The Future of

1. The Future of DmitriyGorenshteyn Daniel M. Choi Brandon Stackhouse Levi Golston & Ellen Zhang

2. Positioning for the future Decision Implementation Next Steps Due to • Consolidate operations to reduce costs • Leverage market share • Diversify offers to subscribers • Merge with DirecTV • Stock-swap to minimize financial risk • Accelerate entry into wireless market • Expand beyond US • Competitor consolidation • Mature and evolving market • Increasing supplier pressure

3. Pay-TV market is saturated in the U.S. • Subscriber growth has dwindled • Market share tied up between 4 companies • Rate of TV US household on the decline Decision ➡ Implementation ➡ Next Steps Source: Bloomberg

4. Programming costs expected to increase • Retransmission fees projected to continue rising • Content providers will continue to drive costs up for the Pay-TV market Decision ➡ Implementation ➡ Next Steps Source: Bloomberg, SNL Kagan

5. DirecTV merger necessary for competition • Larger customer base provides more leverage for TWC-Comcast • Leverage opportunity realized for cable by curbing the rising costs of content • Rising costs for satellite companies Decision ➡ Implementation ➡ Next Steps Source: Bloomberg, SNL Kagan

6. Satellite merger projected to realize savings • Comparable customer base between cable and satellite • Programming costs for DISH-DirecTV merger under control Decision ➡ Implementation ➡ Next Steps Source: Bloomberg, SNL Kagan

7. Net income projected to grow post-merger Reduction in costs by 2018: • 10% subscriber acquisition costs • 10-15% SG&A • 10-25% programming costs Strong synergy: +$3.8B Conservative: +$2.0B *assuming flat customer growth Decision ➡ Implementation ➡ Next Steps Source: 10-K Filings, S&P

8. Core Competencies & Merger Synergies Supplements • Major DBS players in the US market • DVR (Hopper and Genie) • Streaming, On demand • HD • Combined cutting-edge technology • More channels & cheaper packages • Better geographic coverage Complements Complements • Spectrum holdings • Satellite Internet • Rural area coverage • Latin America market • Exclusive channel packages Decision ➡ Implementation ➡ Next Steps

9. Structure of the deal “Highly leveraged” financial risk: • Requires $45-50 B debt financing and assumption of DTV debt • FFO/debt ratio ~12% • Difficult to repay debt obligations High taxation of acquisition Acquire Stock Swap “Intermediate” financial risk: • Stock swap at 1.32 DISH: 1 DTV • Pro forma value of $66.5 B • FFO/debt ratio ~27% • Healthy ratio to repay debt obligations Lower taxation of acquisition Decision ➡ Implementation ➡ Next Steps Source: S&P

10. Merge via stock-swap “Highly leveraged” financial risk: • Requires $45-50 B debt financing and assumption of DTV debt • FFO/debt ratio ~12% • Difficult to repay debt obligations High taxation of acquisition Acquire Stock Swap “Intermediate” financial risk: • Stock swap at 1.32 DISH: 1 DTV • Pro forma value of $66.5 B • FFO/debt ratio ~27% • Healthy ratio to repay debt obligations Lower taxation of acquisition Decision ➡ Implementation ➡ Next Steps Source: S&P

11. Latin American DBS market is expanding • Rapid growth in Latin American digital TV market • DirecTV estimated 33% market share Latin American Market Decision ➡ Implementation ➡ Next Steps Source: 10-K filings, Digital TV Research

12. New opportunity: Global wireless broadband Mobile Broadband is Growing Dish’s Spectrum Holdings • Acquisitions of TerreStar, DBSD North America, and others: • Unpaired 700 MHz: multipoint broadcasting w/ eMBMS • PCS H block: LTE wireless country-wide • AWS-4 blocks: additional broadband capacity Broadband Commission for Digital Development Decision ➡ Implementation ➡ Next Steps Source: Broadband Commission for Digital Development, ExtremeTech

13. Now is the right time to shift to wireless market Industry Regulatory Environment • Pay-TV competitors are also in broadband Internet market • Over-the-top content delivery expanded by 225% in past 4 years • Dish Network is in process of acquiring additional wireless spectrum licenses • FCC is currently reallocating wireless spectrum • FCC’s National Broadband Plan actively promotes broadband penetration • Dept. of Justice is reconsidering competition standards in face of broadband development Decision ➡ Implementation ➡ Next Steps Source: Bloomberg, www.broadband.gov

14. Future growth strategies Future Build-outs • •Latin America (DirecTV) • •Wireless broadband • •Smart home potential (DirecTV: LifeShield) • •Electronic sell-through (EST) • •Mobile & Interactive TV (ex. DirecTV – shares in i.TV) • •4K resolution and beyond – potential for a specialty market Decision ➡ Implementation ➡ Next Steps Source: Advanced TV

15. Mid-Term (3-5 yrs) Long-Term (5+ yrs) Short-Term (0-2 yrs) DBS Diversified Content Provider Survive Merge with DirecTV Consolidate operations Lower costs Position Build core-competencies Roll out wireless broadband Expand Latin American market Thrive Identify new opportunity Expand global market Robust Business Diversified business robust to disruption High Risk Not a diversified business Volatile Risk Changing structures

16. Sources • Mobile satellite TV market to reach $11bn by 2015, in Advanced Television • IBISWorld Industry Report 51711a • IBISWorld Industry Report 51711b • Yahoo! Finance • What Would A DIRECTV-DISH Merger Mean For Ratings?, S&P Credit FAQ, Oct. 2013 • Dish secures spectrum for 150 Mbps LTE wireless broadband to rural homes in the US, Neal Gompa in Extreme Tech • Ergen lays out Dish Network’s 10-year plan, Associated Press, May 2012 • Updated Industry Retransmission Fee Projections, SNL Kagan, November 2013 • Multichannel Video Subscription Count Drops by a Quarter Million in 2013, SNL Kagan, March 2014 • US Multichannel Subscriber Update and Programming Cost Analysis, SNL Kagan, June 2013

17. Sources -continued • Analysis: In telecom merger mania, skeptical eye from Obama administration, by Alina Selyukh and Sinead Carew in Reuters, Dec. 2013 • DirecTV’s Latin America Pay-TV Is Booming, by Trefis in Forbes, Sep. 2013 • Saturated market for DBS, in Advanced Television, Nov. 2013 • What A Merger of Comcast And Time Warner Cable Could Mean For Hollywood, by David Lieberman, Feb. 2014 • Economics of Mobile Programming, SNL Kagan, Mar. 2014 • Why A DirecTV Dish Network Merger Might Be Different This Time Around, Forbes, Mar. 2014 • Ergen’s DirecTV Overture Puts Dish in Play: Real M&A, Bloomberg News, Mar. 2014 • FCC Chair Hints at Spectrum-Allocation Idea, Wall Street Journal Tech, Dec. 2013 • Dish-DirecTV M&A May Yield Up To 25% Programming Cost Savings, Bloomberg, Mar. 2014 • Dish-DirecTV DOJ Review Would Have Three Possible Outcomes, Bloomberg, Mar. 2014 • Broadband, Commercial Service Are Main Bull Cases for U.S. Cable, Bloomberg, Mar. 2014

18. Appendix

19. Service Segments Satellite $39.9 bn Cable $ 84.9 bn Supplement Source: IBISWorld

20. Financial Summary (EOY 2013)

21. Projected cost reduction schedule Cost Reduction Schedule

22. Cost Calculation DISH Projections SG&A Programming per user Op. expense DirecTV Projections SG&A Programming per user Op. expense

23. Net Income Calculation DISH Projections SAC Subscriber Adds Revenue DirecTV Projections Revenue Subscriber Adds SAC

24. Projected cost efficiencies post-merger Decision ➡ Implementation ➡ Next Steps Source: 10-K Filings, S&P

25. Exchange Ratio Calculation Supplement

26. Over-the-top subscribers White: % of household with TV Orange: Over-the-top subscribers (000’s) Source: Bloomberg

27. Triple Play isn’t a good idea (i.e. no landline) Supplement http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201306.pdf

28. Current wireless strategy is poorly defined • $10-26B in broadband transmission spectrum • DISH attempted to acquire: • SprintNextel (2013, failed) • Clearwire (2013, failed) • LightSquared (2014, GPS conflict) • Pending FCC relaxing restrictions on currently owned spectrum • Lack of industry experience or partner in venture Looming FCC build-out requirements 2016 40% 2019 70%

29. New market: Global wireless broadband Broadband Commission for Digital Development Fees increase by 100%, 3% growth in market size Decision ➡ Implementation ➡ Next Steps Source: Bloomberg, Broadband Commission for Digital Development

30. DISH’s Spectrum Portfolio Vision laid out by Ergen (2012) for TV, voice, and internet to both home and mobile Acquisitions of TerreStar, DBSD North America, and others make it possible now • Unpaired 700 MHz: point to multipoint broadcasting w/ eMBMS • PCS H block: LTE wireless country-wide • AWS-4 blocks: additional broadband capacity Use additional resources from merger to aggressively develop mobile capabilities Become the first to offer the “new triple play” - seamless wireless and satellite connectivity - anywhere in the U.S. Decision ➡ Implementation ➡ Next Steps Source: Extreme Tech

31. High Market Share Locations

32. Friendlier regulatory environment Supplemental Source: FCC (2002)CS Docket No. 01-348

33. Beyond 2002 Failed Merger FCC findings contingent on 3 arguments: • DBS Market • Pay-TV Market • Broadband Source: FCC, CS Docket No. 01-348

34. Beyond 2002 Failed Merger -- DBS

35. Beyond 2002 Failed Merger -- Pay-TV

36. Beyond 2002 Failed Merger -- Broadband

37. Merger Payoffs Barrier to Entry Market Shift

38. Alternative merger prospects Long-Term Short-Term Opportunities • Long-term growth prospects unclear • Dish subsidiary may be barred from additional spectrum acquisitions • FCC may see merger as anti-competitive behavior • Dish identity diluted • Strong long-term market prospects with well-established companies • AT&T and Sprint have more diversified holdings • Does not lead to DBS monopoly Challenges Decision ➡ Implementation ➡ Next Steps

39. Merger Challenges • Things that could preclude the DISH-DirecTV merger • Regulation* • Ownership • Cultural hurdles • Technical barrier Decision ➡ Implementation ➡ Next Steps

40. Friendlier Regulatory Environment Market shift from Pay-TV to Online Content Regulatory Overhaul (National Broadband Plan) • Promoting Broadband Penetration • Spectrum Reallocation • Re-visiting Competition Standards

41. National Broadband Plan (2013) FCC Overhauling Broadband Regulation: • Spectrum Reallocation • Actively Promote Penetration • DOJ Reconsidering Competitivity Standards • Possibly Re-Visiting Communications Act Source: FCC, www.broadband.gov

42. AT&T or Sprint Merger?