EchoStar has filed an insurance claim for $219 million representing a total constructive loss with respect to its EchoStar IV satellite launched on May 8, 1998.
As the Company previously announced, the south solar array on
EchoStar IV did not properly deploy, resulting in a reduction of power
available to operate certain transponders on the satellite, and an
unrelated anomaly occurred resulting in the failure of four primary
transponders and two spare transponders on the satellite.
While the anomalies have affected EchoStar's ability to fully
utilize the satellite, the Company has commenced commercial use and is
currently uplinking local signals to Denver, Salt Lake City, Phoenix
and San Francisco. Significant additional programming including
expanded local-to-local programming, educational, foreign language,
data and other niche services will be added to EchoStar IV to serve
the Western United States later this year and during 1999.
The insurance claim for $219,250,000 was filed through EchoStar's
insurance broker, Marsh & McLennan. The Company expects to use the insurance proceeds, together with other funds, to launch a new DBS
satellite to the 119 degrees W.L. location in approximately three years.
Either EchoStar I or EchoStar II, currently located at 119 degrees W.L.,
could then be moved to one of the Company's other DBS orbital
locations and each could provide in-orbit back up. EchoStar does not
maintain insurance for lost profit opportunity.
With four operational satellites, EchoStar has more capacity in
space than any other DBS provider and continues to offer over 300
digital video and audio services to more than 1.5 million DISH Network
customers.
