have a separate line item for subscriber acquisition costs on our~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)~~~~, our methodology for calculating DISH TV SAC is unchanged from prior periods.~~

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RESULTS OF OPERATIONS

Three Months Ended ~~September~~June 30, ~~2020~~2021 Compared to the Three Months Ended ~~September~~June 30, ~~2019.~~2020.


	For the Three Months Ended										For the Three Months Ended
	September 30,						Variance				June 30,						Variance
Statements of Operations Data	2020			2019			Amount			%	2021			2020			Amount			%

	(In thousands)										(In thousands)
Revenue:
Service revenue	$	3,109,479		$	3,070,913		$	38,566		1.3	$	3,176,710		$	3,117,334		$	59,376		1.9
Equipment sales and other revenue		41,550			51,369			(9,819)		(19.1)		34,778			31,197			3,581		11.5
Total revenue		3,151,029			3,122,282			28,747		0.9		3,211,488			3,148,531			62,957		2.0

Costs and Expenses:
Cost of services		1,849,824			2,056,701			(206,877)		(10.1)		1,949,761			1,989,738			(39,977)		(2.0)
% of Service revenue		59.5	%		67.0	%						61.4	%		63.8	%
Cost of sales - equipment and other		28,366			43,358			(14,992)		(34.6)		24,902			23,660			1,242		5.2
Selling, general and administrative expenses		379,167			438,644			(59,477)		(13.6)		332,060			348,367			(16,307)		(4.7)
% of Total revenue		12.0	%		14.0	%						10.3	%		11.1	%
Depreciation and amortization		125,016			145,081			(20,065)		(13.8)		111,391			122,869			(11,478)		(9.3)
Total costs and expenses		2,382,373			2,683,784			(301,411)		(11.2)		2,418,114			2,484,634			(66,520)		(2.7)

Operating income (loss)		768,656			438,498			330,158		75.3		793,374			663,897			129,477		19.5

Other Income (Expense):
Interest income		652			21,453			(20,801)		(97.0)		1,002			1,112			(110)		(9.9)
Interest expense, net of amounts capitalized		(171,246)			(187,784)			16,538		8.8		(162,212)			(164,047)			1,835		1.1
Other, net		(91)			1,508			(1,599)		*		(287)			(152)			(135)		(88.8)
Total other income (expense)		(170,685)			(164,823)			(5,862)		(3.6)		(161,497)			(163,087)			1,590		1.0

Income (loss) before income taxes		597,971			273,675			324,296		*		631,877			500,810			131,067		26.2
Income tax (provision) benefit, net		(148,098)			(68,817)			(79,281)		*		(155,134)			(125,830)			(29,304)		(23.3)
Effective tax rate		24.8	%		25.1	%						24.6	%		25.1	%
Net income (loss)		449,873			204,858			245,015		*	$	476,743		$	374,980		$	101,763		27.1
Less: Net income (loss) attributable to noncontrolling interests, net of tax		—			—			—		*
Net income (loss) attributable to DISH DBS	$	449,873		$	204,858		$	245,015		*

Other Data:
Pay-TV subscribers, as of period end (in millions) **		11.423			12.180			(0.757)		(6.2)		10.993			11.272			(0.279)		(2.5)
DISH TV subscribers, as of period end (in millions) **		8.965			9.494			(0.529)		(5.6)		8.554			9.017			(0.463)		(5.1)
SLING TV subscribers, as of period end (in millions)		2.458			2.686			(0.228)		(8.5)		2.439			2.255			0.184		8.2
Pay-TV subscriber additions (losses), net (in millions)		0.116			0.148			(0.032)		(21.6)		(0.067)			(0.096)			0.029		30.2
DISH TV subscriber additions (losses), net (in millions)		(0.087)			(0.066)			(0.021)		(31.8)		(0.132)			(0.040)			(0.092)		*
SLING TV subscriber additions (losses), net (in millions)		0.203			0.214			(0.011)		(5.1)		0.065			(0.056)			0.121		*
Pay-TV ARPU	$	91.79		$	85.29		$	6.50		7.6	$	96.32		$	92.17		$	4.15		4.5
DISH TV subscriber additions, gross (in millions)		0.292			0.416			(0.124)		(29.8)		0.201			0.268			(0.067)		(25.0)
DISH TV churn rate		1.41	%		1.69	%		(0.28)	%	(16.6)		1.29	%		1.14	%		0.15	%	13.2
DISH TV SAC	$	864		$	827		$	37		4.5	$	890		$	834		$	56		6.7
EBITDA	$	893,581		$	585,087		$	308,494		52.7	$	904,478		$	786,614		$	117,864		15.0
OIBDA	$	893,672		$	583,579		$	310,093		53.1	$	904,765		$	786,766		$	117,999		15.0

* Percentage is not meaningful.

**During the first quarter 2020, we removed approximately 250,000 subscribers representing commercial accounts impacted by COVID-19 from our ending Pay-TV subscriber count. During the second, third and ~~third~~fourth quarters 2020, 45,000, 35,000 and ~~35,000,~~zero, respectively, of these subscribers came off pause or had temporary rate relief end and ~~are included in~~were added to our ~~ending~~ Pay-TV subscriber count asduring the periods they returned in 2020, and 17,000, 5,000 and 47,000, respectively, of ~~September 30, 2020.~~these subscribers disconnected. During the three months ended March 31, 2021, the remaining commercial accounts representing 101,000 subscribers disconnected. The effect of the removal of the 250,000 subscribers, the addition of these 80,000 subscribers and disconnect of 170,000 subscribers was excluded from the calculation of our gross new Pay-TV subscriber activations, net Pay-TV subscriber additions/losses and Pay-TV churn rate. See “Results of Operations – Pay-TV subscribers” for further information.

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Pay-TV ~~subscribers~~Subscribers

DISH TV subscribers. We lost approximately ~~87,000~~132,000 net DISH TV subscribers during the three months ended ~~September~~June 30, ~~2020~~2021 compared to the loss of approximately ~~66,000~~40,000 net DISH TV subscribers during the same period in ~~2019.~~2020. This increase in net DISH TV subscriber losses primarily resulted from lower gross new DISH TV subscriber activations ~~partially offset by~~and a ~~lower~~higher DISH TV churn rate.

SLING TV subscribers. We added approximately ~~203,000~~65,000 net SLING TV subscribers during the three months ended ~~September~~June 30, ~~2020~~2021 compared to the ~~addition~~loss of approximately ~~214,000~~56,000 net SLING TV subscribers during the same period in ~~2019. This decrease~~2020. The increase in net SLING TV ~~subscriber additions~~subscribers was primarily related to ~~lower SLING~~higher Sling TV subscriber activations and lower subscriber disconnects resulting from our emphasis on improved streaming performance and enhanced customer segmentation and targeting, leading to the acquisition and retention of more high quality subscribers. We continue to experience increased competition, including competition from other subscription video on-demand and live-linear OTT service ~~providers, and~~providers. The three months ended June 30, 2020 was negatively impacted by delays and cancellations of sporting events as a result of COVID-19.

DISH TV subscribers, gross.During the three months ended ~~September~~June 30, ~~2020~~2021, we activated approximately ~~292,000~~201,000 gross new DISH TV subscribers compared to approximately ~~416,000~~268,000 gross new DISH TV subscribers during the same period in ~~2019,~~2020, a decrease of ~~29.8%~~25.0%. This decrease in our gross new DISH TV subscriber activations was primarily related to the ~~impact~~lack of ~~COVID-19.~~ ~~Beginning in the second half of March 2020, COVID-19 and the related governmental recommendations and/or mandates created reduced in person selling opportunities, and a reduction in customers’ willingness to open direct mail marketing and allow in-home technicians into their homes~~demand, as well as ~~delays~~ increased competitive pressures, including aggressive short term introductory pricing and ~~cancellations~~bundled offers combining broadband, video and/or wireless services and other discounted promotional offers, live-linear OTT service providers, direct-to-consumer offerings by certain of ~~sporting events.~~ ~~As a result, beginning in the first quarter 2020, we reduced~~ our ~~marketing expenditures~~programmers, and our gross new DISH TV subscribers began to decrease. We continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our gross new DISH TV subscribers as a result of, among other things, higher unemployment and lower discretionary spending and reduced ability to perform our in-home service operations due to the impact of social distancing.channel removals. In addition, our gross new DISH TV subscriber activations continue to be negatively impacted by stricter customer acquisition policies for our DISH TV subscribers, including an emphasis on acquiring higher quality subscribers. Furthermore, we continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our gross new DISH TV subscribers as a result of, among other things, lower discretionary spending and by increased competitive pressures, including aggressive short term introductory pricing and bundled offers combining broadband, video and/or wireless services and other discounted promotional offers, and channel removals.reduced ability to perform our in-home service operations due to the impact of social distancing.

DISH TV churn rate. Our DISH TV churn rate for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~1.41%~~1.29% compared to ~~1.69%~~1.14% for the same period in ~~2019. This decrease primarily resulted from the impact of~~2020. The three months ended June 30 2020 was positively impacted by COVID-19 including, among other things, the recommendations and/or mandates from federal, state, and local authorities that customers refrain from non-essential movements outside of their homes and the resulting increased consumption of our Pay-TV services. ~~In addition, COVID-19 had an impact on competitive pressures due to, among other things, a reduction in~~ ~~customers’ willingness to allow competitors’ technicians into their homes~~. We continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our DISH TV churn rate as a result of, among other things, ~~higher unemployment and~~ lower discretionary spending and reduced ability to perform our in-home service operations due to the impact of social distancing. ~~In addition, this decrease also resulted from~~Our DISH TV churn rate was positively impacted by our emphasis on acquiring and retaining higher quality subscribers. Our DISH TV churn rate continues to be adversely impacted by external factors, such as, among other things, increased competitive pressures, including aggressive marketing, bundled discount offers combining broadband, video and/or wireless services and other discounted promotional offers, as well as cord cutting. Our DISH TV churn rate is also impacted by internal factors, such as, among other things, our ability to consistently provide outstanding customer service, price increases, programming interruptions in connection with the scheduled expiration of certain programming carriage contracts, our ability to control piracy and other forms of fraud and the level of our retention efforts.

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Beginning in March 2020, several federal, state, and local government agencies implemented recommendations, guidelines, and orders regarding “social distancing” in an attempt to slow or stop the spread of COVID-19. As a result of these actions, many bars, restaurants, and other commercial establishments ~~have been~~were ordered to and in certain cases continue to be recommended and/or ordered to suspend all non-essential “in-person” business operations and/or operate at reduced capacity. In addition, airlines and hotels significantly reduced operations as a result of government actions and/or related lower consumer demand. In an effort to avoid charging commercial customers for services in their establishments which ~~are~~were no longer open to the public, we ~~have~~ paused service or provided temporary rate relief for certain of those commercial accounts. For certain commercial accounts, each subscription is counted as one Pay-TV subscriber. For other commercial accounts, as discussed above, we divide our total revenue for these commercial accounts by $34.99, and include the resulting number, which is substantially smaller than the actual number of commercial units served, in our Pay-TV subscriber count. During the first quarter 2020, we removed 250,000 subscribers from our ending Pay-TV subscriber count for commercial accounts we placed on pause, or received reduced revenue, or for which we anticipate the account to disconnect due to COVID-19. During the second, third and ~~third~~fourth quarters 2020, 45,000, 35,000 and ~~35,000,~~zero, respectively, of these subscribers came off pause or had temporary rate relief end and 17,000, 5,000 and ~~5,000,~~47,000, respectively, of these subscribers disconnected.

We ~~have~~did not ~~incurred and do not expect to~~ incur any significant expenses in connection with the return of ~~these~~the 80,000 commercial accounts and accordingly, ~~these~~those commercial accounts were added to our ending subscriber count during the periods they returned in 2020 and were not recorded as gross new Pay-TV subscriber activations. ~~We cannot predict when~~During the first quarter of 2021, the remaining commercial accounts will be able to fully reopen, how many will return or when they may return to active subscriber status, and there can be no assurance that they will return. We continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our subscriber base, gross new DISH TVrepresenting 101,000 subscribers and our DISH TV churn rate as a result of, among other things, higher unemployment and lower discretionary spending and our reduced ability to perform our in-home service operations due to the impact of social distancing. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition and results of operations.disconnected.

We cannot predict with any certainty the impact to our net Pay-TV subscriber additions, gross new DISH TV subscriber activations, and DISH TV subscriber churn rate resulting from programming interruptions or threatened programming interruptions that may occur in the future. As a result, we may at times suffer from periods of lower net Pay-TV subscriber additions or higher net Pay-TV subscriber losses.

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 independent third-party retailers and installers to provide high-quality service. Most of these factors have affected both gross new DISH TV subscriber activations as well as DISH TV subscriber churn rate. Our future gross new DISH TV subscriber activations and our DISH TV subscriber churn rate may be negatively impacted by these factors, which could in turn adversely affect our revenue.

Service revenue. “Service revenue” totaled ~~$3.109~~$3.177 billion for the three months ended ~~September~~June 30, ~~2020~~,2021, an increase of ~~$39~~ $59 million or ~~1.3%~~1.9% compared to the same period in ~~2019.~~2020. The increase in “Service revenue” compared to the same period in ~~2019~~2020 was primarily related to an increase in Pay-TV ARPU, discussed below, partially offset by a lower average Pay-TV subscriber base.

Pay-TV ARPU. Pay-TV ARPU was ~~$91.79~~$96.32 during the three months ended ~~September~~June 30, ~~2020~~2021versus ~~$85.29~~$92.17 during the same period in ~~2019.~~2020. The ~~$6.50~~$4.15 or ~~7.6%~~ 4.5% increase in Pay-TV ARPU was primarily attributable to the DISH TV programming package price increases in the first quarter ~~2020~~2021 and ~~2019,~~2020, the SLING TV programming package price increases in the first quarter 2021 and 2020 and ~~fourth quarter 2019, and~~higher ad sales revenue, partially offset by an increase in ~~revenue related to advertising sales. In addition,~~SLING TV subscribers as a percentage of our total Pay-TV ~~ARPU for the three months ended September 30, 2020 was positively impacted by fewer commercial accounts compared to the same period in 2019. Commercial accounts have~~subscriber base. SLING TV subscribers on average purchase lower ~~Pay-TV ARPU~~priced programming services than ~~residential~~DISH TV subscribers, and therefore, the ~~decrease~~increase in ~~commercial accounts~~SLING TV subscribers as a percentage of our total Pay-TV subscriber base had a ~~positive~~negative impact on Pay-TV ARPU.

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Cost of services. “Cost of services” totaled ~~$1.850~~$1.950 billion during the three months ended ~~September~~June 30, ~~2020~~2021, a decrease of ~~$207~~$40 million or ~~10.1%~~2.0% compared to the same period in ~~2019.~~ 2020. The decrease in “Cost of services” was primarily attributable to a lower average Pay-TV subscriber base and a decrease in variable and retention costs per subscriber, ~~andlower~~partially offset by higher programming costs per subscriber. Variable and retention costs per subscriber decreased due to, among other things, increased operational efficiencies, including a focused set of staffing reductions ~~and fewer customer upgrades.~~in 2020. Programming costs per subscriber ~~decreased~~increased during the three months ended ~~September~~June 30, ~~2020~~2021 due ~~to,~~ ~~among others, Sinclair RSN’s removal of certain of their channels from our programming lineup in July 2019 and multiple one-time programming adjustments.~~ ~~These decreases were partially offset by increases in programming costs per subscriber related~~ to rate increases in certain of our programming contracts, including the renewal of certain contracts at higher rates, particularly for local broadcast channels. “Cost of services” represented ~~59.5%~~61.4% and ~~67.0%~~63.8% of “Service revenue” during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

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In the normal course of business, we enter into contracts to purchase programming content in which our payment obligations are generally contingent on the number of Pay-TV subscribers to whom we provide the respective content. Our “Cost of services” have and will continue to face further upward pressure from price increases and the renewal of long-term programming contracts on less favorable pricing terms. In addition, our programming expenses will increase to the extent we are successful in growing our Pay-TV subscriber base.

Selling, general and administrative expenses. ~~“Selling,~~“Selling, general and administrative expenses” totaled ~~$379~~$332 million during the three months ended ~~September~~June 30, ~~2020,~~2021, a ~~$59~~$16 million or ~~13.6%~~4.7% decrease compared to the same period in ~~2019.~~2020. This change was primarily driven by ~~a decrease in subscriber acquisition costs resulting from~~ ~~fewer gross new DISH TV subscriber activations,~~ ~~and by~~ cost cutting initiatives including a focused set of staffing ~~reductions.~~reductions in 2020.

DISH TV SAC. DISH TV SAC was ~~$864~~$890 during the three months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$827~~$834 during the same period in ~~2019,~~2020, an increase of ~~$37~~$56 or ~~4.5%~~6.7%. This change was primarily attributable to an increase in advertising costs per ~~subscriber.~~subscriber, partially offset by higher commercial additions compared to the same period in 2020 and a decrease in hardware costs per activation. Commercial activations historically have lower DISH TV SAC than residential activations, and therefore the increase in commercial activations have a positive impact on DISH TV SAC. The decrease in hardware costs per activation primarily resulted from lower costs per receiver and a higher percentage of remanufactured receivers being activated on new subscriber accounts.

During the three months ended ~~September~~June 30,, 2021 and 2020, ~~and 2019,~~ the amount of equipment capitalized under our lease program for new DISH TV subscribers totaled ~~$49~~$18 million and ~~$66~~$36 million, respectively. This decrease in capital expenditures primarily resulted from a decrease in gross new DISH TV subscriber ~~activations.~~activations and a higher percentage of remanufactured receivers being activated on new subscriber accounts.

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 DISH TV SAC reduction associated with redeployment of that returned lease equipment.

Our “DISH TV SAC” may materially increase in the future to the extent that we, among other things, transition to newer technologies, introduce more aggressive promotions, or provide greater equipment subsidies.

~~Interest expense, net of amounts capitalized.~~ ~~“Interest expense, net of amounts capitalized” totaled $171 million during the three months ended~~ ~~September 30, 2020, a decrease of $17 million compared to the same period in 2019.~~ This decrease was primarily related to a reduction in interest expense resulting from debt redemptions during 2020 and 2019, partially offset by an increase in interest expense as a result of the issuance of our 7 3/8% Senior Notes due 2028 on July 1, 2020.

Income tax (provision) benefit, net. Our income tax provision was ~~$148~~$155 million during the three months ended ~~September~~June 30, ~~2020,~~2021, an increase of ~~$79~~$29 million compared to the same period in ~~2019.~~2020. The increase in the provision was primarily related to an increase in “Income (loss) before income ~~taxes.~~taxes,”

partially offset by a decrease in our effective tax rate.

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~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019.~~2020.


	For the Nine Months Ended										For the Six Months Ended
	September 30,						Variance				June 30,						Variance
Statements of Operations Data	2020			2019			Amount			%	2021			2020			Amount			%

	(In thousands)										(In thousands)
Revenue:
Service revenue	$	9,357,713		$	9,285,915		$	71,798		0.8	$	6,314,097		$	6,248,234		$	65,863		1.1
Equipment sales and other revenue		109,629			140,966			(31,337)		(22.2)		60,310			68,079			(7,769)		(11.4)
Total revenue		9,467,342			9,426,881			40,461		0.4		6,374,407			6,316,313			58,094		0.9

Costs and Expenses:
Cost of services		5,911,995			6,337,170			(425,175)		(6.7)		3,908,460			4,062,170			(153,710)		(3.8)
% of Service revenue		63.2	%		68.2	%						61.9	%		65.0	%
Cost of sales - equipment and other		82,840			133,302			(50,462)		(37.9)		41,177			54,474			(13,297)		(24.4)
Selling, general and administrative expenses		1,149,782			1,215,414			(65,632)		(5.4)		665,134			770,616			(105,482)		(13.7)
% of Total revenue		12.1	%		12.9	%						10.4	%		12.2	%
Depreciation and amortization		382,970			435,796			(52,826)		(12.1)		226,633			257,954			(31,321)		(12.1)
Total costs and expenses		7,527,587			8,121,682			(594,095)		(7.3)		4,841,404			5,145,214			(303,810)		(5.9)

Operating income (loss)		1,939,755			1,305,199			634,556		48.6		1,533,003			1,171,099			361,904		30.9

Other Income (Expense):
Interest income		2,614			29,981			(27,367)		(91.3)		1,808			1,962			(154)		(7.8)
Interest expense, net of amounts capitalized		(517,633)			(578,286)			60,653		10.5		(336,188)			(346,387)			10,199		2.9
Other, net		702			6,072			(5,370)		(88.4)		(1,795)			793			(2,588)		*
Total other income (expense)		(514,317)			(542,233)			27,916		5.1		(336,175)			(343,632)			7,457		2.2

Income (loss) before income taxes		1,425,438			762,966			662,472		86.8		1,196,828			827,467			369,361		44.6
Income tax (provision) benefit, net		(356,432)			(195,104)			(161,328)		(82.7)		(295,558)			(208,334)			(87,224)		(41.9)
Effective tax rate		25.0	%		25.6	%						24.7	%		25.2	%
Net income (loss)		1,069,006			567,862			501,144		88.3	$	901,270		$	619,133		$	282,137		45.6
Less: Net income (loss) attributable to noncontrolling interests, net of tax		—			(124)			124		*
Net income (loss) attributable to DISH DBS	$	1,069,006		$	567,986		$	501,020		88.2

Other Data:
Pay-TV subscribers, as of period end (in millions) **		11.423			12.180			(0.757)		(6.2)		10.993			11.272			(0.279)		(2.5)
DISH TV subscribers, as of period end (in millions) **		8.965			9.494			(0.529)		(5.6)		8.554			9.017			(0.463)		(5.1)
SLING TV subscribers, as of period end (in millions)		2.458			2.686			(0.228)		(8.5)		2.439			2.255			0.184		8.2
Pay-TV subscriber additions (losses), net (in millions)		(0.393)			(0.142)			(0.251)		*		(0.297)			(0.509)			0.212		41.7
DISH TV subscriber additions (losses), net (in millions)		(0.259)			(0.411)			0.152		37.0		(0.262)			(0.172)			(0.090)		(52.3)
SLING TV subscriber additions (losses), net (in millions)		(0.134)			0.269			(0.403)		*		(0.035)			(0.337)			0.302		89.6
Pay-TV ARPU	$	90.88		$	85.55		$	5.33		6.2	$	94.97		$	90.43		$	4.54		5.0
DISH TV subscriber additions, gross (in millions)		0.859			1.007			(0.148)		(14.7)		0.411			0.567			(0.156)		(27.5)
DISH TV churn rate		1.36	%		1.64	%		(0.28)	%	(17.1)		1.29	%		1.34	%		(0.05)	%	(3.7)
DISH TV SAC	$	854		$	813		$	41		5.0	$	839		$	849		$	(10)		(1.2)
EBITDA	$	2,323,427		$	1,747,191		$	576,236		33.0	$	1,757,841		$	1,429,846		$	327,995		22.9
OIBDA	$	2,322,725		$	1,740,995		$	581,730		33.4	$	1,759,636		$	1,429,053		$	330,583		23.1

* Percentage is not meaningful.

**During the first quarter 2020, we removed approximately 250,000 subscribers representing commercial accounts impacted by COVID-19 from our ending Pay-TV subscriber count. During the second, third and ~~third~~fourth quarters 2020, 45,000, 35,000 and ~~35,000,~~zero, respectively, of these subscribers came off pause or had temporary rate relief end and ~~are included in~~were added to our ~~ending~~ Pay-TV subscriber count asduring the periods they returned in 2020, and 17,000, 5,000 and 47,000, respectively, of ~~September 30, 2020.~~ these subscribers disconnected. During the three months ended March 31, 2021, the remaining commercial accounts representing 101,000 subscribers disconnected. The effect of the removal of ~~these~~the 250,000 subscribers, ~~as of March 31, 2020 and~~ the addition of these 80,000 subscribers asand disconnect of ~~September 30, 2020~~170,000 subscribers was excluded from the calculation of our gross new Pay-TV subscriber activations, net Pay-TV subscriber additions/losses and Pay-TV churn ~~rate for the nine months ended September 30, 2020.~~rate. See “Results of Operations – Pay-TV subscribers” for further ~~information..~~information.

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Pay-TV ~~subscribers~~Subscribers

DISH TV subscribers. We lost approximately ~~259,000~~262,000 net DISH TV subscribers during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the loss of approximately ~~411,000~~172,000 net DISH TV subscribers during the same period in ~~2019.~~2020. This ~~decrease~~increase in net DISH TV subscriber losses primarily resulted from ~~a lower DISH TV churn rate, partially offset by~~ lower gross new DISH TV subscriber ~~activations.~~activations, offset by a lower DISH TV churn rate.

SLING TV subscribers. We lost approximately ~~134,000~~35,000 net SLING TV subscribers during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the ~~addition~~loss of approximately ~~269,000~~337,000 net SLING TV subscribers during the same period in ~~2019. This~~2020. The decrease in net SLING TV subscriber ~~additions~~losses was primarily related to lower subscriber disconnects resulting from our emphasis on improved streaming performance and enhanced customer segmentation and targeting, leading to the acquisition and retention of more high quality subscribers, and higherSLING TV subscriber ~~activations,~~activations. We continue to experience increased competition, including competition from other subscription video on-demand and live-linear OTT service ~~providers, and~~providers. The six months ended June 30, 2020 was negatively impacted by delays and cancellations of sporting events as a result of COVID-19.

DISH TV subscribers, gross. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, we activated approximately ~~859,000~~411,000 gross new DISH TV subscribers compared to approximately ~~1.007 million~~567,000 gross new DISH TV subscribers during the same period in ~~2019,~~2020, a decrease of ~~14.7%~~27.5%. This decrease in our gross new DISH TV subscriber activations was primarily related to the impact of COVID-19. Beginning in the second half of March 2020, COVID-19 and the related governmental recommendations and/or mandates created reduced in person selling opportunities, and a reduction in customers’ willingness to open direct mail marketing and allow in-home technicians into their ~~homes as well as delays and cancellations of sporting events.~~homes. As a result, beginning in the first quarter 2020, we reduced our marketing expenditures and our gross new DISH TV subscribers began to decrease. We continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our gross new DISH TV subscribers as a result of, among other things, ~~higher unemployment and~~ lower discretionary spending and reduced ability to perform our in-home service operations due to the impact of social distancing. In addition, our gross new DISH TV subscriber activations continue to be negatively impacted by stricter customer acquisition policies for our DISH TV subscribers, including an emphasis on acquiring higher quality subscribers, and by increased competitive pressures, including aggressive short term introductory pricing and bundled offers combining broadband, video and/or wireless services and other discounted promotional offers, and channel removals.

DISH TV churn rate. Our DISH TV churn rate for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~1.36%~~1.29% compared to ~~1.64%~~1.34% for the same period in ~~2019.~~2020. This decrease primarily resulted from the impact of COVID-19 beginning in the second quarter 2020, including, among other things, the recommendations and/or mandates from federal, state, and local authorities that customers refrain from non-essential movements outside of their homes and the resulting increased consumption of our Pay-TV services. In addition, COVID-19 had an impact on competitive pressures due to, among other things, a reduction in customers’ willingness to allow competitors’ technicians into their homes ~~and~~ delays and cancellations of sporting events that reduced the attractiveness of competitors’ promotional offers and services. Furthermore, our DISH TV churn rate for the nine months ended September 30, 2019 was negatively impacted by Univision’s removal of certain of their channels from our programming lineup.. We continue to assess the impact of COVID-19 and cannot predict with certainty the impact to our DISH TV churn rate as a result of, among other things, ~~higher unemployment and~~ lower discretionary spending and reduced ability to perform our in-home service operations due to the impact of social distancing. ~~In addition, this decrease also resulted from~~Our DISH TV churn rate was positively impacted by our emphasis on acquiring and retaining higher quality subscribers. Our DISH TV churn rate continues to be adversely impacted by external factors, such as, among other things, increased competitive pressures, including aggressive marketing, bundled discount offers combining broadband, video and/or wireless services and other discounted promotional offers, as well as cord cutting. Our DISH TV churn rate is also impacted by internal factors, such as, among other things, our ability to consistently provide outstanding customer service, price increases, programming interruptions in connection with the scheduled expiration of certain programming carriage contracts, our ability to control piracy and other forms of fraud and the level of our retention efforts.

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Service revenue. “Service revenue” totaled ~~$9.358~~$6.314 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, an increase of ~~$72~~ $66 million or ~~0.8%~~1.1% compared to the same period in ~~2019.~~ 2020. The increase in “Service revenue” compared to the same period in ~~2019~~2020 was primarily related to an increase in Pay-TV ARPU, discussed below, partially offset by a lower average Pay-TV subscriber base.

Pay-TV ARPU. Pay-TV ARPU was ~~$90.88~~$94.97 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 versus ~~$85.55~~$90.43 during the same period in ~~2019.~~ 2020. The ~~$5.33~~$4.54 or ~~6.2%~~5.0% increase in Pay-TV ARPU was primarily attributable ~~to the~~ DISH TV programming package price increases in the first quarter 2021 and 2020, and ~~2019,~~ the SLING TV programming package price increases in the first quarter 2021 and 2020 and ~~fourth quarter 2019~~higher ad sales revenue, partially offset by an increase in SLING TV subscribers as a percentage of our total Pay-TV subscriber base. SLING TV subscribers on average purchase lower priced programming services than DISH TV subscribers, and ~~fewer commercial accounts compared to~~therefore, the ~~same period~~increase in ~~2019, which have lower~~SLING TV subscribers as a percentage of our total Pay-TV ~~ARPU than residential subscribers.~~subscriber base had a negative impact on Pay-TV ARPU.

Cost of services. “Cost of services”totaled ~~$5.912~~$3.908 billion during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, a decrease of ~~$425~~$154 million or ~~6.7%~~3.8% compared to the same period in ~~2019.~~2020. The decrease in “Cost of services” was primarily attributable to a lower average Pay-TV subscriber base ~~lower~~and a decrease in variable and retention costs per subscriber, partially offset by higher programming costs per subscriber. Variable and retention costs per subscriber ~~and the reduction~~decreased due to, among other things, increased operational efficiencies, including a focused set of ~~expense associated with the satellite lease for EchoStar XVIII and Nimiq 5.~~staffing reductions in 2020. Programming costs per subscriber ~~decreased~~increased during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 due ~~to, among others, Sinclair~~ RSN’s removal of certain of their channels from our programming lineup in July 2019 and multiple one-time programming adjustments in the third quarter 2020. The reduction in satellite lease expense relates to our lease of EchoStar XVIII from DISH Network which ended in May 2019 as a result of an agreement to sell our interests in the LMDS and MVDDS licenses in exchange for the EchoStar XVIII satellite. During September 2019 pursuant to the Master Transaction Agreement, we began accounting for our Nimiq 5 satellite lease as a finance lease. Accordingly, expenses related to this lease are no longer recorded in “Cost of services,” but rather in “Depreciation and amortization” and “Interest expense, net of amounts capitalized” on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). These decreases were partially offset by increases in programming costs per subscriber related to rate increases in certain of our programming contracts, including the renewal of certain contracts at higher rates, particularly for local broadcast channels. “Cost of services” represented ~~63.2%~~61.9% and ~~68.2%~~65.0% of “Service revenue” during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

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Selling, general and administrative expenses. ~~“Selling,~~“Selling, general and administrative expenses” totaled ~~$1.150 billion~~$665 million during the ~~nine~~six months ended ~~September~~June 30,~~, 2020,~~ 2021, a ~~$66~~$105 million or ~~5.4%~~13.7% decrease compared to the same period in ~~2019.~~ 2020. This change was primarily driven by a decrease in subscriber acquisition costs resulting from reduced marketing expenditures and fewer gross new DISH TV subscriber activations, and by cost cutting initiatives, ~~in the Pay-TV segment,~~ including a focused set of staffing ~~reductions.~~reductions in 2020.

DISH TV SAC. DISH TV SAC was ~~$854~~$839 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to ~~$813~~$849 during the same period in ~~2019, an increase~~2020, a decrease of ~~$41~~$10 or ~~5.0%~~1.2%. This change was primarily attributable to ~~fewer~~higher commercial additions compared to the same period in ~~2019, which~~2020 and a decrease in hardware costs per activation, partially offset by an increase in advertising costs per subscriber. Commercial activations historically have lower DISH TV SAC than residential activations, and antherefore the increase in ~~advertising~~commercial activations had a positive impact on DISH TV SAC. The decrease in hardware costs per ~~subscriber.~~activation primarily resulted from lower costs per receiver and a higher percentage of remanufactured receivers being activated on new subscriber accounts.

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During the ~~nine~~six months ended ~~September~~June 30,, 2021 and 2020, ~~and 2019,~~ the amount of equipment capitalized under our lease program for new DISH TV subscribers totaled ~~$120~~$40 million and ~~$143~~$71 million, respectively. This decrease in capital expenditures primarily resulted from a decrease in gross new DISH TV subscriber activations.

~~Depreciation and amortization.~~ ~~“Depreciation and amortization” expense totaled $383 million during the nine months ended September~~ 30~~, 2020, a $53 million or 12.1% decrease compared to the same period in 2019. This change was~~ ~~primarily driven by~~ a decrease in depreciation expense from equipment leased to new and existing DISH TV subscribers, partially offset by an increase in depreciation expense as a result of our Nimiq 5 satellite lease being accounted for as a finance lease beginning in September 2019 and depreciation associated with EchoStar XVIII, discussed above.

~~Interest expense, net of amounts capitalized.~~ ~~“Interest expense, net of amounts capitalized” totaled $518 million during the nine months ended~~ ~~September 30, 2020, a decrease of $61 million compared to the same period in 2019.~~ This decrease was primarily related to a reduction in interest expense resulting from debt redemptions during 2020 and 2019, partially offset by an increase in interest expense as a result of the issuance of our 7 3/8% Senior Notes due 2028 on July 1, 2020.

Income tax (provision) benefit, net. Our income tax provision was ~~$356~~$296 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, an increase of ~~$161~~$87 million compared to the same period in ~~2019.~~2020. The increase in the provision was primarily related to an increase in “Income (loss) before income ~~taxes.~~taxes,” partially offset by a decrease in our effective tax rate.

Non-GAAP Performance Measures and Reconciliation

It is management’s intent to provide non-GAAP financial information to enhance the understanding of our GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.

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EBITDA

EBITDA is not a measure determined in accordance with 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 is a helpful measure for those evaluating operating performance in relation to our competitors. 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.


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Net income (loss)									$	476,743	$	374,980	$	901,270	$	619,133
Interest, net										161,210		162,935		334,380		344,425
Income tax provision (benefit), net										155,134		125,830		295,558		208,334
Depreciation and amortization										111,391		122,869		226,633		257,954
EBITDA	$	893,581	$	585,087	$	2,323,427	$	1,747,191	$	904,478	$	786,614	$	1,757,841	$	1,429,846
Interest, net		(170,594)		(166,331)		(515,019)		(548,305)
Income tax (provision) benefit, net		(148,098)		(68,817)		(356,432)		(195,104)
Depreciation and amortization		(125,016)		(145,081)		(382,970)		(435,796)
Net income (loss) attributable to DISH DBS	$	449,873	$	204,858	$	1,069,006	$	567,986

The changes in EBITDA during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, were primarily a result of the factors described in connection with operating revenues and operating expenses.

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OIBDA

OIBDA, which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability of our business on a more variable cost basis as it excludes the depreciation and amortization expenses related primarily to capital expenditures and acquisitions, as well as in evaluating operating performance in relation to our competitors. OIBDA is calculated by adding back depreciation and amortization expense to operating income (loss).


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

	(In thousands)								(In thousands)
Operating income (loss)									$	793,374	$	663,897	$	1,533,003	$	1,171,099
Depreciation and amortization										111,391		122,869		226,633		257,954
OIBDA	$	893,672	$	583,579	$	2,322,725	$	1,740,995	$	904,765	$	786,766	$	1,759,636	$	1,429,053
Depreciation and amortization		(125,016)		(145,081)		(382,970)		(435,796)
Operating Income (loss)	$	768,656	$	438,498	$	1,939,755	$	1,305,199

The changes in OIBDA during the three and six months ended June 30, 2021, compared to the same period in 2020, were primarily a result of the factors described in connection with operating revenues and operating expenses.

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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

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. However, we are continually monitoring the COVID-19 pandemic and any potential impact to our internal controls.

PART II — OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

See Note 9 “Commitments and Contingencies - Litigation” in the Notes to our Condensed Consolidated Financial Statements for information regarding certain legal proceedings in which we are involved.

Item 1A. RISK FACTORS

Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, ~~2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2020 ~~include~~includes a detailed discussion of our risk factors.

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Item 6.EXHIBITS

(a)

Exhibits.


10.1*4.1		~~Incentive Stock Option Agreement~~Indenture, relating to the 5 1/8% Senior Notes due 2029, dated as of May 24, 2021 among DISH DBS Corporation, the guarantors named on the signature pages thereto and U.S. Bank, National Association, as Trustee (incorporated by reference tofrom Exhibit ~~10.1~~4.1 to the ~~Quarterly~~Current Report on Form ~~10-Q~~8-K of DISH Network Corporation ~~for the quarter ended September 30, 2020, Commission File No. 0-26176)~~filed May 24, 2021).~~***~~

10.2*4.2		~~Non-Qualified Stock Option~~Registration Rights Agreement, dated as of May 24, 2021, by and between DISH DBS Corporation, the guarantors, Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. (incorporated by reference tofrom Exhibit ~~10.2~~4.2 to the ~~Quarterly~~Current Report on Form ~~10-Q~~8-K of DISH Network Corporation ~~for the quarter ended September 30, 2020, Commission File No. 0-26176)~~filed May 24, 2021).~~***~~

10.322		~~Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q~~List of DISH Network Corporation for the quarter ended September 30, 2020, Commission File No. 0-26176).***Subsidiary Guarantors

31.1**		Section 302 Certification of Chief Executive Officer.

31.2**		Section 302 Certification of Chief Financial Officer.

32.1**		Section 906 Certification of Chief Executive Officer.

32.2**		Section 906 Certification of Chief Financial Officer.

101**		The following materials from the Quarterly Report on Form 10-Q of DISH DBS for the quarter ended ~~September~~June 30, ~~2020,~~2021, filed on ~~November~~August 13, ~~2020,~~2021, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Changes in Stockholder’s Equity (Deficit), (iv) Condensed Consolidated Statements of Cash Flows and (v) related notes to these financial statements.
104**		Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

*~~Incorporated by reference.~~

**Filed herewith.

~~***Constitutes a management contract or compensatory plan or arrangement.~~

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Table of Contents

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 DBS CORPORATION


	By:	/s/ W. Erik Carlson
		W. Erik Carlson
		President and Chief Executive Officer
		(Duly Authorized Officer)

	By:	/s/ Paul W. Orban
		Paul W. Orban
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: ~~November~~August 13, ~~2020~~2021

7360


	As of September 30, 2020								As of December 31, 2019
	Marketable								Marketable
	Investment		Unrealized						Investment		Unrealized
	Securities		Gains		Losses		Net		Securities		Gains		Losses		Net

	(In thousands)
Debt securities (including restricted):
U.S. Treasury and agency securities	$	130,592	$	8	$	—	$	8	$	390	$	—	$	—	$	—
Commercial paper		287,124		—		—		—		—		—		—		—
Corporate securities		28,212		2		—		2		—		—		—		—
Other		147		—		—		—		—		—		—		—
Total	$	446,075	$	10	$	—	$	10	$	390	$	—	$	—	$	—