Jason Kiser - Treasurer R. Stanton Dodge - Executive Vice President, General Counsel and Secretary Joseph P. Clayton - Chief Executive Officer, President and Director Robert E. Olson - Chief Financial Officer, Principal Accounting Officer and Executive Vice President Charles W. Ergen - Co-Founder and Chairman

Brian Russo - Deutsche Bank AG, Research Division Marci Ryvicker - Wells Fargo Securities, LLC, Research Division Stefan Anninger - Crédit Suisse AG, Research Division Benjamin Swinburne - Morgan Stanley, Research Division Jason B. Bazinet - Citigroup Inc, Research Division Philip Cusick - JP Morgan Chase & Co, Research Division Tuna N. Amobi - S&P Equity Research James M. Ratcliffe - Barclays Capital, Research Division Richard Tullo - Albert Fried & Company, LLC, Research Division

Good afternoon. My name is Nicole, and I'll be your conference operator today. At this time, I would like to welcome everyone to the DISH Network Corporation Q2 2012 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Kiser, you may begin your conference.

Thank you, Nicole. Well, thanks for joining us, everyone. My name's Jason Kiser. I'm the Treasurer here at DISH Network. I'm joined today by Charlie Ergen, our Chairman; Joe Clayton, our CEO; Bernie Han, COO; Robert Olson, our CFO; Paul Orban, our Controller; and Stanton Dodge, our General Counsel. Before we open it up to Q&A, we do need to do our Safe Harbor disclosures. So for that, we'll turn it over to Stanton. R. Stanton Dodge: Good morning, everyone, and thank you for joining us. We invite media to participate in listen-only mode on the call and ask that you not identify participants or their firms in your reports. We also do not allow audio taping and ask that you respect that. All statements we make during this call that are not statements of historical fact constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by such forward-looking statements. For a list of those factors, please refer to the front of our 10-Q. All cautionary statements we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. And with that out of the way, I'll turn it back over to Jason.

Thanks, Stan. I think Joe has some prepared remarks that he'd like to get to. Joseph P. Clayton: Thanks, Jason, and good afternoon to those of you on the East Coast and good morning to our West Coast participants. Now I've been serving as DISH CEO for a little over a year now, and I believe that we've made good progress in transforming DISH into a more customer-centric company. We've made significant improvement in our customer service, branding, distribution and in commercializing our technology. We at DISH are indeed in a much better situation today than we were at this time last year. Now in a few minutes, I'll walk you all through some of the highlights of the second quarter. But before we get into those details, I want to briefly update you all on our wireless and our Blockbuster corporate initiatives. First, our wireless spectrum status is generally unchanged. We continue to work with the FCC on the AWS-4 rulemaking process, and we expect a favorable resolution in the next few months. The FCC's agenda in the wireless arena is quite full at this time. This only highlights the increasing importance of spectrum in our country today. We firmly believe that liberating spectrum, increasing competition and creating new jobs are all in the immediate public interest. In the meantime, we're moving forward to the extent that we believe prudent. In May, we entered into an agreement with Qualcomm to enhance the development of the 2-gigahertz platform at the chipset level. This will in time bring device and infrastructure players into the picture. As we mentioned on our last call, in order to be prepared once we do receive regulatory clarity, we've been actively developing relationships with companies throughout the wireless sector. Let's move on to Blockbuster. The second quarter was a transition period for Blockbuster. In the last several months, we've taken the following actions: completed the relocation of the Dallas headquarters to Denver; replaced virtually the entire senior management team, we brought in new people who have extensive retail experience; closed underperforming stores, another 150 in the quarter; reformatted and implemented new signage and product displays in the remaining 900-plus stores with a heavy Hispanic focus in most urban retail locations; developed a new in-store merchandising strategy; retrained the entire retail sales force; and started demonstrating and selling DISH's Hopper and Joey products and DISH's programming services, like Blockbuster @Home, in the Blockbuster retail stores. So just as we are experiencing a business transformation here at DISH, Blockbuster is going through a similar evolution. Given all the moving parts, sales seasonality and the increased in-store investment, Blockbuster reported an operating loss in the second quarter. Now we are optimistic that the strategic changes that we have recently implemented will put us in a position for improvement. Now let's move on to the second quarter DISH highlights. April began with our marketing launch of DISH's highly acclaimed whole home HD DVR, the Hopper, extensively advertised during the NCAA men's basketball tournament and on the national championship game itself on April 2. This represented DISH's largest advertising campaign in its history. As you all may recall, the Hopper boasts a variety of consumer friendly and technologically advanced features such as PrimeTime Anytime, up to 8 days of primetime recording from the major TV networks; the ability to record up to 6 programs at the same time; a 2-terabyte hard drive with over 2,000 hours of video storage; and 73 channels of commercial-free SiriusXM music, including 9 new Latino stations. These are product attributes that the rest of the pay-TV industry simply cannot match. And we believe that this level of differentiation, combined with our new brand emphasis, will help fuel our sales success going forward. Now to say that the Hopper has created an industry buzz would be an understatement. And that was before some other news that we shared about another consumer-friendly feature. And I'll talk more about that in a minute. In early May, we hosted over 3,200 retailers at our annual Team Summit event in Orlando. It represented our largest retail conference ever with nearly 40% being new attendees. The big product news was the introduction of a new feature that further differentiated the Hopper from our competition, AutoHop. This consumer-friendly capability allows the customer to more easily fast-forward through commercials on certain prerecorded shows of the 4 major networks the day after the live program has aired, a practice that, quite frankly, consumers have embraced since the introduction of remote control. The reaction was swift: immediate praise from the buying public and hell and damnation from the major broadcasters. Now I learned a long time ago that giving the consumer what he or she wants will lead to success every single time. So we do not know how the courts will rule on AutoHop, but we do know that we have already won in the court of public opinion. Also in May, we received good news in terms of our customer service performance. The American Customer Service Satisfaction Index (sic) [American Customer Satisfaction Index], ASCI, ranked DISH first among the nation's largest satellite and cable providers in key measures of customer experience, including overall value, satisfaction and loyalty. At DISH, one of our guiding principles is to think customer. It is the common goal of every employee to continually improve the customer experience. We feel that this single-minded approach will help facilitate lower churn in our subscriber base. In June, we announced our intention to drop AMC Networks' AMC, WE, IFC and Sundance from our network offerings. Simply put, with the exception of a few original series from AMC, all 4 channels significantly underperformed with our DISH subscribers. In a year where we took no price increase, we are laser-like focused on controlling our ever escalating programming costs. Now with that chronological overview, let's get into some specifics. In the second quarter, we made solid progress toward our 2012 goals of growing high-value subscribers, increasing revenue and investing for long-term growth. First, we showed improvement in our subscriber performance. In this seasonally low quarter, we turned in significant year-over-year improvement in both activations and churn. True to our strategy, we are taking a disciplined approach to acquiring and retaining customers. In spite of a difficult economic environment and a highly price-sensitive marketplace, we grew activations to 665,000, a 16% improvement over last year. Now we lost approximately 10,000 subscribers from the end of the first quarter, giving DISH a total subscriber base of 14,691,000 (sic) [14,061,000] as of June 30. Now while disappointed in the loss of just one customer, we were nearly 125,000 net additions better than our 2011 second quarter results. And we believe that we fared much better than most of our competitors. We're also pleased with the continuing improvement in our churn. As you are aware, the second quarter is seasonally higher than the first quarter. Our churn came in at 1.64% (sic) [1.60%], again, an improvement over 2011. We're also focused on subscriber quality. In the second quarter, we increased our mix of DVR and IP-connected activations. This growth was primarily driven by the launch of our award-winning Hopper. And Hopper has also been instrumental in reenergizing our brand. We invested significant marketing dollars behind a national advertising campaign featuring the Hopper, and it has clearly resonated with the American consumer. Yes, the loveable Boston Guys dramatically raised the DISH brand awareness among the buying public. We will continue to invest in our new brand image and in our Hopper product in the second half. Shifting to revenue. Even without a programming price increase this year, we grew ARPU in the second quarter. Although event-driven pay-per-view revenue was higher this quarter, we also saw increased revenue from value-added service, such as our bundled broadband service on the same bill. In summary, with the exception of a onetime charge for an orbital slot, which we disclosed previously, our second quarter results were generally consistent with trends during the last few quarters. Now to provide you all with greater details on our financial performance, here's our CFO, Robert Olson. Robert E. Olson: Thanks, Joe. Well, as Joe mentioned, we continued to make progress in several areas in the second quarter. Our gross activations rebounded nicely, up 93,000 activations compared to second quarter last year. Churn also improved year-over-year, although it was up sequentially due to normal seasonality. The net result was close to flat subscribers in what is typically a tough quarter for DISH and the industry. Subscriber-related revenue declined by 0.5% year-over-year in the second quarter, as we had fewer average subscribers. ARPU was up slightly year-over-year and up -- and $1.40 higher than first quarter, driven by increased pay-per-view and premium revenue. Subscriber-related expenses increased by 5.6% in the quarter versus last year. This increase was due largely to higher programming expense. Programming costs were primarily driven by increases in our contractual rates. Overall, retention and variable costs were flat year-over-year. Blockbuster had a $13-million operating loss in the quarter, driven by weak revenue per store. Some of this revenue shortfall was due to seasonality, as the business is normally stronger in first and fourth quarters. As Joe mentioned, we have numerous initiatives underway to improve revenue. We ended the second quarter with approximately 900 domestic stores. Our second quarter expenses for the wireless spectrum segment were less than the run rate we reported for the last 3 weeks of the first quarter. This was partly due to the severance expense we incur in the first quarter, which we discussed on last quarter's earnings call. The majority of the expense recorded within the wireless spectrum segment was related to depreciation. Our SAC for the quarter was $806, which was up slightly versus second quarter of last year and up $55 per activation versus first quarter. The sequential increase was largely driven by higher brand advertising expense and higher capital equipment spending, associated with a full quarter of Hopper sales. Administrative expenses were roughly flat year-over-year. We had fewer Blockbuster domestic stores in 2012. Partially offsetting this, we had a full quarter of Blockbuster operations this year compared to only 2 months in second quarter of 2011. G&A expenses for the DISH pay-TV business were consistent with recent trends. Net income was down 33% in the second quarter on a year-over-year basis. There were a number of items unrelated to the steady-state operation of our pay-TV business that contributed to this decline. Joe mentioned the FCC ruling on our 148 orbital slot, which we disclosed in an 8-K filing last month. This had a $43-million impact on net income. Our wireless spectrum and Blockbuster segments combined for approximately $26 million of the year-over-year decline in net income in the second quarter. Obviously, the wireless spectrum costs were not part of our results last year since the acquisitions did not close until March 9 this year. As we have discussed on previous calls, the Blockbuster business benefited last year from purchase price accounting impacts related to our purchase of those assets. Another factor contributing almost $40 million to the year-over-year decline in net income was the increase in subscriber acquisition cost. About half of this increase was driven by higher net additions, and the other half was driven by more brand advertising expense associated with the Hopper launch. While we expect this brand advertising to have a long-term positive impact, in the short term, it increased our SAC expense. These items were partially offset in the year-over-year comparison by the accrual we made in second quarter 2011 associated with our ESPN litigation. We generated $238 million of free cash flow in the quarter. Due to the timing of estimated tax payments, our cash taxes paid were roughly $80 million higher than book taxes in the quarter. For the remainder of the year, we expect cash taxes and book taxes to be in the same general range; however, that will vary by quarter. Through the first 6 months of the year, we generated $928 million of free cash flow. The major change on the balance sheet versus last quarter was the addition of $1.9 billion in debt. The proceeds from this debt largely in [ph] investing cash and marketable securities. At the end of July, we added another $1 billion in debt to this offering. Let me now turn it back to Joe before we start Q&A. Joseph P. Clayton: Thanks, Robert. I believe that today's second quarter results clearly show that we have made progress. Unquestionably, there is much more hard work to do. We are committed to growing high-value subscribers, to increasing revenue and to investing for long-term growth. Thank you all for joining us today for our second quarter earnings call. Now we'll open it up to your questions.

[Operator Instructions] Your first question comes from the line of Doug Mitchelson from Deutsche Bank. Brian Russo - Deutsche Bank AG, Research Division: This is Brian Russo for Doug. Your 10-Q disclosed an almost $400-million investment in debt securities of a single company. Can you confirm that company is Clearwire? Charles W. Ergen: This is Charlie. We can't confirm. We don't give disclosure on our strategic investments in terms of names. But we -- it's nothing unusual for us to be at that kind of level in a strategic investment from time to time if you kind of go back through our history. Brian Russo - Deutsche Bank AG, Research Division: Understood. A follow up, if I might. What more might you share on your wireless strategy once the NPRM comes out and is favorable? Charles W. Ergen: Well, I mean, the goalpost of what the possibilities are, obviously, it would be anything from selling the spectrum to building out a total network ourselves without any help from anybody else. But I think the logical place for us to be will be to partner with somebody who's knowledgeable about the business in the business, where there's synergy. But all of that depends on kind of 2 things. One is the timing of the FCC -- when will the FCC rule on our application? And two, what does that ruling say? That will kind of push us kind of one way or the other in those goalposts. Obviously, it's been frustrating that we've been through a process that's now entering its 15th or 16th month since we first filed our first application, and we've gone through a merger agreement then and now a rulemaking agreement. So it's frustratingly slow, but we're not the only people that have had government be slow. And I think that the FCC will -- that they've taken a good hard look at it. I think they strategically have to decide kind of where they want the wireless industry in the United States. They look like in the T-Mo, AT&T merger that they want 4 players. The President of the United States has continually said that he wants to free up spectrum and have a competitive industry. To a person on the FCC, including the chairman, they've said the same thing. We've made the bet that what they've said is what they really mean, and that they do want a new entrant into the business place, they do want more competition. We clearly are in a situation in the United States where you have 2 main players in AT&T and Verizon. It's -- everybody else who's in the industry today has their own set of challenges, if you're not named AT&T and Verizon. So it's unclear exactly how the FCC wants to address that. But I think we'll get clarity both on how the FCC rules on our application and how they rule on the Verizon application with the cable companies. And then I think there'll be a little bit more clarity about kind of where the administration and the FCC would like to see the competitiveness in the wireless business. And as a consumer, it's not very competitive. You're starting to see data caps and higher rates, and you really -- most customers have 2 good choices, and it's unclear whether there's a third or fourth choice out there for the vast majority of people. Most of the profits are in 2 companies, if you exclude Apple. Then -- it's an industry that certainly, we think, is in need of some creativity and some new entrants. But the FCC has taken a good, long, hard look at it. I think that in general, this FCC has made good decisions. In net neutrality and other things that they've worked on, they generally come to good conclusions. It's a very -- at least, my experience with the staff, they're very smart; they're very intelligent; and as a result of that, they're going to come -- I think they're going to come to good conclusions, and I think that they will want us in this business. If we're allowed into the business and the timing is such that we can enter the business where it hasn't run away from us, then I think that, that's a real growth engine for our company in the future and something that we're prepared to do and something that we spent the last 3 years, 4 years preparing ourselves for and have become pretty knowledgeable about the industry and about the things we could do to change it and make it better.

Your next question comes from the line of Marci Ryvicker from Wells Fargo. Marci Ryvicker - Wells Fargo Securities, LLC, Research Division: I have 2 questions, probably both for Robert. You mentioned subscriber-related expenses being up 5.6%, and the Q talks about 55% of revenue. Is this a good run rate that we should think about? Or was there something in the programming expenses that was onetime in the quarter? Robert E. Olson: Marci, yes, this is Robert. Well, we don't give forward guidance to that specific level. But I will say that the bulk of our experience on sub-related expense in the quarter, the bulk of that growth is what's related to programming contractual increases. There were a few things of smaller note that are worth pointing out. We had increased pay-per-view revenue year-over-year in the second quarter, whereas that pay-per-view revenue was down in first quarter. So that drove a little bit of the sequential year-over-year change. As Joe mentioned, we rolled out the Hopper this quarter. While variable and retention costs were flat year-over-year, over the last several quarters, they've actually been down year-over-year. And so that impacted us slightly. Finally, we are starting to grow our broadband business. We worked with ViaSat this year and then later this year, Hughes. Right now, we don't break out that business as a separate line. However, the bulk of those expenses roll into subscriber-related expense. So those are all small impacts. The bulk of it is indeed the programming contractual increase. Charles W. Ergen: This is Charlie. I might just want to add one thing, that obviously, with the termination of the AMC contract, there is some small effect on the positive side in margins going forward because that eliminates a paid programming cost that we used to have. Marci Ryvicker - Wells Fargo Securities, LLC, Research Division: And that would be less than the HDNet. Charles W. Ergen: That's for -- what's that? Marci Ryvicker - Wells Fargo Securities, LLC, Research Division: That would be less than the cost of what you're paying for the HDNet that you added. Charles W. Ergen: When you look at -- when you factor in the replacement cost of the replacement channels, then we still have a net improvement in our cost structure there, which is something that's important going forward, in my opinion, given that, as an example on the AMC side -- first of all, there's 4 AMC channels, right? So if we're just talking about AMC, that's one kind of thing. But contractually, we were forced to carry 3 other channels that we weren't as interested in, in Sundance, WE and IFC, which weren't in the top -- were very poorly viewed within our sub base. So that was one factor. The second factor was that when we analyzed the movies that were on AMC, just as an example, and looked at HDNet, majority of the movies that are on AMC are also on HDNet, except HDNet, we had a lower cost structure than AMC, materially. And secondly, there was no commercials. So this is commercial free -- watching commercial free. And we know from our consumer feedback that 20 minutes of commercials or 60 minutes commercials on an hour-long movie is an awful lot for customers. So we actually improved the movie quality. And in fact, that our research showed that the movies were the highest-rated -- most viewed items on AMC were actually movies. And so by substituting HDNet, we improved our cost structure, improved the service for the customer. ON the -- there are some critically acclaimed series of 8 weeks or 16 weeks duration on AMC, but those are also available to our consumers on an à la carte basis through iTunes or Amazon in virtually the same time frame and through Netflix and others for full seasons. And a lot of our customers like to sit down and watch those channels, the full season in a week. They sign up for Netflix for a free trial, watch 4 seasons of Mad Men, and they're done, and they watch it for free. And so what happened is we had to make it kind of a short-term/long-term decision, where short term, we clearly will lose some customers. And perhaps in the future, there'll be some customers who might want that channel who won't subscribe to our service. But we think that's more than made up by 2 factors. One is the improved cost structure in terms of not paying for programming that we have available on other channels. And second, on a retail basis, we're several dollars lower than our competition who are carrying those channels. And so -- and when you look out there and you've got 4 players all carrying the same channels, at some point, people are going to differentiate themselves and say, "Look, we're going to make strategic decisions on which channels we carry and which ones our viewers watch." And we're very fortunate that we're able to get viewer measurement from the majority of our customers. And so we've got real -- we don't have Nielsen data on 5,000 people. We have data, real data from our customers. And for whatever reason, our customers don't watch some of those critically acclaimed channels at the level that we read about in the paper, perhaps because we skew a bit rural or whatever. So strictly, really an economic decision for us that we think makes a lot of sense long-term, and we think the payback on that's relatively short. Marci Ryvicker - Wells Fargo Securities, LLC, Research Division: I have a somewhat unrelated question. Just about the $3 billion of debt you've raised. How are you thinking about the use of proceeds? We know you have some debt coming due. There's the VOOM litigation in September. And also, is there any possibility that you could think about a special dividend later this year? Charles W. Ergen: Well, we get this question every time, and I -- every quarter and I repeat kind of the answer, which is, we primarily would like to use it to grow our business. And hopefully, as management, we can find ways to use that capital to grow our business, and that's kind of our first choice in all cases. But sometimes, to grow your business, you can't do it because there's not -- there are not ways to do it -- at our debt level, they are not ways to do it and then you look at probably 2 other things, which would be buying back stock or paying a dividend. Dividend could make more sense this year because the tax law could be changing and the tax rate on dividends could go up next year. So maybe that could make some sense if we're not able to find other ways to utilize the cash to grow our business. We took advantage of historically low rates for our company, and we have a lot of things that we think we can do to grow our business. But we have to -- we're really handcuffed at this point as a company until the FCC rules on our application, because that -- I'd put it -- again, I'll put it this way. When we started getting DBS business, I was only worried about one thing. I knew -- which was a launch on a Chinese rocket. And we knew that the risk was that, that satellite launch might not be successful. But we knew if it was successful, that we were going to be in a real business. We were going to be able to take a company that was a "$100 million a year" company and we grew it to a $14-billion company just based on that fact that we had to be launched successfully. I think we're in exactly the same situation today when it comes to growing this business from a wireless perspective, which is -- where the launch pad is in Washington. And the FCC, has either got to -- either approve what we're trying to do with -- in a way that gives us enough flexibility to compete or they're not going to, or they're going to take too long to do it. And if we're successful in navigating through the FCC rulemaking process, then I'm confident that we can grow a significant growth to our current business just like we were able to do in DBS. To the extent that, that doesn't happen, in other words, i.e., the equivalent of a launch failure because it takes too long or because there's conditions that don't make sense for us, then I think we probably just don't get into that business, and we have to find out a way to get in other businesses, and we think there's other businesses out there for us to get into. So there's always that moment when you -- as an entrepreneur, when you're starting a business, where you have to have something go your way. And for us, it was a launch in DBS. And for us in wireless, it's the FCC.

Your next question comes from the line of Stefan Anninger from Crédit Suisse. Stefan Anninger - Crédit Suisse AG, Research Division: Two if possible. It appears that you did not accrue a charge for the VOOM litigation, which I think would suggest that at this point, you expect to prevail in this case. Is that a fair assumption? And how are you thinking about the litigation and your confidence there? Would you be interested perhaps in coming to an agreement with AMC if that were possible? And then a question about the third quarter and how you feel about the potential for customer growth there. You have some headwinds and some tailwinds. The tailwind is it looks like the Hopper is helping sub growth. From a headwind perspective, you have a DTV NFL SUNDAY TICKET promotion, and then potentially, churn from the AMC shutoff. Robert E. Olson: Stefan, this is Robert. You're correct. We did not accrue a charge for the VOOM litigation. In order to accrue a charge, the outcome needs to be both probable and estimable, neither of which it is. And your second question was on sort of the growth prospects for the... Charles W. Ergen: It's Joe. Robert E. Olson: Joe, do you want to answer that? Joseph P. Clayton: Yes, remember, last year, in the third quarter, we lost about 115,000 net additions roughly. I think we're in a better shape as we move into the third quarter. Yes, the NFL SUNDAY TICKET is a headwind. Yes, we are better prepared, I think, to defend against that in the third quarter. AMC, we will lose some subs, but I think that's manageable. So I can only tell you that we're cautiously optimistic. That being said, the pricing environment is still very competitive. And the macroeconomic situation of the country is still difficult. But I think we will do better than we did in the third quarter of next year -- of this year, just like we did better in the second quarter this year compared to 2011. Stefan Anninger - Crédit Suisse AG, Research Division: Would it be -- would you be willing to comment on the AMC litigation beyond the accrual question and perhaps comment more broadly on how you're thinking about the litigation and your chances there? Charles W. Ergen: This is Charlie. I mean, obviously, we're not going to litigate this in the press. I mean, we're going to litigate it in the court. And I think that for better or worse, in this company, when we think we're right, we're like a dog with a bone. We're going to continue on, which ultimately would be a very long process, regardless of the initial court case, is going to go on for a long time in appeals, regardless of what happens just because one side or the other will always challenge anything. So when we think we're right and we think that the odds are in our favor, then we're going to go the distance. And that's where we are at this point. You never say never about a future relationship with AMC. You never say never, but I think that when we take something down and say we're going to take it down, that's what we intend to do. It's not -- because the economics just don't make sense for us at this point.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Benjamin Swinburne - Morgan Stanley, Research Division: First question back on the macro, Joe. I know the economy is clearly shaky, but we've seen a little bit of light on the housing front and I was curious, one, if you're seeing that. And two, if you guys generally think DISH might benefit more than the other pay-TV operators from an improvement in housing, just given the skew of your customer base, maybe where you had a bit more pressure from the macro on the downturn. Joseph P. Clayton: Well, obviously, I think we would benefit for improved housing starts, but I think the whole industry will as well. I don't see it benefiting us to a great degree more than the rest of the pay-TV industry. On a macro sense, unemployment benefits are running out. That's affecting cash flow of the consumers. And then the churn that we are seeing, it's the non-pay churn, which means people most likely do not have the money to pay these bills. Our voluntary churn is -- I think is going better than our expectations. So I think we're still in a fairly difficult macroeconomic environment. Benjamin Swinburne - Morgan Stanley, Research Division: Got it. And then on the products side, Joe, can you comment a little more on Sling? It always seemed like that was a technology that had real potential to differentiate DISH. And I was curious if you think that there's a lot more left in that product, if you guys have fully exploited it, and if you've held back at all because of some questions around litigation threats or the sort of overhang about the legal view of that product. Joseph P. Clayton: Well, Ben, I'm relatively new and Sling was introduced well before I got here. But I can tell you from my standpoint, I believe it's a very desirable consumer feature. What's better than giving a consumer control of his video viewing experience, where he wants, when he wants and what he wants? So we believe that Sling does have a lot more runway to it. And just like we weren't out front when we launched DVR or HD, Sling needs some more advertising muscle behind it, not too dissimilar than what we're doing with our whole home HD DVR today, the Hopper. So I see Sling as having a very important part of our future going forward. Benjamin Swinburne - Morgan Stanley, Research Division: Great. And then last question for either of you, Charlie or Joe, on Aereo and retrans. It may be premature to have this conversation, but have you looked at this at all? And does it present an opportunity for DISH to potentially either push back or even completely avoid retransmission fees? Or is that a little too pie in the sky? Charles W. Ergen: This is Charlie. I think it would be a revolutionary factor in the business because obviously, what Aereo does can be duplicated by others, or Aereo could have a head start and dominate that side of the industry. But obviously, that's a situation where at least initially, they've won the first -- kind of the first salvo. That's going to go on for a while. But if that's ultimately declared legal, then that would balance the scale in terms of retransmission discussions because there'd be an alternative, which is -- I mean it's very similar to where I think programmers devalue their product when they give it to other people on the Internet, right? They don't -- they may not overall devalue, but they devalue it to a provider. So obviously, if you can get your networks through the Internet, you're not going to be willing to pay a pay -- a MVPD player for it. So I think that ultimately the networks have to look at -- the easy solution for them, in my opinion, would just be to do it themselves and put it on the Internet and license it that way as well and compete against Aereo. But the networks went from 100% -- 3 networks went from 100% market share to 4 networks that now have less -- well less than 50% market share, and the Hopper with PrimeTime Anytime actually takes them over 50% again, actually significantly increases our market share gain, and we got sued for that. So I'm not saying -- anyone's stealing the ideas out of the broadcaster's desk at this point, because change is -- companies can either fight change or you can embrace change. And so far, the networks have -- are fighting change and if they don't get what they want, they go to Capitol Hill to fight change. And the rest of the world is moving on. And YouTube is going to have -- this next generation is going to watch YouTube. They're not going to watch a broadcast network, if they're not careful. So it never ceases to amaze me, but I'm not running those companies. Joseph P. Clayton: I think it's safe to say that we at DISH embrace new technology.

Your next question comes from the line of Jason Bazinet with Citi Investment. Jason B. Bazinet - Citigroup Inc, Research Division: Yes, just had a question for Mr. Ergen. This may seem a little odd, but seems like the industry, the distributors have difficulty procuring individual channels that they want. In the case of AMC, you mentioned those other channels you don't want. Is there -- do you think that there's any sort of legal remedy or any sort of governmental intervention that could allow you to just procure the channels that you want on more favorable terms, as opposed to buying the full panoply of what a content operator or content company wants to sell to you? Charles W. Ergen: Well, we've been kind of a lone voice in Washington, although I think from time to time, Cablevision actually has joined in, in a similar vein, but we've been for à la carte. And in fact, we started out as an à la carte company in the big DISH business. But there doesn't seem to be any enthusiasm for that at the FCC or in Congress, in my opinion, to force more of an à la carte kind of offering. So I think that the big players are in pretty good shape, particularly Disney, who really has taken in about -- probably has less than 20% of the viewing minutes, but takes in probably well over 40% of the revenue. I think they're just in great shape going forward, because they're -- because you do -- going to be [ph] taking a lot of channels that people don't watch to get the channels that people do. And it just means that it's going to be interesting to see how it plays out, but as monthly bills approach $100 a month and customers have alternatives for entertainment, how many people actually, ultimately -- how does that ultimately affect the industry? And how many people cut the cord? And how does that ultimately affect the total revenue of the programmers? And I don't know how that's going to happen. All we can do is prepare ourself for any eventuality and so what you try to do strategically is put yourself in a position that if the business continues to go on the way it is, you're okay, and if business changes, you're out in front of that change, so you're not having to react to it on the back end. Jason B. Bazinet - Citigroup Inc, Research Division: Is the core area of your comment that even if you would like to segment the market and sort of have a non-sports-programming tier, that, that would sort of not be possible, given the way that contracts are written and the restrictions that the content companies put on you? In other words, you'd have to carry ESPN and a lot of the other stuff and you couldn't just drop ESPN, as an example? Charles W. Ergen: Well, I think you could drop -- again, I can't speak to Disney. You'd have to ask them the question. But historically, you probably have to drop Disney, not ESPN. You'd probably drop Disney. So I think there'll be a day when there's probably an offering out there from somebody who doesn't include sports, just because sports will get -- the contract will get so onerous that somebody could make the decision that they'll take the short-term pain of losing that 20% of the eyeballs and then take the long-term gain that they might be $10 or $15 or $20 less expensive for the consumer. So while the world is at $110, $120 per month, somebody might come in at $70 or $80 or $90, but not have all the sports. My mom doesn't watch sports. I've got neighbors who don't watch sports. I got friends who go to the bars or their neighbor's house to watch sports, so -- because they don't want to pay for it. So there's virtually any sporting event is on the Internet for free because of piracy and other things. So the world may change at some point, but I don't think that's imminent. But that would be a long-term risk to probably -- I'd say it this way: long term, there's probably going to be virtually à la carte. That may be -- I don't know if that's 5 years or 10 years or 20 years, but I just don't see the consumer paying $2,000 a year for TV.

Your next question comes from the line of Phil Cusick from JPMorgan. Philip Cusick - JP Morgan Chase & Co, Research Division: I wondered if we can just talk about expenses for a second. You mentioned spending a lot of money on Hopper advertising in the second quarter. Is it fair to think that, that won't be repeated in the third quarter, given your history of not spending as much when DTV is out aggressively? Joseph P. Clayton: I'll try to take that one, Phil. We are going to spend advertising dollars and marketing dollars on Hopper in the third quarter. I mean, you just can't make a one-shot run at this, then drop it. We're still in the process of rebuilding our brand, reenergizing our brand and getting Hopper to be a household word to the American consumer. So it will take additional investment as we move into the third quarter as well. Philip Cusick - JP Morgan Chase & Co, Research Division: So a similar level of advertising as the second quarter. Joseph P. Clayton: I think that's fair to say. Philip Cusick - JP Morgan Chase & Co, Research Division: And then second, pay-per-view, as you remarked, was strong in the second quarter. I haven't seen anything yet that would sort of match that in the third quarter. Do you have any visibility of something that's coming up that might help? Robert E. Olson: Phil, this is Robert. No, I think, pay-per-view was unusually low in first quarter, a little bit higher than normal in the second quarter. We don't see anything that's unusual, either high or low, in the third quarter. Philip Cusick - JP Morgan Chase & Co, Research Division: And then if I can, one more. On the Blockbuster side, you said $10 million in negative operating income in the second quarter. Is there further expense reductions to come from there? Because I believe you have inventory price increases coming up ahead. So is that going to become a little more dilutive maybe? Robert E. Olson: Right. As I mentioned in my introductory comments, we really think the opportunity for Blockbuster is improving the revenue per store. Well, we've got numerous initiatives there. You will see some small cost increase as a result of consolidating our headquarters -- the Blockbuster headquarters to Denver. And also, the fact that in the second quarter, we closed roughly 150 stores. We didn't close all of those on April 1. They were spread out through the quarter. So you get some of the full quarter effect in the third quarter.

Your next question comes from line of Tuna Amobi from S&P Capital IQ. Tuna N. Amobi - S&P Equity Research: I have a few questions on the Qualcomm partnership. So I guess, first, maybe you can give us a little bit more -- to the extent that you can, a little bit more color on your commitment to that and any financial commitments, any exclusivity. Or do you feel that, that's kind of the solution that you envision if you receive the S-band ruling? Do you think that kind of gets you where you need to be in terms of competing with AT&T and Verizon? Or is this kind of like the first of potentially several deals you could do? And, Charlie, you said on this call that you don't typically disclose your strategic investments. I'm wondering if you don't view this as a strategic investment, which would be very curious. Or do you just -- are trying to send a signal to the market that you feel confident that the S-band ruling would be positive? Charles W. Ergen: Well, first, we're not going to come and send signals to the market. I mean, we just tell you what we're going to do, and we try to go do it. I don't think we -- we're not -- we don't have a smoke thing like the Indians that send smoke screens and say, "Here what we're doing," but with Qualcomm is it's simple in the sense that what we can do without the -- with the current approvals that we have from the FCC, is we can enter the wireless business as long as every one of our devices makes a link to the satellite, as well as makes a link terrestrial. So we have ATC authorization to do that. So that's the one thing we control our own destiny in. So it's not ideal because that increases our cost per handset, right, and could end up with battery life and other disadvantages vis-à-vis the rest of the world who doesn't have to burden all of their handsets with that. But because we have that authority today, that's -- and because the longest pole in the tent that we have in wireless isn't in fact the chipset and the handsets, because we're a new ecosystem in S-band, which right now is not being used terrestrial around the world to any great degree, that's why we invested with Qualcomm to go do that, to get -- to take care of the long pole of the tent while we're waiting on the FCC, so that to some degree would minimize the impact that with the delays that the FCC have had. We thought -- we were fairly certain -- of course, sometimes you bet and you lose, right? So we were fairly certain we'd have approval by February based on everything we'd heard and then we went to rulemaking, so that kind of kicked the can down the road for many more months. So we're trying to kind of protect as much as we can. And that's the reason. The second thing is, we think there is some strategic advantage to having some handsets that can always make a link to the satellite. So that means that no matter where you are, there's still, what, 30% of the geographic area in United States doesn't have cell coverage. So if you're a mountain climber or if you ran out of gas on a desert road or you happen to be someplace where you're -- where there's not -- in a canyon or there's not cell coverage, you can always make a link to the satellite. That's going to be pretty appealing to first responders and sell help and safety officials and people who from time to time go to rural America. I got a house in rural America, and I'm out of cell phone coverage all the time. I'd love to have a phone that I could -- when I'd need to, I could always make a text or a call through the satellite. So there'd be -- on a very minor basis, there would be some strategic advantage. And we intend to have that product as part of our lineup regardless of -- if we get approval on the rulemaking to not have to burden our handsets, we still will manufacture handsets that make a link to the satellite. Tuna N. Amobi - S&P Equity Research: Okay, that's helpful. Separate question on the AMC situation. Clearly, I think they've communicated to the market that they think that this has something to do with the litigation, which I think on your part, you've clearly stated that it has to do with the viewership. And given the potential disconnect there, and I know that you said that your research is based on the set-top data, so I'm just kind of trying to reconcile it a little bit more, why you think there's this kind of apparently large disconnect, perhaps has something to do with your rural skewing. Or if you can help us understand that a little bit better, be helpful. Charles W. Ergen: Yes. Well, I mean, I can just go back to the economics again for you. First, you wouldn't expect AMC to say people aren't watching their channel. So they're going to -- they gave the response you'd probably expect if you were in their situation. But we know that the most-watched items would be a Saturday night movie on AMC. That would materially have more viewership than their best miniseries, right? Materially more. Yet that same movie is also on HDNet with no commercials. And so the economics of that is pretty easy. The fact that we had to carry WE and IFC and Sundance, which I know in my household -- I have had satellite television for as long as satellite television has been around, and there's never been 1 minute that I know of that anybody in my family or anybody who's came to my house has ever watched 1 second of any of those channels. So -- and we know the viewer measurement is not one of our top 100 or 200 channels, those 3 channels. So to burden the satellite with those channels, to burden our cost infrastructure with those channels just doesn't make sense. I think AMC as a standalone could make more sense, but that is not anything that's been offered to us, so... Tuna N. Amobi - S&P Equity Research: So beyond the economics of that, Charlie... Charles W. Ergen: So then you look at AMC and you look at the fact that -- the critically acclaimed series are critically acclaimed, and I don't want to take anything away from them. But our -- they're critically acclaimed, but they're not viewed as much by our particular audience as one might believe based on the critical acclaim that the channel gets. It's kind of like a movie gets critical acclaim and then does $12 million at the box office. I mean, that's great that it won Academy Awards, but only did $12 million. We got to factor it in. And then the third thing is, that when our customers can go to iTunes or get Mad Men the same time it's on, the economics is we could pay for every customer -- we could pay -- for every customer who would watch Mad Men, we could pay their entire iTunes bill and it would be cheaper than burdening our customers who don't watch those channels with that cost. And so long term, we're going to be able to be -- we'll be several dollars less than our competitors because we don't carry those channels, and we think we give them a better offering in HDNet and the other channels that we substitute in for. We think overall that, that's a better mix. And obviously, business relationships are still -- are personal relationships, too. I mean, I'm going to go off on the sideline here, but there's 2 ways that I think most people do business or certainly we do business. There are companies where you have -- where it's always a contractual relationship. And when you sit down to have a discussion with them, if you go to dinner with them, whatever it is, they bring their contract with them in their briefcase, and every time they have a question they look at their contract and see what it says. And that's kind of one way you do business. The other way you can do business is what I call the Godfather approach, which is, if you do me a favor this time, then I expect someday I'm going to ask you for a favor, right, and I may never ask you, but if I do, I expect you to do a favor for me, and that's just a business relationship. We have that business relationship with Mark Cuban, right? He's a fun guy. I've known him a long time. If he asked me for a favor tomorrow, I'd do everything in my power to do a favor for him, right? He'd do the same for me. So that's that approach. Some other customers we have, it's always a contract. I'm not saying that one is better or worse. We're happy to do business where we carry contracts around. We're happen to do business on the Godfather approach, right? In fact, one of the major programmers sent me a picture of the Godfather, right, from the movie, right, because that's the approach we have with them, right? So it just depends on which way people want to do business. And it's a lot more fun to do business with people you like doing business with that approach it from a noncontractual basis in a win-win situation, where you can have a conversation and talk about help building your business together. So you end up with -- we're in a situation where we could do Mark a favor and he did us a favor. And our customers benefit. Our customers -- just read the blogs. Go read -- our customers are not looking at zombies in New York City. They live in farms and ranches. They have no clue about zombies in New York City marching around saying where is my AMC? I mean, they're watching a Saturday night movie with their husband or their wife or their kids with no commercials, and they're ecstatic, and their price didn't go up. The real question is going to be -- the real question is going to be, what happens when somebody else takes AMC down. What's their reason? What's AMC going to say about that, right? I mean, the fact of the matter is that there's a slippery slope out there. And we maybe 1 year ahead, we maybe 2 years ahead, we may be 1 year behind. But the world is changing and you're not going to have everybody having every program out there. And you're certainly not going to get [ph] programs that are readily available on other networks, that are readily available on the Internet. And I think the DIRECTV/Viacom dispute was one where the dynamics are changing. And the distributor is getting more powerful because distributors are realizing that when COMEDY CENTRAL is on the Internet, and that's the most popular show on that network, that you don't necessarily have to have it if the price is that expensive. And I'm sure that those fundamentals -- everybody's looking at those numbers, and when they do that, right, AMC is going to be vulnerable. They'll be one of the more vulnerable. I don't think Disney is vulnerable. I think AMC is vulnerable, right? I mean, you can make your own calculations, right? But for us -- and I don't want to take anything away from AMC, but for us, the economics of that was not a hard decision, and we think that is a -- we think that's going to be -- the payback period on that -- while we'll lose some customers, right, our margins are going to be positively affected and we've got a stronger relationship with somebody who's fun to do business with, that's given us a comparable product, in some cases better. Tuna N. Amobi - S&P Equity Research: Just a quick clarification. So for -- as someone who covers the industry, I'm wondering if there's potentially other programmers out there with contracts that maybe they show some disconnect between the ratings from Nielsen versus your data? And I'm wondering if perhaps this could come up in some of the future deals that you're likely to have? And you may be pressing issues like this going forward. I'm wondering if you're seeing anything else related to any other programmer that suggest there's a disconnect in viewership as reported by Nielsen and your own data. That would be helpful. Charles W. Ergen: Well, there's a lot of -- there is a lot of disconnect between Nielsen and our customers. I can't speak to anybody else. But it's not a huge issue with most of our providers today, as long as they don't make us -- as long as we're not forced to carry channels we don't want to carry, right? So obviously, AMC discussion might have gone a different way if IFC, Sundance and WE weren't in the equation, right, because then you can talk about value of one particular thing versus the value of 4 channels. But most of our programming partners are penalized because Disney gets a disproportionate share of the revenue because of the high cost of sports, right? So Viacom had a fair point in their dispute with DIRECTV in the sense that they're saying, "Hey, we're 22.3% of the eyeballs and we're getting 11% of the revenue, right? So they -- we need a material price increase to level the playing field, right?" So most programmers not named Disney are in a situation that they're getting -- they're not getting their fair share, right? And I think the broadcasters feel the same way on retrans. So how all that shakes out in the industry will be interesting. But it probably will evolve over time and somebody will be creative and somebody will resist change and somebody will support change and we're sitting here talking 2 or 3 years from now, we'll probably have a different set of dynamics. My job here is to make sure that no matter which -- you can hypothesize the different things that might happen. No matter -- our job is to make sure that no matter what happens, we're positioned for that. And the other part of it that we look at it is: Forget all about all of that. How do we help our programming partners get more revenue? How do we help them? So that's why we think targeted advertising make sense. We think that programmers should be embracing the Hopper, not suing over it, because there's lots of ways that the Hopper can make them more money, right? But they have to have discussions about how to do that as opposed to lawsuits. We think that mobility and tablets and phones and computers are more TV sets for people to get eyeballs and therefore to get more revenue for, right? We think there's ways to do that, right? But you have to have those discussions with people to do it. Again, there's some companies who are open to those kind of discussions and other people who are going to be followers and wait for the change to happen and then come in behind it. And I'm not saying one's right or one's wrong. But it's our job to be in a position that if somebody wants to make more money, we can help them. And I mean, I don't want to harp on Mark Cuban. That's why Mark's a fun guy to do -- because Mark will sit and brainstorm with you for hours about -- and he may have a lot of good ideas and a lot of bad ideas, but at least you're sharing ideas about how you might make more money, and not everybody does that. But strategically, I like where we are. I like that we're positioned for the change that's inevitably going to come to this industry. And whether people, whether -- you can debate whether the cord cutting's happening or not -- I personally think it's happening; other people say it's not happening -- but we'll hopefully be prepared whether it's happening or not happening.

Your next question comes from the line of James Ratcliffe from Barclays. James M. Ratcliffe - Barclays Capital, Research Division: Just 2 quick ones. First of all, other than the pay-per-view easing off a little bit, is there any other reason why ARPU wouldn't sort of trend lower on a year-on-year basis for the back half of the year, just given the continued flow-through of the lack of price increase this year? And secondly, we talked a little about expenses, but on the revenue side of Blockbuster, should we be expecting that the store closures and the like will continue to have an incremental effect in the back half of the year? Or are you kind of at steady-state on the footprint at this point? Robert E. Olson: James, this is Robert. I'll try to address those questions. We said at the beginning of the year that our goal was to gradually improve ARPU sequentially throughout the year. And so while I do think pay-per -view will be slightly lower in the third quarter, we're working hard to improve our premium revenue, improve our advertising sales revenue. And so we're hopeful that we will see gradual improvement, although small and not necessarily each quarter, but gradual improvement throughout the year in ARPU. Obviously, this year's been difficult because we haven't had a price increase, but we're working hard to overcome that. On the Blockbuster side, I think we'll continue to evaluate our store profitability. We have that detailed information store by store. The one wildcard right now is just simply how quickly and how successfully our new initiatives will improve revenue of the store. We have a real good handle on the cost for the store. What we don't have as good a handle on is the changes we are making and how much they'll improve revenue per store. Ultimately, that really comes down to math. If we're able to improve revenue per store, we'll have a successful business. Charles W. Ergen: This is Charlie. There's a few -- if you look at the entire industry -- I'm not the analyst, but I would imagine that most people's increase in ARPU has just been through price increases, right? It's competitive. Customers have -- almost every customer has 4 choices of video providers and then they have the Internet. So they almost have 5 choices to provide their video. So the -- and people give big discounts to get you to switch. So you get a lot people flipping just between providers to get the big discounts for a year or 2, right? So one company even gives 2 years of discounts, right? So most of the ARPU increases in the industry have been strictly from price increases. And of course, we didn't have a price increase. But having said that, we have opportunity within our business to increase ARPU in the sense that the Hopper, the whole home DVR, is $10. So as opposed to, what, $6 or whatever for a normal DVR. So as people migrate to Hopper, there's a little bit more increase there. And then one thing just to point out. I can't remember, but we had a Starz promotion last year that was free Starz. That's rolling off for customers, and to the extent that we're effectively marketing those customers to become long-term Starz customers, that's revenue on the premium side that we weren't getting last year because of our 30-year anniversary promotion. And then there's other ways that we can go, small ways that we can have incremental changes. So I don't think that -- I think there's opportunity for us in the ARPU side even without a price increase, and then there's some opportunity from us in the margin because I think that the trade of the AMC channels improves our margin. Because I think of the deals we did with HDNet and the replacements.

Your next question comes from line of Rich Tullo from Albert Fried & Company. Richard Tullo - Albert Fried & Company, LLC, Research Division: One quick comment is, if there is a judgment for AMC, does DISH have to post the entire judgment with the courts? Or can you obtain a letter of credit to file an appeal? Joseph P. Clayton: Depends on the amount of the judgment. Charles W. Ergen: Yes, it depends on what the judge said. So again, I think our -- we don't -- this is a crazy thing, but we don't go around looking at failure. We go around looking at how we're going to -- how we can and how we're going to succeed. And we'll be prepared for -- we're prepared for anything that happens and the biggest factor in our business right now is certainly not that. The biggest factor for us is the FCC. And if the FCC decides not to approve us or it takes too long, life will go on. We're not going to be mad at them. We're not good to be mad at anybody. We're just going to go on and figure out another way to improve our business. And so we're all about how we can go out there and do positive stuff. I know your job is to look at all the negatives out there, but I like where we are as a company, and I like where we're positioned, and I like the odds on us being successful. Richard Tullo - Albert Fried & Company, LLC, Research Division: Just another question on the ratings with Nielsen. I understand that they're putting out a pro forma product that says these are the ratings as if DISH were to carry AMC. Is that what you heard? And do you really believe that kind of tabulation? Charles W. Ergen: I haven't heard anything. I haven't heard anything about that. I mean, obviously, when you lose potentially 14 million sets of eyeballs, you're going to have some impact. I mean, you have impacts in terms of negotiations with future people. I'm sure AT&T got a better deal than they would have had we not taken them down. I'm sure the next guy will be in a better negotiating position. I'm sure that ratings will be impacted. I'm sure advertising dollars will be impacted. And I'm sure that we will be impacted. So you'd rather not get into that situation. And you'd rather that you could work the economics out and maybe not have to carry some of the channels you don't want to and you get to realistic numbers based on our stuff. But we weren't close. And for us, I mean, for us, it's an -- look, the proof is going to be in the pudding, right? I mean, a year from now, you guys are going to be able to run an analysis and say, DISH made a good decision or made a bad decision, right? All I can tell you is, I used to be a financial analyst. Robert knows a thing or 2 about financial analysis. We have real numbers, you guys don't, and this is a no-brainer. Richard Tullo - Albert Fried & Company, LLC, Research Division: Fair enough. I think Calvin Coolidge wrote a poem called Persistence once that I think you might like. Charles W. Ergen: We'll be on -- I guess we're back in November, right? Thank you all for being with us today.

This concludes today's conference call. You may now disconnect.