<PAGE>

==============================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K

(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                       OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE
    ACT OF 1934

     For the transition period from _______________ to ________________.

                       Commission file number: 333-3980

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
            (Exact name of registrant as specified in its charter)

                   COLORADO                            84-1337871
         (State or other jurisdiction               (I.R.S. Employer
      of incorporation or organization)            Identification No.)

               5701 S. SANTA FE
              LITTLETON, COLORADO                         80120
  (Address of principal executive offices)             (Zip Code)

      Registrant's telephone number, including area code: (303) 723-1000


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

      Securities registered pursuant to Section 12(g) 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 /X/  No / /


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  /X/

     As of March 24, 1998, the Registrant's outstanding Common stock consisted
of 1,000 shares of Common Stock, $0.01 par value.

     THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
(I)(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS ANNUAL REPORT ON
FORM 10-K WITH THE REDUCED DISCLOSURE FORMAT.

                     DOCUMENTS INCORPORATED BY REFERENCE

     The following documents are incorporated into this Form 10-K by reference:

     None

==============================================================================

<PAGE>
                               TABLE OF CONTENTS


                                    PART I

Item 1.  Business..........................................................   1
Item 2.  Properties........................................................   2
Item 3.  Legal Proceedings.................................................   2
Item 4.  Submission of Matters to a Vote of Security Holders...............   *

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters...........................................................   4
Item 6.  Selected Financial Data...........................................   *
Item 7.  Management's Narrative Analysis of Results of Operations..........   4
Item 8.  Financial Statements and Supplementary Data.......................   7
Item 9.  Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure..............................................   7

                                    PART III

Item 10. Directors and Executive Officers of the Registrant................   *
Item 11. Executive Compensation............................................   *
Item 12. Security Ownership of Certain Beneficial Owners and Management....   *
Item 13. Certain Relationships and Related Transactions....................   *

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...   8

         Signatures........................................................  14
         Index to Financial Statements..................................... F-1


  * DISH Network-SM- is a service mark of EchoStar Communications Corporation.


----------------
* This item has been omitted pursuant to the reduced disclosure format as set
  forth in General Instructions (I)(1)(a) and (b) of Form 10-K.

<PAGE>


                                    PART I

ITEM 1.   BUSINESS

     ALL STATEMENTS CONTAINED HEREIN, AS WELL AS STATEMENTS MADE IN PRESS
RELEASES AND ORAL STATEMENTS THAT MAY BE MADE BY THE COMPANY OR BY OFFICERS,
DIRECTORS OR EMPLOYEES OF THE COMPANY ACTING ON ITS BEHALF, THAT ARE NOT
STATEMENTS OF HISTORICAL FACT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT COULD CAUSE THE ACTUAL RESULTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM HISTORICAL RESULTS OR FROM ANY FUTURE RESULTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.  AMONG THE FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE THE FOLLOWING: THE
UNAVAILABILITY OF SUFFICIENT CAPITAL ON SATISFACTORY TERMS TO FINANCE THE
COMPANY'S BUSINESS PLAN; INCREASED COMPETITION FROM CABLE, DIRECT BROADCAST
SATELLITE ("DBS"), OTHER SATELLITE SYSTEM OPERATORS AND OTHER PROVIDERS OF
SUBSCRIPTION TELEVISION SERVICES; THE INTRODUCTION OF NEW TECHNOLOGIES AND
COMPETITORS INTO THE SUBSCRIPTION TELEVISION BUSINESS;  INCREASED SUBSCRIBER
ACQUISITION COSTS AND SUBSCRIBER PROMOTION SUBSIDIES;  THE INABILITY OF THE
COMPANY TO OBTAIN NECESSARY SHAREHOLDER AND BONDHOLDER APPROVAL OF ANY
STRATEGIC TRANSACTIONS; THE INABILITY OF THE COMPANY TO OBTAIN AND RETAIN
NECESSARY AUTHORIZATIONS FROM THE FEDERAL COMMUNICATION COMMISSION ("FCC");
THE OUTCOME OF ANY LITIGATION IN WHICH THE COMPANY MAY BE INVOLVED;  GENERAL
BUSINESS AND ECONOMIC CONDITIONS; AND OTHER RISK FACTORS DESCRIBED FROM TIME
TO TIME IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC").  IN ADDITION TO STATEMENTS THAT EXPLICITLY DESCRIBE SUCH
RISKS AND UNCERTAINTIES, READERS ARE URGED TO CONSIDER STATEMENTS THAT INCLUDE
THE TERMS "BELIEVES," "BELIEF," "EXPECTS," "PLANS," "ANTICIPATES," "INTENDS"
OR THE LIKE TO BE UNCERTAIN AND FORWARD-LOOKING.  ALL CAUTIONARY STATEMENTS
MADE HEREIN SHOULD BE READ AS BEING APPLICABLE TO ALL FORWARD-LOOKING
STATEMENTS WHEREVER THEY APPEAR.  IN THIS CONNECTION, INVESTORS SHOULD
CONSIDER THE RISKS DESCRIBED HEREIN.

BRIEF DESCRIPTION OF BUSINESS

     EchoStar Satellite Broadcasting Corporation and subsidiaries ("ESBC" or
the "Company") is a wholly-owned subsidiary of EchoStar DBS Corporation ("DBS
Corp").  DBS Corp is a wholly-owned subsidiary of EchoStar Communications
Corporation ("ECC," and together with its subsidiaries "EchoStar").  EchoStar
is a publicly traded company on the Nasdaq National Market.  Unless otherwise
stated herein, or the context otherwise requires, references herein to
EchoStar shall include ECC, DBS Corp, ESBC and all direct and indirect
wholly-owned subsidiaries thereof.  ESBC's management refers readers of this
Annual Report on Form 10-K to EchoStar's Annual Report on Form 10-K for the
year ended December 31, 1997.  Substantially all of EchoStar's operations are
conducted by subsidiaries of ESBC.  The operations of EchoStar include three
interrelated business units:

     -    THE DISH NETWORK - a DBS subscription television service in the
          United States.  As of December 31, 1997, EchoStar had approximately
          1,040,000 DISH Network subscribers.

     -    TECHNOLOGY - the design, manufacture, distribution and sale of DBS
          set-top boxes, antennae and other digital equipment for the DISH
          Network ("EchoStar Receiver Systems"), and the design, manufacture
          and distribution of similar equipment for direct-to-home ("DTH")
          projects of others internationally, together with the provision of
          uplink center design, construction oversight, and other project
          integration services for international DTH ventures.

     -    SATELLITE SERVICES - the turn-key delivery of video, audio and data
          services to business television customers and other satellite users.
           These services include satellite uplink services, satellite
          transponder space usage, and other services.


                                       1
<PAGE>

ITEM 2.   PROPERTIES

     The following table sets forth certain information concerning EchoStar's
properties:
<TABLE>
<CAPTION>
                                                               APPROXIMATE   OWNED OR
DESCRIPTION/USE                            LOCATION           SQUARE FOOTAGE  LEASED
------------------------------------  ----------------------- -------------- --------
<S>                                   <C>                     <C>            <C>
Corporate headquarters..............  Littleton, Colorado         156,000      Owned
EchoStar Technologies Corporation
 office and distribution center.....  Englewood, Colorado         155,000      Owned
Office and distribution center......  Sacramento, California       78,500      Owned
Digital Broadcast Operations Center.  Cheyenne, Wyoming            55,000      Owned
Customer Service Center.............  Thornton, Colorado           55,000      Owned
European headquarters and warehouse.  Almelo, The Netherlands      53,800      Owned
Warehouse facility..................  Denver, Colorado             40,000      Owned

</TABLE>

ITEM 3.   LEGAL PROCEEDINGS

     On July 29, 1996, EchoStar Acceptance Corporation ("EAC"), Dish Network
Credit Corporation ("DNCC"), ESC and Echosphere Corporation (collectively,
"EchoStar Credit"), filed a civil action against Associates Investment
Corporation ("Associates") which is currently pending in the U.S. District
Court in the District of Colorado.  EchoStar Credit alleges that Associates,
among other things, breached its contract with EchoStar Credit pursuant to
which Associates agreed to finance the purchase of EchoStar Receiver Systems
by consumers. EchoStar Credit alleges that Associates' refusal to finance
certain prospective consumers has resulted in the loss of prospective
customers to EchoStar's competitors.  In addition, EchoStar Credit alleges
that the loss of sales due to Associate's action forced EchoStar to lower the
price on its products. Associates filed counterclaims against EAC for fraud
and breach of contract. Associates seeks approximately $10.0 million by way of
its counterclaims.  EAC intends to vigorously defend against such
counterclaims.  A trial date has not yet been set.  It is too early in the
litigation to make an assessment of the probable outcome.

     Certain purchasers of C-band and DISH Network systems have filed actions
in various state courts in Alabama naming EchoStar, EAC or Echosphere
Corporation as a defendant and seeking actual and punitive damages.  Eleven
lawsuits were filed against EAC in the state of Alabama.  Eight of the suits
involve EAC and Household Retail Services, Inc. ("HRSI") and three suits
involve EAC and Bank One Dayton, N.A. ("Bank One").   All three of the
EAC/Bank One cases recently have been dismissed or are in the process of being
dismissed against all defendants including EAC.  Therefore, only the cases
involving EAC and HRSI remain pending.  In those cases, the plaintiffs in
those suits allege that the terms of the financing plan were misrepresented to
them by the independent retail dealers.  The plaintiffs allege that the
dealers were the agents of EAC and that EAC did not properly train the
dealers.  Additional suits may be filed or the plaintiffs' attorneys may
attempt to certify a class and/or add additional plaintiffs to the existing
suits and seek exponentially greater damages.  EAC denies liability and
intends to vigorously defend against all remaining claims, which include
allegations of fraud and lending law violations.  While the actual damages
claimed in each of these cases are not material, EchoStar is aware that juries
in Alabama have recently issued a number of verdicts awarding substantial
punitive damages on actual damage claims of less than $10,000.

     EAC and HRSI entered into a Merchandise Financing Agreement in 1989 (the
"Merchant Agreement") pursuant to which HRSI acted as a consumer financing
source for the purchase of, among other things, satellite systems distributed
by Echosphere Corporation, a subsidiary of EchoStar, to consumers through EAC
dealers.  HRSI terminated the Merchant Agreement as of December 31, 1994.
During February 1995, EAC and Echosphere (the "EAC Parties") filed suit
against HRSI.  The case is pending in U.S. District Court in Colorado (the
"HRSI Litigation").  The EAC Parties have alleged, among other things, breach
of contract, breach of fiduciary duty, fraud and wanton and willful conduct by
HRSI in connection with termination of the Merchant Agreement and related
matters.  The EAC parties are


                                       2
<PAGE>

seeking damages in excess of $10.0 million. HRSI's counterclaims have been
dismissed with prejudice.  Summary judgment motions have been pending on all
remaining issues since May 1996.  A trial date has not been set.

     During February 1997, EchoStar and News announced an agreement (the "News
Agreement") pursuant to which, among other things, News agreed to acquire
approximately 50% of the outstanding capital stock of EchoStar.  News also
agreed to make available for use by EchoStar the DBS permit for 28 frequencies
at 110DEG. WL purchased by MCI for over $682 million following a 1996 FCC
auction.  During late April 1997, substantial disagreements arose between the
parties regarding their obligations under the News Agreement.

     In May 1997, EchoStar filed a Complaint requesting that the Court confirm
EchoStar's position and declare that News is obligated pursuant to the News
Agreement to lend $200 million to EchoStar without interest and upon such
other terms as the Court orders.  EchoStar also filed a First Amended
Complaint significantly expanding the scope of the litigation, to include
breach of contract, failure to act in good faith, and other causes of action.
EchoStar seeks specific performance of the News Agreement and damages,
including lost profits based on, among other things, a jointly prepared
ten-year business plan showing expected profits for EchoStar in excess of $10
billion based on consummation of the transactions contemplated by the News
Agreement.

     In June 1997, News filed an answer and counterclaims seeking unspecified
damages.  News' answer denies all of the material allegations in the First
Amended Complaint and asserts numerous defenses, including bad faith,
misconduct and failure to disclose material information on the part of
EchoStar and its Chairman and Chief Executive Officer, Charles W. Ergen.  The
counterclaims, in which News is joined by its subsidiary ASkyB, assert that
EchoStar and Ergen breached their agreements with News and failed to act and
negotiate with News in good faith.  EchoStar has responded to News' answer and
denied the allegations in their counterclaims.  EchoStar also has asserted
various affirmative defenses.  EchoStar intends to vigorously defend against
the counterclaims.  Discovery commenced on July 3, 1997 and depositions are
currently being taken.  The case has been set for trial commencing November
1998, but that date could be postponed.

     While EchoStar is confident of its position and believes it will
ultimately prevail, the litigation process could continue for many years and
there can be no assurance concerning the outcome of the litigation.

     EchoStar is subject to various other legal proceedings and claims which
arise in the ordinary course of its business.  In the opinion of management,
the amount of ultimate liability with respect to those actions will not
materially affect the financial position or results of operations of EchoStar.


                                       3
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

     As of March 24, 1997, all 1,000 authorized, issued and outstanding shares
of the Company's Common Stock were held by DBS Corp.  There is currently no
established trading market for the Company's Common Stock.

     ESBC has never declared or paid any cash dividends on its common stock
and does not expect to declare dividends in the foreseeable future.  Payment
of any future dividends will depend upon the earnings and capital requirements
of ESBC, ESBC's debt facilities, and other factors the Board of Directors
considers appropriate.  The Company currently intends to retain its earnings,
if any, to support future growth and expansion.  The Company's ability to
declare dividends is affected by covenants in its debt facilities that
prohibit ESBC from declaring dividends and its subsidiaries from transferring
funds in the form of cash dividends, loans or advances to ECC.  ESBC may pay
dividends and make other distributions to DBS Corp without restrictions.

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996.

     REVENUE.  Total revenue in 1997 was $476 million, an increase of 141%, or
$279 million, as compared to total revenue of $197 million in 1996.  The
increase in total revenue in 1997 was primarily attributable to the operation
of the DISH Network during the entirety of 1997, combined with DISH Network
subscriber growth.  The Company expects this trend to continue as the number
of DISH Network subscribers increases, and as it develops its Technology and
Satellite Services businesses.  Consistent with the increases in total revenue
during 1997, the Company experienced a corresponding increase in trade
accounts receivable at December 31, 1997.

     DISH Network subscription television services revenue totaled $299
million during 1997, an increase of $249 million compared to 1996.  This
increase was directly attributable to the operation of the DISH Network during
the entirety of 1997, combined with the increase in the number of DISH Network
subscribers. Average monthly revenue per subscriber approximated $39 during
1997 compared to approximately $36 in 1996.  The increase in monthly revenue
per subscriber was primarily due to additional channels added upon
commencement of operations of EchoStar II.  DISH Network subscription
television services revenue consists primarily of revenue from basic, premium
and pay-per-view subscription television services.

     Other DISH Network revenue totaled $43 million in 1997, an increase of
$35 million compared to 1996.  Other DISH Network revenue primarily consists
of incremental revenues over advertised subscription rates realized from the
Company's 1996 Promotion (as described below), as well as installation
revenues.  In August 1996, the Company lowered the suggested retail price for
a standard EchoStar Receiver System to $199 (as compared to an average retail
price in March 1996 of $499), conditioned upon the consumer's one-year prepaid
subscription to the DISH Network's America's Top 50 CD programming package for
$300 (the "1996 Promotion").  In 1997, the Company recognized incremental
revenues related to the 1996 Promotion of approximately $39 million, an
increase of $34 million over 1996.  The Company expects incremental revenue
related to the 1996 Promotion to decline at an accelerated rate in future
periods and to cease during the third quarter of 1998.

     During 1997, DTH equipment sales and integration services totaled $90
million. EchoStar currently has agreements for the sale of digital satellite
broadcasting equipment using EchoStar technology to two international DTH
service operators.  The Company realized revenues of $74 million related to
these agreements during 1997.  Of this amount, $59 million related to sales of
digital set-top boxes and other DTH equipment while $15 million resulted from
the provision of integration services (revenue from uplink center design,
construction oversight, and


                                       4
<PAGE>

other project integration services).  DBS accessory sales totaled $10 million
during 1997, an $8 million increase compared to 1996.

     While EchoStar continues to actively pursue other distribution and
integration service opportunities, no assurance can be given that any such
additional negotiations will be successful.  EchoStar's future revenue from
the sale of DTH equipment and integration services in international markets
depends largely on the success of the DBS operator in that country, which, in
turn, depends on other factors, such as the level of consumer acceptance of
DBS products and the intensity of competition for international subscription
television subscribers. No assurance can be given regarding the level of
expected future revenues which may be generated from EchoStar's alliances with
foreign DTH operators.

     DTH equipment sales and integration services revenue totaled $77 million
during 1996.  These revenues consisted primarily of sales of EchoStar Receiver
Systems and related accessories prior to the August 1996 nationwide rollout of
the 1996 Promotion.

     Satellite services revenue totaled $11 million during 1997, an increase
of $5 million, or 91%, compared to 1996.  These revenues include, among other
things, fees charged to content providers for signal carriage and revenues
earned from business television ("BTV") customers for the broadcast of
organizationally specific programming.  The increase in satellite services
revenue was primarily attributable to an increase in the number of content
providers, increased usage by the Company's BTV customers, and an entire year
of operation in 1997.

     C-band and other revenue totaled $33 million for 1997, a decrease of $23
million compared to $56 million in 1996.  Other revenue principally related to
domestic and international sales of C-band products and net domestic C-band
programming revenues.  This decrease resulted from the world-wide decrease in
demand for C-band products and services.  Effective January 1, 1998, EchoStar
ceased operation of its C-band programming business.

     DISH NETWORK OPERATING EXPENSES.  DISH Network operating expenses totaled
$193 million during 1997, an increase of $151 million as compared to 1996.
The increase in DISH Network operating expenses was primarily attributable to
operation of the DISH Network during the entirety of 1997 and  the increase in
the number of DISH Network subscribers.  Subscriber-related expenses totaled
$144 million in 1997, an increase of $121 million compared to 1996.  Such
expenses, which include programming expenses, copyright royalties, residuals
payable to retailers and distributors, and billing, lockbox and other variable
subscriber expenses, totaled 48% of subscription television services revenues,
compared to 46% of subscription television services revenues during 1996.
Satellite and transmission expenses are comprised primarily of costs
associated with the operation of EchoStar's digital broadcast center,
contracted satellite TT&C services, and costs of maintaining in-orbit
insurance on EchoStar's DBS satellites.  Satellite and transmission expenses
increased $8 million in 1997 compared to 1996 primarily as a result of the
operation of the DISH Network (including EchoStar II) during the entirety of
1997.  Customer service center and other operating expenses consist primarily
of costs incurred in the operation of the Company's DISH Network customer
service center and expenses associated with subscriber equipment installation.
 Customer service center and other operating expenses totaled $35 million in
1997, an increase of $22 million as compared to 1996.  The increase in
customer service center and other operating expenses was directly attributable
to the operation of the DISH Network during the entirety of 1997, combined
with the increase in the number of DISH Network subscribers.  The Company
expects DISH Network operating expenses to continue to increase in the future
as subscribers are added. However, as its DISH Network subscriber base
continues to expand, the Company expects that such costs as a percentage of
DISH Network revenue will decline.

     COST OF SALES - DTH EQUIPMENT AND INTEGRATION SERVICES.  Cost of sales -
DTH equipment and integration services totaled $61 million during 1997, a
decrease of $15 million, or 20%, as compared to 1996.  During 1997, cost of
sales - DTH equipment and integration services principally represented costs
associated with set-top boxes and related components sold to international DTH
operators. For 1996, cost of sales - DTH equipment and integration services
totaled $76 million and represented costs of EchoStar Receiver Systems sold
prior to the August 1996 rollout of the 1996 Promotion.

                                       5
<PAGE>


     COST OF SALES - C-BAND AND OTHER.  Cost of sales - C-band and other
totaled $24 million during 1997, a decrease of $18 million compared to 1996.
This decrease was consistent with the decrease in related revenues and
resulted from the world-wide decrease in the demand for C-band products and
services.

     MARKETING EXPENSES.  Marketing expenses totaled $183 million for 1997, an
increase of $130 million as compared to 1996.  The increase in marketing
expenses was primarily attributable to the increase in subscriber promotion
subsidies.  Subscriber promotion subsidies represent the excess of transaction
costs over transaction proceeds at the time of sale of EchoStar Receiver
Systems.  These costs totaled $149 million during 1997, an increase of $113
million over 1996.  This increase resulted from the commencement of the 1997
Promotion (as described below) and the increase in the number of EchoStar
Receiver Systems sold during 1997.  During 1997, EchoStar further reduced the
"up-front" costs to consumers by maintaining the suggested retail price for a
standard EchoStar Receiver System at $199 and eliminating any related prepaid
subscription commitments (the "1997 Promotion").  Advertising and other
expenses increased $17 million to $35 million during 1997 as a result of
increased marketing activity and operation of the DISH Network during the
entirety of 1997.

     GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative ("G&A")
expenses totaled $66 million for 1997, an increase of $17 million as compared
to 1996.  The increase in G&A expenses was principally attributable to
increased personnel expenses to support the growth of the DISH Network.  G&A
expenses as a percentage of total revenue decreased to 14% during 1997 as
compared to 25% during 1996.  EchoStar expects that its G&A expenses as a
percent of total revenue may continue to decrease in future periods.

     EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION.  Earnings
Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was negative
$51 million for 1997, as compared to negative EBITDA of $65 million for 1996.
This improvement in EBITDA resulted from the factors affecting revenue and
expenses discussed above.  The Company believes that EBITDA results will
continue to improve in future periods as the number of DISH Network
subscribers increases.  In the event that new subscriber activations exceed
expectations, the Company's EBITDA results may be negatively impacted in the
near-term because subscriber acquisition costs are expensed upon shipment of
EchoStar Receiver Systems.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses
for 1997 (including amortization of subscriber acquisition costs of $121
million) aggregated $173 million in 1997, an increase of $129 million, as
compared to 1996.  The increase in depreciation and amortization expenses
principally resulted from amortization of subscriber acquisition costs
(increase of $105 million) and depreciation of EchoStar II (placed in service
during the fourth quarter of 1996).

     OTHER INCOME AND EXPENSE.  Other expense, net totaled $84 million during
1997, an increase of $37 million as compared to 1996.  The increase in other
expense resulted primarily from increased interest expense associated with the
Company's 12 7/8% Senior Secured Discount Notes due 2004 (the "1994 Notes")
and its 13 1/8% Senior Secured Discount Notes due 2004 (the "1996 Notes") due
to higher accreted balances thereon.  Additionally, interest income decreased
$10 million as a result of a decrease in invested balances.  The increase in
interest expense and the decrease in interest income were partially offset by
an increase in capitalized interest.  Capitalized interest (primarily related
to satellite construction) totaled $35 million during 1997, compared to $32
million during 1996.

     INCOME TAX BENEFIT.  The $55 million decrease in the income tax benefit
during 1997 principally resulted from the Company's decision to increase its
valuation allowance sufficient to fully offset net deferred tax assets arising
during the year.  Realization of these assets is dependent on the Company
generating sufficient taxable income prior to the expiration of the net
operating loss carryforwards.  The Company's net deferred tax assets ($67
million at each of December 31, 1996 and 1997) principally relate to temporary
differences for amortization of original issue discount on the 1994 Notes and
1996 Notes, net operating loss carryforwards, and various accrued expenses
which are not deductible until paid.  If future operating results differ
materially and adversely from the Company's current expectations, its judgment
regarding the magnitude of its valuation allowance may change.


                                       6
<PAGE>

IMPACT OF YEAR 2000 ISSUE

     EchoStar has assessed and continues to assess the impact of the Year 2000
Issue on its computer systems and operations.  The Year 2000 Issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year.  Thus, as the century date approaches, date
sensitive systems may recognize the year 2000 as 1900 or not at all.  The
inability to recognize or properly treat the Year 2000 may cause computer
systems to process critical financial and operational information incorrectly.

     EchoStar presently believes that with modifications to existing software
and conversions to new software, the Year 2000 Issue can be mitigated.
EchoStar is utilizing both internal and external resources to identify,
correct or reprogram, and test all affected systems for Year 2000 compliance.
EchoStar has also initiated formal communications with all of its significant
suppliers to determine the extent to which EchoStar is vulnerable to those
third parties' failure to remediate their own Year 2000 Issue.  EchoStar
believes its costs to successfully mitigate the Year 2000 Issue will not be
material.

     If EchoStar's remediation plan is not successful or is not completed in a
timely manner, the Year 2000 Issue could significantly disrupt EchoStar's
ability to transact business with its customers and suppliers, and could have
a material impact on its operations.  In addition, there can be no assurance
that the systems of other companies with which EchoStar's systems interact
also will be timely converted, or that any such failure to convert by another
company would not have an adverse effect on EchoStar's systems.

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board ("FASB") issued
FAS No. 130, "Reporting Comprehensive Income" ("FAS No. 130"), which
establishes standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. In June 1997, the FASB issued FAS No.
131, "Disclosures About Segments of an Enterprise and Related Information"
("FAS No. 131") which establishes standards for reporting information about
operating segments in annual financial statements of public business
enterprises and requires that those enterprises report selected information
about operating segments in interim financial reports issued to shareholders
and for related disclosures about products and services, geographic areas, and
major customers.  FAS No. 130 and FAS No. 131 are effective for financial
statements for periods beginning after December 15, 1997.  The adoption of FAS
No. 130 and FAS No. 131 may require additional disclosure in the Company's
financial statements.

INFLATION

     Inflation has not materially affected the Company's operations during the
past three years.  The Company believes that its ability to increase the
prices charged for its products and services in future periods will depend
primarily on competitive pressures.  The Company does not have any material
backlog of its products.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's Consolidated Financial Statements are included in this
report beginning on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.


                                       7
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this Report:

          (1)  FINANCIAL STATEMENTS                                         PAGE
                                                                            ----
               Report of Independent Public cAcountants....................  F-2
               Consolidated Balance Sheets at December 31, 1996 and 1997...  F-3
               Consolidated Statements of Operations for the years ended
               December 31, 1995, 1996 and 1997............................  F-4
               Consolidated Statements of Changes in Stockholder's Equity
               for the years ended December 31, 1995, 1996 and 1997........  F-5
               Consolidated Statements of Cash Flows for the years ended
               December 31, 1995, 1996 and 1997............................  F-6
               Notes to Consolidated Financial Statements..................  F-7

          (2)  FINANCIAL STATEMENT SCHEDULES

               None.  All schedules have been included in the Consolidated
               Financial Statements or Notes thereto.

          (3)  EXHIBITS


   2.1*      Amended and Restated Agreement for Exchange of Stock and
             Merger, dated as of May 31, 1995, by and among EchoStar
             Communications Corporation, a Nevada corporation formed in
             April 1995 ("EchoStar"), Charles W. Ergen and Dish, Ltd.
             (formerly EchoStar Communications Corporation, a Nevada
             corporation formed in December 1993) ("Dish") (incorporated by
             reference to Exhibit 2.2 to the Registration Statement on Form
             S-1 of EchoStar, Registration No. 33-91276).

   2.2*      Plan and Agreement of Merger made as of December 21, 1995 by
             and among EchoStar, Direct Broadcasting Satellite Corporation,
             a Colorado Corporation ("MergerCo") and Direct Broadcasting
             Satellite Corporation, a Delaware Corporation ("DBSC")
             (incorporated by reference to Exhibit 2.3 to the Registration
             Statement on Form S-4 of EchoStar, Registration No. 333-
             03584).

   2.3*      Merger Trigger Agreement entered into as of December 21, 1995
             by and among EchoStar, MergerCo and DBSC (incorporated by
             reference to Exhibit 2.4 to the Registration Statement on Form
             S-4 of EchoStar, Registration No. 333-03584).

   3.1(a)*   Amended and Restated Articles of Incorporation of EchoStar
             (incorporated by reference to Exhibit 3.1(a) to the
             Registration Statement on Form S-1 of EchoStar, Registration
             No. 33-91276).

   3.1(b)*   Bylaws of EchoStar (incorporated by reference to Exhibit
             3.1(b) to the Registration Statement on Form S-1 of EchoStar,
             Registration No. 33-91276).

   3.2(a)*   Articles of Incorporation of EchoStar Satellite Broadcasting
             Corporation (formerly EchoStar Bridge Corporation, a Colorado
             corporation) ("ESBC") (incorporated by reference to Exhibit
             3.1(e) to the Registration Statement on Form S-1 of ESBC,
             Registration No. 333-3980).

   3.2(b)*   Bylaws of ESBC (incorporated by reference to Exhibit 3.1(f) to
             the Registration Statement on Form S-1 of ESBC, Registration
             No. 333-3980).

   3.3(a)*   Amended and Restated Articles of Incorporation of Dish
             (incorporated by reference to Exhibit 3.1(a) to the
             Registration Statement on Form S-1 of Dish, Registration No.
             33-76450).


                                       8
<PAGE>

   3.3(b)*   Bylaws of Dish (incorporated by reference to Exhibit 3.1(b) to
             the Registration Statement on Form S-1 of Dish, Registration
             No. 33-76450).

   3.4(a)*   Articles of Incorporation of EchoStar DBS Corporation, a
             Colorado corporation ("DBS Corp.") (incorporated by reference
             to Exhibit 3.4(a) to the Registration Statement on Form S-4 of
             DBS Corp., Registration No. 333-31929).

   3.4(b)*   Bylaws of DBS Corp. (incorporated by reference to Exhibit
             3.4(b) to the Registration Statement on Form S-4 of DBS Corp.,
             Registration No. 333-31929).

   4.1*      Indenture of Trust between Dish and First Trust National
             Association ("First Trust"), as Trustee (incorporated by
             reference to Exhibit 4.1 to the Registration Statement on Form
             S-1 of Dish, Registration No. 33-76450).

   4.2*      Warrant Agreement between EchoStar and First Trust, as Warrant
             Agent (incorporated by reference to Exhibit 4.2 to the
             Registration Statement on Form S-1 of Dish, Registration No.
             33-76450).

   4.3*      Security Agreement in favor of First Trust, as Trustee under
             the Indenture filed as Exhibit 4.1 hereto (incorporated by
             reference to Exhibit 4.3 to the Registration Statement on Form
             S-1 of Dish, Registration No. 33-76450).

   4.4*      Escrow and Disbursement Agreement between Dish and First Trust
             (incorporated by reference to Exhibit 4.4 to the Registration
             Statement on Form S-1 of Dish, Registration No. 33-76450).

   4.5*      Pledge Agreement in favor of First Trust, as Trustee under the
             Indenture filed as Exhibit 4.1 hereto (incorporated by
             reference to Exhibit 4.5 to the Registration Statement on Form
             S-1 of Dish, Registration No. 33-76450).

   4.6*      Intercreditor Agreement among First Trust, Continental Bank,
             N.A. and Martin Marietta Corporation ("Martin Marietta")
             (incorporated by reference to Exhibit 4.6 to the Registration
             Statement on Form S-1 of Dish, Registration No. 33-76450).

   4.7*      Series A Preferred Stock Certificate of Designation of
             EchoStar (incorporated by reference to Exhibit 4.7 to the
             Registration Statement on Form S-1 of EchoStar, Registration
             No. 33-91276).

   4.8*      Registration Rights Agreement by and between EchoStar and
             Charles W. Ergen (incorporated by reference to Exhibit 4.8 to
             the Registration Statement on Form S-1 of EchoStar,
             Registration No. 33-91276).

   4.9*      Indenture of Trust between ESBC and First Trust, as Trustee
             (incorporated by reference to Exhibit 4.9 to the Annual Report
             on Form 10-K of EchoStar for the year ended December 31, 1995,
             Commission File No. 0-26176).

   4.10*     Security Agreement of ESBC in favor of First Trust, as Trustee
             under the Indenture filed as Exhibit 4.9 hereto (incorporated
             by reference to Exhibit 4.10 to the Annual Report on Form 10-K
             of EchoStar for the year ended December 31, 1995, Commission
             File No. 0-26176).

   4.11*     Escrow and Disbursement Agreement between ESBC and First Trust
             (incorporated by reference to Exhibit 4.11 to the Annual
             Report on Form 10-K of EchoStar for the year ended December
             31, 1995, Commission File No. 0-26176).


                                       9
<PAGE>

   4.12*     Pledge Agreement of ESBC in favor of First Trust, as Trustee
             under the Indenture filed as Exhibit 4.9 hereto (incorporated
             by reference to Exhibit 4.12 to the Annual Report on Form 10-K
             of EchoStar for the year ended December 31, 1995, Commission
             File No. 0-26176).

   4.13*     Pledge Agreement of EchoStar in favor of First Trust, as
             Trustee under the Indenture filed as Exhibit 4.9 hereto
             (incorporated by reference to Exhibit 4.13 to the Annual
             Report on Form 10-K of EchoStar for the year ended December
             31, 1995, Commission File No. 0-26176).

   4.14*     Registration Rights Agreement by and between ESBC, EchoStar,
             Dish, MergerCo and Donaldson, Lufkin & Jenrette Securities
             Corporation (incorporated by reference to Exhibit 4.14 to the
             Annual Report on Form 10-K of EchoStar for the year ended
             December 31, 1995, Commission File No. 0-26176).

   4.15*     Registration Rights Agreement, dated as of June 25, 1997, by
             and among DBS Corp., EchoStar Communications Corporation, a
             Nevada corporation formed in April 1995 ("EchoStar"), EchoStar
             Satellite Broadcasting Corporation, a Colorado corporation,
             Dish, Ltd. (formerly EchoStar Communications Corporation, a
             Nevada corporation formed in December 1993), Donaldson, Lufkin
             & Jenrette Securities Corporation ("DLJ") and Lehman Brothers
             Inc. ("Lehman Brothers") (incorporated by reference to Exhibit
             4.15 to the Registration Statement on Form S-4 of DBS Corp.,
             Registration No. 333-31929).

   4.16*     Indenture of Trust, dated as of June 25, 1997, between DBS
             Corp. and First Trust National Association ("First Trust"), as
             Trustee (incorporated by reference to Exhibit 4.16 to
             Amendment No. 1 to the Registration Statement on Form S-4 of
             DBS Corp., Registration No. 333-31929).

   4.17*     12 1/8%  Series B Senior Redeemable Exchangeable Preferred
             Stock Certificate of Corrrection for the Certificate of
             Designation of EchoStar (incorporated by reference to Exhibit
             4.17 to Amendment No. 1 to the Registration Statement on Form
             S-3 of EchoStar, Registration No. 333-37683).

   4.18*     Registration Rights Agreement, dated as of October 2, 1997, by
             and among EchoStar, DLJ and Lehman Brothers ((incorporated by
             reference to Exhibit 4.18 to Amendment No. 1 to the
             Registration Statement on Form S-3 of EchoStar, Registration
             No. 333-37683).

   4.19*     6 3/4% Series C Cumulative Convertible Preferred Stock
             Certificate of Designation of EchoStar (incorporated by
             reference to Exhibit 4.19 to the Registration Statement on
             Form S-4 of EchoStar, Registration No. 333-39901).

   4.20*     Form of Deposit Agreement between EchoStar and American
             Securities Transfer & Trust, Inc. (incorporated by reference
             to Exhibit 4.20 to Amendment No. 1 to the Registration
             Statement on Form S-3 of EchoStar, Registration No. 333-
             37683).

   4.21(a)*  Form of Underwriting Agreement for 6 3/4% Series C Cumulative
             Convertible Preferred Stock by and between EchoStar, DLJ and
             Lehman Brothers (incorporated by reference to Exhibit 1.1 to
             Amendment No. 1 to the Registration Statement on Form S-3 of
             EchoStar, Registration No. 333-37683).

   4.21(b)*  Form of Underwriting Agreement for Class A Common Stock by and
             between EchoStar, DLJ, BT Alex. Brown Incorporated and
             Unterberg Harris (incorporated by reference to Exhibit 1.1 to
             Amendment No. 1 to the Registration Statement on Form S-3 of
             EchoStar, Registration No. 333-37683).


                                       10
<PAGE>

   4.22*     Form of Indenture for EchoStar's 121/8% Senior Exchange Notes
             due 2004 (incorporated by reference to Exhibit 4.8 to the
             Quarterly Report on Form 10-Q of EchoStar for the quarterly
             period ended September 30, 1997, Commission File No. 0-
             26176).

   10.1(a)*  Satellite Construction Contract, dated as of February 6,
             1990, between EchoStar Satellite Corporation ("ESC") and
             Martin Marietta as successor to General Electric EchoStar,
             Astro-Space Division ("General Electric") (incorporated by
             reference to Exhibit 10.1(a) to the Registration Statement on
             Form S-1 of Dish, Registration No. 33-76450).

   10.1(b)*  First Amendment to the Satellite Construction Contract, dated
             as of October 2, 1992, between ESC and Martin Marietta as
             successor to General Electric (incorporated by reference to
             Exhibit 10.1(b) to the Registration Statement on Form S-1 of
             Dish, Registration No. 33-76450).

   10.1(c)*  Second Amendment to the Satellite Construction Contract,
             dated as of October 30, 1992, between ESC and Martin Marietta
             as successor to General Electric (incorporated by reference
             to Exhibit  10.1(c) to the Registration Statement on Form S-1
             of Dish, Registration No. 33-76450).

   10.1(d)*  Third Amendment to the Satellite Construction Contract, dated
             as of April 1, 1993, between ESC and Martin Marietta
             (incorporated by reference to Exhibit 10.1(d) to the
             Registration Statement on Form S-1 of Dish, Registration No.
             33-76450).

   10.1(e)*  Fourth Amendment to the Satellite Construction Contract,
             dated as of August 19, 1993, between ESC and Martin Marietta
             (incorporated by reference to Exhibit 10.1(e) to the
             Registration Statement on Form S-1 of Dish, Registration No.
             33-76450).

   10.1(f)*  Form of Fifth Amendment to the Satellite Construction
             Contract, between ESC and Martin Marietta (incorporated by
             reference to Exhibit 10.1(f) to the Registration Statement on
             Form S-1 of Dish, Registration No. 33-81234).

   10.1(g)*  Sixth Amendment to the Satellite Construction Contract, dated
             as of June 7, 1994, between ESC and Martin Marietta
             (incorporated by reference to Exhibit 10.1(g) to the
             Registration Statement on Form S-1 of Dish, Registration No.
             33-81234).

   10.1(h)*  Eighth Amendment to the Satellite Construction Contract,
             dated as of July 18, 1996, between ESC and Martin Marietta
             (incorporated by reference to Exhibit 10.1(h) to the
             Quarterly Report on Form 10-Q of EchoStar for the quarter
             ended June 30, 1996, Commission File No. 0-26176).

   10.2*     Master Purchase and License Agreement, dated as of August 12,
             1986, between Houston Tracker Systems, Inc. ("HTS") and
             Cable/Home Communications Corp. (a subsidiary of General
             Instruments Corporation) (incorporated by reference to
             Exhibit 10.4 to the Registration Statement on Form S-1 of
             Dish, Registration No. 33-76450).

   10.3*     Master Purchase and License Agreement, dated as of June 18,
             1986, between Echosphere Corporation and Cable/Home
             Communications Corp. (a subsidiary of General Instruments
             Corporation) (incorporated by reference to Exhibit 10.5 to
             the Registration Statement on Form S-1 of Dish, Registration
             No. 33-76450).

   10.4*     Merchandising Financing Agreement, dated as of June 29, 1989,
             between Echo Acceptance Corporation and Household Retail
             Services, Inc. (incorporated by reference to Exhibit 10.6 to
             the Registration Statement on Form S-1 of Dish, Registration
             No. 33-76450).


                                       11
<PAGE>

   10.5*     Key Employee Bonus Plan, dated as of January 1, 1994
             (incorporated by reference to Exhibit 10.7 to the Registration
             Statement on Form S-1 of Dish, Registration No. 33-76450)**

   10.6*     Consulting Agreement, dated as of February 17, 1994, between
             ESC and Telesat Canada (incorporated by reference to Exhibit
             10.8 to the Registration Statement on Form S-1 of Dish,
             Registration No. 33-76450).

   10.7*     Form of Satellite Launch Insurance Declarations (incorporated
             by reference to Exhibit 10.10 to the Registration Statement on
             Form S-1 of Dish, Registration No. 33-81234).

   10.8*     Dish 1994 Stock Incentive Plan (incorporated by reference to
             Exhibit 10.11 to the Registration Statement on Form S-1 of
             Dish, Registration No. 33-76450).**

   10.9*     Form of Tracking, Telemetry and Control Contract between AT&T
             Corp. and ESC (incorporated by reference to Exhibit 10.12 to
             the Registration Statement on Form S-1 of Dish, Registration
             No. 33-81234).

   10.10*    Manufacturing Agreement, dated as of March 22, 1995, between
             HTS and SCI Technology, Inc. (incorporated by reference to
             Exhibit 10.12 to the Registration Statement on Form S-1 of
             Dish, Commission File No. 33-81234).

   10.11*    Manufacturing Agreement dated as of April 14, 1995 by and
             between ESC and Sagem Group (incorporated by reference to
             Exhibit 10.13 to the Registration Statement on Form S-1 of
             EchoStar, Registration No. 33-91276).

   10.12*    Statement of Work, dated January 31, 1995 from ESC to DiviCom,
             Inc. (incorporated by reference to Exhibit 10.14 to the
             Registration Statement on Form S-1 of EchoStar, Registration
             No. 33-91276).

   10.13*    Launch Services Contract, dated as of June 2, 1995, by and
             between EchoStar Space Corporation and Lockheed-Khrunichev-
             Energia International, Inc. (incorporated by reference to
             Exhibit 10.15 to the Registration Statement on Form S-1 of
             EchoStar, Registration No. 33-91276).

   10.14*    EchoStar 1995 Stock Incentive Plan (incorporated by reference
             to Exhibit 10.16 to the Registration Statement on Form S-1 of
             EchoStar, Registration No. 33-91276)**

   10.15(a)* Eighth Amendment to Satellite Construction Contract, dated as
             of February 1, 1994, between DirectSat Corporation and Martin
             Marietta (incorporated by reference to Exhibit 10.17(a) to the
             Quarterly Report on Form 10-Q of EchoStar for the quarter
             ended June 30, 1996, Commission File No. 0-26176).

   10.15(b)* Ninth Amendment to Satellite Construction Contract, dated as
             of February 1, 1994, between DirectSat Corporation and Martin
             Marietta (incorporated by reference to Exhibit 10.15 to the
             Registration Statement of Form S-4 of EchoStar, Registration
             No. 333-03584).

   10.15(c)* Tenth Amendment to Satellite Construction Contract, dated as
             of July 18, 1996, between DirectSat Corporation and Martin
             Marietta (incorporated by reference to Exhibit 10.17(b) to the
             Quarterly Report on Form 10-Q of EchoStar for the quarter
             ended June 30, 1996, Commission File No. 0-26176).

   10.16*    Satellite Construction Contract, dated as of July 18, 1996,
             between EDBS and Lockheed Martin Corporation (incorporated by
             reference to Exhibit 10.18 to the Quarterly Report on Form 10-
             Q of EchoStar for the quarter ended June 30, 1996, Commission
             File No. 0-26176).


                                       12
<PAGE>

   10.17*    Confidential Amendment to Satellite Construction Contract
             between DBSC and Martin Marietta, dated as of May 31, 1995
             (incorporated by reference to Exhibit 10.14 to the
             Registration Statement of Form S-4 of EchoStar, Registration
             No. 333-03584).

   10.18*    Right and License Agreement by and among HTS and Asia
             Broadcasting and Communications Network, Ltd., dated December
             19, 1996 (incorporated by reference to Exhibit 10.18 to the
             Annual Report on Form 10-K of EchoStar for the year ended
             December 31, 1996, as amended, Commission file No. 0-26176).

   10.19*    Agreement between HTS, ESC and ExpressVu Inc., dated January
             8, 1997, as amended (incorporated by reference to Exhibit
             10.18 to the Annual Report on Form 10-K of EchoStar for the
             year ended December 31, 1996, as amended, Commission File No.
             0-26176).

   10.20*    Amendment No. 9 to Satellite Construction Contract, effective
             as of July 18, 1996, between Direct Satellite Broadcasting
             Corporation, a Delaware corporation ("DBSC") and Martin
             Marrieta Corporation (incorporated by reference to Exhibit
             10.1 to the Quarterly Report on Form 10-Q of EchoStar for the
             quarterly period ended June 30, 1997, Commission File No. 0-
             26176).

   10.21*    Amendment No. 10 to Satellite Construction Contract, effective
             as of May 31, 1996, between DBSC and Lockheed Martin
             Corporation (incorporated by reference to Exhibit 10.2 to the
             Quarterly Report on Form 10-Q of EchoStar for the quarterly
             period ended June 30, 1997, Commission File No. 0-26176).

   10.22*    Contract for Launch Services, dated April 5, 1996, between
             Lockheed Martin Commercial Launch Services, Inc. and EchoStar
             Space Corporation (incorporated by reference to Exhibit 10.3
             to the Quarterly Report on Form 10-Q of EchoStar for the
             quarterly period ended June 30, 1997, Commission File No. 0-
             26176).

   24.1+     Powers of Attorney authorizing signature of James DeFranco.

   27+       Financial Data Schedule.

   99.1*     Consolidated Financial Statements of EchoStar for the year
             ended December 31, 1997 (incorporated by reference to
             EchoStar's Annual Report on Form 10-K for the year ended
             December 31, 1997).

   99.2*     Consolidated Financial Statements of Dish, Ltd. for the year
             ended December 31, 1997 (incorporated by reference to Dish,
             Ltd.'s Annual Report on Form 10-K for the year ended December
             31, 1997).

   99.3+     Financial Statements of DBSC for the year ended December 31,
             1997.

   99.4+     Combined and Consolidated Financial Statements of
             "EchoSatellite" for the year ended December 31, 1997.

+    Filed herewith
*    Incorporated by reference.
**   Constitutes a management contract or compensatory plan or arrangement.

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed during the fourth quarter of 1997.


                                       13
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, EchoStar Satellite Broadcasting Corporation has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                        ECHOSTAR SATELLITE BROADCASTING CORPORATION


                        By:  /s/ STEVEN B. SCHAVER
                           ---------------------------------------------
                             Steven B. Schaver
                             Chief Financial Officer

Date:  March 27, 1998

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
EchoStar Satellite Broadcasting Corporation and in the capacities and on the
dates indicated:

Signature               Title                                     Date
----------------------  ----------------------                    --------------

/s/ CHARLES W. ERGEN    Chief Executive Officer and Director      March 27, 1998
----------------------  (PRINCIPAL EXECUTIVE OFFICER)
Charles W. Ergen

/s/ STEVEN B. SCHAVER   Chief Financial Officer                   March 27, 1998
----------------------  (PRINCIPAL FINANCIAL OFFICER)
Steven B. Schaver

/s/ JOHN R. HAGER       Treasurer and Controller                  March 27, 1998
----------------------  (PRINCIPAL ACCOUNTING OFFICER)
John R. Hager

 *                      Director                                  March 27, 1998
----------------------
James DeFranco


/s/ DAVID K. MOSKOWITZ  Director                                  March 27, 1998
----------------------
David K. Moskowitz



* By: /s/ DAVID K. MOSKOWITZ
     ----------------------------
          David K. Moskowitz
          Attorney-in-Fact
<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                         PAGE
CONSOLIDATED FINANCIAL STATEMENTS:
 Report of Independent Public Accountants..............................   F-2
 Consolidated Balance Sheets at December 31, 1996 and 1997.............   F-3
 Consolidated Statements of Operations for the years ended
   December 31, 1995, 1996 and 1997....................................   F-4
 Consolidated Statements of Changes in Stockholder's Equity for the
   years ended December 31, 1995, 1996 and 1997........................   F-5
 Consolidated Statements of Cash Flows for the years ended
   December 31, 1995, 1996 and 1997....................................   F-6
 Notes to Consolidated Financial Statements............................   F-7


                                     F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To EchoStar Satellite Broadcasting Corporation:

     We have audited the accompanying consolidated balance sheets of EchoStar
Satellite Broadcasting Corporation (a Colorado corporation) and subsidiaries,
as described in Note 1, as of December 31, 1996 and 1997, and the related
consolidated statements of operations, changes in stockholder's equity and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of EchoStar
Satellite Broadcasting Corporation and subsidiaries as of December 31, 1996 and
1997, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.


                                             ARTHUR ANDERSEN LLP


Denver, Colorado,
February 27, 1998.


                                     F-2
<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                      ----------------------------
ASSETS                                                                    1996             1997
                                                                      ----------------------------
<S>                                                                   <C>               <C>
Current Assets:
  Cash and cash equivalents.........................................  $   38,428        $   45,653
  Marketable investment securities..................................      18,807                 -
  Trade accounts receivable, net of allowance for uncollectible
   accounts of $1,494 and $1,347, respectively......................      13,483            66,045
  Inventories.......................................................      72,767            22,993
  Subscriber acquisition costs, net.................................      68,129            18,819
  Other current assets..............................................      19,861             8,769
                                                                      ----------------------------
Total current assets................................................     231,475           162,279
Restricted Cash and Marketable Investment Securities:
  1996 Notes escrow.................................................      47,491                 -
  Other.............................................................      31,450             2,245
                                                                      ----------------------------
Total restricted cash and marketable investment securities..........      78,941             2,245
Property and equipment, net.........................................     499,989           505,347
Advances to affiliates, net.........................................     144,893           191,823
Deferred tax assets.................................................      79,670            64,997
Other noncurrent assets.............................................      38,123            35,894
                                                                      ----------------------------

    Total assets....................................................  $1,073,091        $  962,585
                                                                      ----------------------------
                                                                      ----------------------------
LIABILITIES AND  STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
  Trade accounts payable............................................  $   40,793        $   68,491
  Deferred revenue..................................................     104,095           122,215
  Accrued expenses..................................................      40,859            72,369
  Current portion of long-term debt.................................      11,334            14,924
                                                                      ----------------------------
Total current liabilities...........................................     197,081           277,999

Long-term obligations, net of current portion:
  1994 Notes........................................................     437,127           499,863
  1996 Notes........................................................     386,165           438,512
  Mortgages and other notes payable, net of current portion.........      51,428            40,495
  Long-term deferred satellite services revenue and other long-term
   liabilities......................................................       7,037            19,500
                                                                      ----------------------------
Total long-term obligations, net of current portion.................     881,757           998,370
                                                                      ----------------------------
    Total liabilities...............................................   1,078,838         1,276,369

Commitments and Contingencies (Note 9)

Stockholder's Equity (Deficit):
  Common stock, $.01 par value, 1,000 shares authorized, issued
  and outstanding...................................................           -                 -
  Additional paid-in capital........................................     108,838           108,838
  Unrealized holding losses on available-for-sale securities,
   net of deferred taxes............................................   (      11)                -
  Accumulated deficit...............................................   ( 114,574)        ( 422,622)
                                                                      ----------------------------
Total stockholder's equity (deficit)................................   (   5,747)        ( 313,784)
                                                                      ----------------------------
    Total liabilities and stockholder's equity (deficit)............  $1,073,091        $  962,585
                                                                      ----------------------------
                                                                      ----------------------------

</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                     F-3
<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                               (In thousands)
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                        ----------------------------------------
                                                          1995          1996          1997
                                                        ----------------------------------------
<S>                                                     <C>            <C>            <C>
REVENUE:
  DISH Network:
    Subscription television services..................  $       -      $  49,650      $ 298,883
    Other.............................................          -          8,238         42,925
                                                        ----------------------------------------
  Total DISH Network..................................          -         57,888        341,808
  DTH equipment sales and integration services........     35,816         77,390         90,263
  Satellite services..................................          -          5,822         11,135
  C-band and other....................................    112,704         56,003         32,696
                                                        ----------------------------------------
Total revenue.........................................    148,520        197,103        475,902

COSTS AND EXPENSES:
  DISH Network Operating Expenses:
    Subscriber-related expenses.......................          -         22,840        143,529
    Customer service center and other.................          -         12,996         35,078
    Satellite and transmission........................          -          6,573         14,563
                                                        ----------------------------------------
  Total DISH Network operating expenses...............          -         42,409        193,170
  Cost of sales-DTH equipment and integration services     30,404         75,984         60,918
  Cost of sales-C-band and other......................     84,846         42,345         23,909
  Marketing:
    Subscriber promotion subsidies....................          -         35,239        148,502
    Advertising and other.............................      1,786         17,929         34,843
                                                        ----------------------------------------
  Total marketing expenses............................      1,786         53,168        183,345
  General and administrative..........................     36,376         48,693         66,042
  Amortization of subscriber acquisition costs........          -         16,073        121,428
  Depreciation and amortization.......................      3,114         27,296         51,408
                                                        ----------------------------------------
Total costs and expenses..............................    156,526        305,968        700,220
                                                        ----------------------------------------

Operating loss........................................   (  8,006)      (108,865)      (224,318)

Other Income (Expense):
  Interest income.....................................     12,545         15,089          4,612
  Interest expense, net of amounts capitalized........   ( 23,985)     (  61,487)      ( 86,849)
  Other...............................................        894      (     345)      (  1,347)
                                                        ----------------------------------------
Total other income (expense)..........................   ( 10,546)     (  46,743)      ( 83,584)
                                                        ----------------------------------------

Loss before income taxes..............................   ( 18,552)      (155,608)      (307,902)
Income tax benefit (provision), net...................      6,191         54,860       (    146)
                                                        ----------------------------------------
Net loss..............................................  $( 12,361)     $(100,748)     $(308,048)
                                                        ----------------------------------------
                                                        ----------------------------------------

</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                     F-4
<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                 (In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                                          ACCUMULATED
                                                                                                          DEFICIT AND
                                                                                                          UNREALIZED
                                                COMMON STOCK         SERIES A     COMMON     ADDITIONAL     HOLDING
                                           -----------------------   PREFERRED    STOCK       PAID-IN        GAINS
                                                SHARES     AMOUNT     STOCK      WARRANTS     CAPITAL       (LOSSES)      TOTAL
                                           --------------------------------------------------------------------------------------
                                           (NOTES 1 AND 2)
<S>                                        <C>              <C>      <C>         <C>          <C>         <C>           <C>
Balance, December 31, 1994...............        33,544     $  336   $ 15,991    $  26,133    $ 62,197     $  (  849)   $ 103,808
  8% Series A Cumulative Preferred Stock
   dividends (at $0.38 per share)........             -          -        616            -           -        (  616)           -
  Exercise of Common Stock Warrants......         2,731         26          -      (25,419)     25,393             -            -
  Common Stock Warrants exchanged for
   ECC Warrants..........................             -          -          -      (   714)        714             -            -
  Launch bonuses funded by issuance of
   ECC's Class A Common Stock............             -          -          -            -       1,192             -        1,192
  Unrealized holding gains on available-
   for-sale securities, net..............             -          -          -            -           -           251          251
  Net loss...............................             -          -          -            -           -      ( 12,361)     (12,361)
                                           --------------------------------------------------------------------------------------
Balance, December 31, 1995...............        36,275        362     16,607            -      89,496      ( 13,575)      92,890
  Issuance of Common Stock (Note 1)......             1          -          -            -           1             -            1
  Reorganization of entities under common
   control (Note 1)......................       (36,275)      (362)   (16,607)           -      16,969             -            -
  Income tax benefit of deduction for
   income tax purposes on exercise of
   Class A Common Stock options..........             -          -          -            -       2,372             -        2,372
  Unrealized holding losses on available-
   for-sale securities, net..............             -          -          -            -           -      (    262)    (    262)
  Net loss...............................             -          -          -            -           -      (100,748)    (100,748)
                                           --------------------------------------------------------------------------------------
Balance, December 31, 1996...............             1          -          -            -     108,838      (114,585)    (  5,747)
  Unrealized holding gains on available-
   for-sale securities, net..............             -          -          -            -           -            11           11
  Net loss...............................             -          -          -            -           -      (308,048)    (308,048)
                                           --------------------------------------------------------------------------------------
Balance, December 31, 1997...............             1      $   -   $      -         $  -    $108,838     $(422,622)   $(313,784)
                                           --------------------------------------------------------------------------------------
                                           --------------------------------------------------------------------------------------
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                     F-5
<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                     ----------------------------------------
                                                                        1995            1996          1997
                                                                     ----------------------------------------
<S>                                                                  <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss...........................................................   $( 12,361)     $(100,748)     $(308,048)
Adjustments to reconcile net loss to net cash flows
 from operating activities:
  Depreciation and amortization....................................       3,114         27,296         51,408
  Amortization of subscriber acquisition costs.....................           -         16,073        121,428
  Deferred income tax benefit......................................    (  4,825)      ( 50,522)      (    358)
  Amortization of debt discount and deferred financing costs.......      23,528         61,695         81,934
  Change in reserve for excess and obsolete inventory..............       1,212          2,866       (  1,823)
  Change in long-term deferred satellite services revenue
   and other long-term liabilities.................................           -          5,949         12,056
  Other, net.......................................................         608            536            407
  Changes in current assets and current liabilities:
    Trade accounts receivable, net.................................    (  1,536)      (  4,368)      ( 52,562)
    Inventories....................................................    ( 19,654)      ( 36,864)        51,597
    Subscriber acquisition costs...................................           -       ( 84,202)      ( 72,118)
    Other current assets...........................................    ( 14,088)      (  3,118)        13,449
    Advances to affiliates, net....................................           -       (132,669)      ( 14,018)
    Trade accounts payable.........................................       4,111         21,730         27,698
    Deferred revenue...............................................    (  1,009)       103,511         18,120
    Accrued expenses...............................................    (    988)        16,871         44,184
                                                                     ----------------------------------------
Net cash flows from operating activities...........................    ( 21,888)      (155,964)      ( 26,646)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investment securities......................    (  3,004)      (138,328)      (  4,706)
Sales of marketable investment securities..........................      33,816        119,730         23,524
Purchases of restricted marketable investment securities...........    ( 15,000)      ( 21,100)      (  1,495)
Funds released from escrow and restricted cash and
 marketable investment securities..................................     122,149        235,402         78,675
Offering proceeds and investment earnings placed in escrow.........    (  9,589)      (193,972)      (    484)
Purchases of property and equipment................................    (113,555)      (157,897)      ( 49,385)
Payments received on convertible subordinated debentures
 from SSET.........................................................           -          6,445            834
Proceeds from sale of investment in DBSC to ECC....................       4,210              -              -
Other..............................................................    (    458)      (    123)      (    427)
                                                                     ----------------------------------------
Net cash flows from investing activities...........................      18,569       (149,843)        46,536

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of 1996 Notes...........................           -        336,916              -
Proceeds form issuance of common stock.............................           -              1              -
Repayments of mortgage indebtedness and notes payable..............    (    238)      (  6,631)      ( 12,665)
                                                                     ----------------------------------------
Net cash flows from financing activities...........................    (    238)       330,286       ( 12,665)
                                                                     ----------------------------------------

Net increase in cash and cash equivalents..........................    (  3,557)        24,479          7,225
Cash and cash equivalents, beginning of year.......................      17,506         13,949         38,428
                                                                     ----------------------------------------
Cash and cash equivalents, end of year.............................   $  13,949      $  38,428      $  45,653
                                                                     ----------------------------------------
                                                                     ----------------------------------------
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                     F-6
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND BUSINESS ACTIVITIES

PRINCIPAL BUSINESS

     EchoStar Satellite Broadcasting Corporation and subsidiaries ("ESBC" or
the "Company") is a wholly-owned subsidiary of EchoStar DBS Corporation ("DBS
Corp").  DBS Corp is a wholly-owned subsidiary of EchoStar Communications
Corporation ("ECC," and together with its subsidiaries "EchoStar"), a publicly
traded company on the Nasdaq National Market.  Unless otherwise stated herein,
or the context otherwise requires, references herein to EchoStar shall include
ECC, DBS Corp, ESBC and all direct and indirect wholly-owned subsidiaries
thereof.  The Company's management refers readers of this Annual Report on Form
10-K to EchoStar's Annual Report on Form 10-K for the year ended December 31,
1997.  Substantially all of EchoStar's operations are conducted by subsidiaries
of Dish, Ltd., a wholly-owned subsidiary of ESBC.  The operations of EchoStar
include three interrelated business units:

     -    THE DISH NETWORK - a DBS subscription television service in the United
          States.  As of December 31, 1997, EchoStar had approximately 1,040,000
          DISH Network subscribers.

     -    TECHNOLOGY - the design, manufacture, distribution and sale of DBS
          set-top boxes, antennae and other digital equipment for the DISH
          Network ("EchoStar Receiver Systems"), and the design, manufacture
          and distribution of similar equipment for direct-to-home ("DTH")
          projects of others internationally, together with the provision of
          uplink center design, construction oversight and other project
          integration services for international DTH ventures.

     -    SATELLITE SERVICES - the turn-key delivery of video, audio and data
          services to business television customers and other satellite users.
           These services include satellite uplink services, satellite
          transponder space usage, and other services.

     Since 1994, EchoStar has deployed substantial resources to develop the
"EchoStar DBS System."  The EchoStar DBS System consists of EchoStar's FCC-
allocated orbital spectrum, DBS satellites ("EchoStar I," "EchoStar II,"
"EchoStar III," and "EchoStar IV," respectively), digital satellite receivers,
digital broadcast operations center, customer service facilities, and other
assets utilized in its operations.  EchoStar's principal business strategy is
to continue developing its subscription television service in the U.S. to
provide consumers with a fully viable alternative to cable television service.

ORGANIZATION AND LEGAL STRUCTURE

     Certain companies principally owned and controlled by Mr. Charles W. Ergen
were reorganized in 1993 into Dish, Ltd. (together with its subsidiaries,
"Dish, Ltd.").  In April 1995, ECC was formed to complete an initial public
offering (the "IPO") of its Class A Common Stock.  Concurrently, Mr. Ergen
exchanged all of his then outstanding shares of Class B Common Stock and 8%
Series A Cumulative Preferred Stock of Dish, Ltd. for like shares of ECC (the
"Exchange").  In December 1995, ECC merged Dish, Ltd. with a wholly-owned
subsidiary of ECC (the "Merger").  In connection with the 1996 Notes Offering
(as defined), ECC contributed all of the outstanding capital stock of Dish,
Ltd. to ESBC.  This transaction was accounted for as a reorganization of
entities under common control whereby Dish, Ltd. was treated as the predecessor
to ESBC.  The following table summarizes the organizational structure of
EchoStar and its principle subsidiaries as of December 31, 1997:
<TABLE>
<CAPTION>
                                                     REFERRED TO
       LEGAL ENTITY                                  HEREIN AS    PARENT
       -------------------------------------------------------------------------
<S>                                                  <C>          <C>
       EchoStar Communications Corporation           ECC          Publicly owned
       EchoStar DBS Corporation                      DBS Corp     ECC
       EchoStar Satellite Broadcasting Corporation   ESBC         DBS Corp
       Dish, Ltd.                                    Dish, Ltd.   ESBC
       EchoStar Satellite Corporation                ESC          Dish, Ltd.
       Echosphere Corporation                        Echosphere   Dish, Ltd.
       Houston Tracker Systems, Inc.                 HTS          Dish, Ltd.
       EchoStar International Corporation            EIC          Dish, Ltd.

</TABLE>


                                     F-7
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1.   ORGANIZATION AND BUSINESS ACTIVITIES - CONTINUED

SIGNIFICANT RISKS AND UNCERTAINTIES

     COMPETITION.  The subscription television industry is highly competitive.
EchoStar faces competition from companies offering video, audio, data,
programming and entertainment services.  Many of these competitors have
substantially greater financial and marketing resources than EchoStar.
EchoStar's ability to effectively compete in the subscription television market
will depend on a number of factors, including competitive factors (such as the
introduction of new technologies or the entry of additional strong
competitors), the level of consumer demand for such services, the availability
of EchoStar Receiver Systems, and EchoStar's ability to obtain necessary
regulatory changes and approvals.

     DEPENDENCE ON SINGLE RECEIVER MANUFACTURER.  During 1997, EchoStar
Receiver Systems were manufactured exclusively by SCI Systems, Inc. ("SCI"), a
high-volume contract electronics manufacturer.  During February 1998, EchoStar
executed two separate agreements for the manufacture of digital set-top boxes
in accordance with EchoStar's specifications.  Phillips Electronics of North
America Corporation ("Phillips") and Vtech Communications Ltd. ("Vtech") are
expected to begin the manufacture of EchoStar's digital set-top boxes during
the second half of 1998.  There can be no assurance that either or both of
Phillips or Vtech will be able to successfully manufacture and deliver digital
set-top boxes during 1998, or at all.  EchoStar currently is negotiating with
additional brand-name consumer electronics manufacturers to produce receivers
for use with the DISH Network. No assurance can be provided regarding the
ultimate success of those negotiations.  In the event that EchoStar's
manufacturers of digital set-top boxes are unable for any reason to produce
receivers in a quantity sufficient to meet its requirements, EchoStar's ability
to add additional subscribers, or its ability to satisfy delivery obligations
for receiver sales to international DTH providers, may be materially impaired
and its results of operations would be adversely affected.

     TRANSACTIONS WITH MAJOR CUSTOMERS.  During 1997, export sales to two
customers, ExpressVu, Inc. and Distribuidora de Television Digital S.A.,
together accounted for approximately 16% of the Company's total revenue.
Complete or partial loss of one or both of these customers could have a
material adverse effect on the Company's results of operations.

     SUBSTANTIAL LEVERAGE.  EchoStar is highly leveraged, which makes it
vulnerable to changes in general economic conditions.  As of December 31, 1997,
EchoStar had outstanding long-term debt (including both the current and long-
term portion thereof) totaling approximately $1.4 billion.  In addition,
EchoStar's long-term debt will increase by at least $266 million through March
2000, as interest on certain of its long-term debt accrues and is not payable
in cash.  Substantially all of the assets of EchoStar and its subsidiaries are
pledged as collateral on its long-term debt.  Further, the indentures
associated with EchoStar's long-term debt severely restrict its ability to
incur additional indebtedness.  Thus, it may be difficult for EchoStar and its
subsidiaries to obtain additional debt financing if required or desired in
order to implement EchoStar's business strategy.  Certain of EchoStar's
subsidiaries also are parties to other agreements which severely restrict their
ability to obtain additional debt financing for working capital, capital
expenditures and general corporate purposes.

     EXPECTED OPERATING LOSSES.  Due to the substantial expenditures required
to develop the EchoStar DBS System and introduce DISH Network service to
consumers, the Company has sustained significant losses in recent periods.  The
Company's operating losses were $8 million, $109 million and $224 million for
the years ended December 31, 1995, 1996 and 1997, respectively.  The Company
had net losses of $12 million, $101 million and $308 million during those same
periods.  Improvement in the Company's results of operations is largely
dependent upon the Company's ability to expand its DISH Network subscription
base, control subscriber churn (i.e., the rate at which subscribers terminate
service), and effectively manage its  operating and overhead costs.  No
assurance can be


                                     F-8
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1.   ORGANIZATION AND BUSINESS ACTIVITIES - CONTINUED

given that the Company will be effective with regard to these matters.  In
addition, the Company incurs significant costs to acquire DISH Network
subscribers.  The high cost of obtaining new subscribers magnifies the negative
effects of subscriber churn.  The Company anticipates that it will continue to
experience operating losses through at least 1999.  There can be no assurance
that such operating losses will not continue beyond 1999 or that the Company's
operations will generate sufficient cash flows to pay its obligations,
including its obligations on its long-term debt, or to pay cash dividends on
its common stock.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The financial statements for 1995 present the consolidation of Dish, Ltd.
and its subsidiaries through the date of the Exchange and the consolidation of
ECC and its subsidiaries, thereafter.  The Exchange and Merger was accounted
for as a reorganization of entities under common control and the historical
cost basis of assets and liabilities was not affected by the transaction.
Effective March 1994, the stockholders approved measures necessary to increase
the authorized capital stock of Dish, Ltd. to include 200 million shares of
Class A Common Stock, 100 million shares of Class B Common Stock, and 20
million shares of Series A Convertible Preferred Stock and determined to split
all outstanding shares of common stock on the basis of approximately 4,296 to
1.  All significant intercompany accounts and transactions have been
eliminated.

     The Company accounts for investments in 50% or less owned entities using
the equity method.  At December 31, 1996 and 1997, these investments were not
material to the Company's consolidated financial statements.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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 revenues and expenses for each reporting
period.  Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSACTION GAINS AND LOSSES

     The functional currency of the Company's foreign subsidiaries is the U.S.
dollar because their sales and purchases are predominantly denominated in that
currency.  Transactions denominated in currencies other than U.S. dollars are
recorded based on exchange rates at the time such transactions arise.
Subsequent changes in exchange rates result in transaction gains and losses
which are reflected in income as unrealized (based on period-end translation)
or realized (upon settlement of the transaction).  Net transaction gains
(losses) during 1995, 1996 and 1997 were not material to the Company's results
of operations.

CASH AND CASH EQUIVALENTS

     The Company considers all liquid investments purchased with an original
maturity of 90 days or less to be cash equivalents.  Cash equivalents as of
December 31, 1996 and 1997 consist of money market funds, corporate notes and
commercial paper; such balances are stated at cost which equates to market
value.


                                     F-9
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

STATEMENTS OF CASH FLOWS DATA

     The following presents the Company's supplemental cash flow statement
disclosure (in thousands):
<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                       -------------------------
                                                         1995    1996     1997
                                                       -------------------------
<S>                                                    <C>      <C>      <C>
  Cash paid for interest.............................. $   461  $ 3,007  $ 4,915
  Cash paid for income taxes..........................   3,203      383      209
  Capitalized interest, including amounts due from
   affiliates.........................................  25,763   31,818   34,612
  8% Series A Cumulative Preferred Stock dividends....     617        -        -
  Accrued satellite contract costs....................  15,000        -        -
  Satellite launch payment for EchoStar II applied to
   EchoStar I launch..................................       -   15,000        -
  Satellite vendor financing..........................  32,833   31,167        -
  Other notes payable.................................       -        -    5,322

</TABLE>

MARKETABLE INVESTMENT SECURITIES AND RESTRICTED CASH AND MARKETABLE INVESTMENT
SECURITIES

     The Company considers its marketable investment securities to be available-
for-sale.  Accordingly, these investments are reflected at market value based
on quoted market prices.  Related unrealized gains and losses are reported as a
separate component of stockholder's equity, net of related deferred income
taxes.  The specific identification method is used to determine cost in
computing realized gains and losses. As of December 31, 1996, marketable
investment securities consisted of $16 million of commercial paper and $3
million of government bonds. The market value of these securities approximated
cost.

     Restricted cash and marketable investment securities held in escrow
accounts, as reflected in the accompanying consolidated balance sheets, include
cash restricted by the various indentures associated with certain of the
Company's debt financing transactions (see Note 4), plus investment earnings
thereon.  Restricted cash and marketable investment securities are invested in
certain permitted debt and other marketable investment securities until
disbursed for the express purposes identified in the applicable indenture. As
of December 31, 1996, restricted cash and marketable securities consisted of
$78 million of commercial paper and $1 million of certificates of deposit. The
market value of these securities approximated cost.

     As of December 31, 1996, other restricted cash included a total of $25
million held in two escrow accounts for the benefit of EchoStar Receiver System
manufacturers.  These deposits were released from their respective escrow
accounts during May 1997.  In addition, $6 million at December 31, 1996 was
restricted by an indenture to satisfy certain covenants pertaining to launch
insurance for EchoStar II.  This covenant was satisfied during September 1997.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Fair values for the Company's 1994 Notes and 1996 Notes (as defined, see
Note 4) are based on quoted market prices.  The fair values of the Company's
mortgages and other notes payable are estimated using discounted cash flow
analyses.  The interest rates assumed in such discounted cash flow analyses
reflect interest rates currently being offered for loans with similar terms to
borrowers of similar credit quality.  The following table summarizes the book
and fair values of the Company's debt facilities at December 31, 1997 (in
thousands):
<TABLE>
<CAPTION>
                                                        BOOK VALUE   FAIR VALUE
                                                       -------------------------
<S>                                                     <C>           <C>
  1994 Notes...........................................  $499,863     $570,960
  1996 Notes...........................................   438,512      488,650
  Mortgages and other notes payable....................    55,419       54,954

</TABLE>


                                     F-10
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVENTORIES

     Inventories are stated at the lower of cost or market value.  Cost is
determined using the first-in, first-out method.  Proprietary products are
manufactured by outside suppliers to the Company's specifications.
Manufactured inventories include materials, labor and manufacturing overhead.
Cost of other inventories includes parts, contract manufacturers' delivered
price, assembly and testing labor, and related overhead, including handling and
storage costs.  Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                       -----------------------
                                                         1996           1997
                                                       -----------------------
<S>                                                    <C>           <C>
     DBS receiver components.......................... $ 15,736      $ 12,506
     EchoStar Receiver Systems........................   32,799         7,649
     Consigned DBS receiver components................   23,525         3,122
     Finished goods - analog DTH equipment............    4,091         2,116
     Spare parts and other............................    2,279         1,440
     Reserve for excess and obsolete.inventory........  ( 5,663)      ( 3,840)
                                                       -----------------------
                                                       $ 72,767      $ 22,993
                                                       -----------------------
                                                       -----------------------

</TABLE>

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost.  Cost includes interest
capitalized of $25 million, $20 million and $2 million during the years ended
December 31, 1995, 1996 and 1997, respectively.  The costs of satellites under
construction are capitalized during the construction phase, assuming the
eventual successful launch and in-orbit operation of the satellite.  If a
satellite were to fail during launch or while in-orbit, the resultant loss
would be charged to expense in the period such loss was incurred.  The amount
of any such loss would be reduced to the extent of insurance proceeds received
as a result of the launch or in-orbit failure.  Depreciation is recorded on a
straight-line basis for financial reporting purposes.  Repair and maintenance
costs are charged to expense when incurred.  Renewals and betterments are
capitalized.

     The Company reviews its long-lived assets and identifiable assets to be
held and used for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.  For
assets which are held and used in operations, the asset would be impaired if
the book value of the asset exceeded the undiscounted future cash flows related
to the asset.  For those assets which are to be disposed of, the assets would
be impaired to the extent the fair value does not exceed the book value.  The
Company considers relevant cash flow, estimated future operating results,
trends and other available information including the fair value of frequency
rights owned, in assessing whether the carrying value of assets can be
recovered.

FCC AUTHORIZATIONS

     FCC authorizations are recorded at cost and amortized using the straight-
line method over a period of 40 years.  Such amortization commences at the time
the related satellite becomes operational; capitalized costs are written off at
the time efforts to provide services are abandoned.  FCC authorizations include
interest capitalized of $1 million and $1 million during the years ended
December 31, 1995 and 1996, respectively.  No interest was capitalized during
1997 related to FCC authorizations.


                                     F-11
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ADVANCES TO AFFILIATES

     Advances to affiliates are recorded at cost and represent the net amount
of funds advanced to, or received from, unconsolidated affiliates of ESBC.
Such advances principally have consisted of advances to Direct Broadcasting
Satellite Corporation and EchoStar Space Corporation to fund satellite
construction and launch expenditures.

REVENUE RECOGNITION

     Revenue from the provision of DISH Network subscription television
services and satellite services is recognized as revenue in the period such
services are provided.  Revenue from sales of digital set-top boxes and related
accessories is recognized upon shipment to customers.  Revenue from the
provision of integration services is recognized as revenue in the period the
services are performed.

SUBSCRIBER PROMOTION SUBSIDIES AND SUBSCRIBER ACQUISITION COSTS

     During 1996, in order to stimulate subscriber growth, EchoStar made a
strategic decision to reduce the price charged to consumers for EchoStar
Receiver Systems.  Accordingly, beginning in August 1996, EchoStar began
selling its EchoStar Receiver Systems below its manufactured cost (the "1996
Promotion").  The 1996 Promotion lowered the suggested retail price charged by
independent retailers for a standard EchoStar Receiver System to $199 (as
compared to the original average retail price prior to August 1996 of
approximately $499), conditioned upon the consumer's one-year prepaid
subscription to the DISH Network's America's Top 50 CD programming package for
approximately $300.  The excess of EchoStar's aggregate costs (equipment,
programming and other) over proceeds received pursuant to the 1996 Promotion
was expensed ("subscriber promotion subsidies") upon shipment of the equipment.
Remaining costs were deferred ("subscriber acquisition costs") and amortized
over the term of the prepaid subscription (normally one year).  Excluding
expected incremental subscriber revenues, such as from premium and Pay-Per-View
services, this accounting treatment results in revenue recognition over the
initial prepaid period of service equal to the sum of programming costs (which
are recognized as service is provided) and amortization of subscriber
acquisition costs.  During the period from August 1996 through May 1997,
substantially all new subscriber activations resulted from the 1996 Promotion.

     The caption "DISH Network - Subscription Television Services" in the
accompanying statements of operations includes revenues from the 1996 Promotion
equal to the advertised subscription rates for related DISH Network services.
Incremental revenues realized from the 1996 Promotion are included in the
caption "DISH Network - Other" and amounted to approximately $5 million during
1996 and $39 million during 1997.

     During June 1997, EchoStar introduced the "1997 Promotion."  The 1997
Promotion maintained the suggested retail price for a standard EchoStar
Receiver System at $199, but eliminated the extended subscription commitment.
Net transaction costs associated with the 1997 Promotion are expensed as
incurred (reported as a component of subscriber promotion subsidies) in the
accompanying statements of operations.  While some sales continue to be made
under the terms of the 1996 Promotion, the majority of new subscriber
activations have resulted from the 1997 Promotion since its introduction.  As a
result, beginning in October 1997, net transaction costs resulting from the
sale of EchoStar Receiver Systems pursuant to the 1996 Promotion also are
expensed as incurred.  Consequently, no additional subscriber acquisition costs
will be deferred.  The unamortized balance of such costs ($19 million at
December 31, 1997) is expected to be fully amortized by September 1998.

DEFERRED DEBT ISSUANCE COSTS AND DEBT DISCOUNT

     Costs of completing the 1994 Notes Offering and the 1996 Notes Offering
(as defined, see Note 4) were deferred and are being amortized to interest
expense over their respective terms.  The original issue discounts related to


                                     F-12
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED


the 1994 Notes and the 1996 Notes are being accreted to interest expense so as
to reflect a constant rate of interest on the accreted balance of the 1994
Notes and the 1996 Notes.

DEFERRED REVENUE

     Deferred revenue principally consists of prepayments received from
subscribers for DISH Network programming.  Such amounts are recognized as
revenue in the period the programming is provided to the subscriber.

LONG-TERM DEFERRED SATELLITE SERVICES REVENUE

     Long-term deferred satellite services  revenue consists of advance
payments from certain content providers for carriage of their signal on the
DISH Network.  Such amounts are deferred and recognized as revenue on a
straight-line basis over the related contract terms (up to ten years).

ACCRUED EXPENSES

     Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                     ----------------------
                                                      1996           1997
                                                     ----------------------
<S>                                                  <C>            <C>
     Accrued expenses............................... $11,029        $34,604
     Accrued programming............................   9,463         20,018
     Accrued royalties..............................   7,693         17,747
     Deferred tax liabilities.......................  12,674              -
                                                     ----------------------
                                                     $40,859        $72,369
                                                     ----------------------
                                                     ----------------------

</TABLE>

ADVERTISING COSTS

     Advertising costs, exclusive of subscriber promotion subsidies, are
expensed as incurred and totaled $2 million, $18 million and $35 million for
the years ended December 31, 1995, 1996 and 1997, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1997, the FASB issued FAS No. 130, "Reporting Comprehensive
Income" ("FAS No. 130"), which establishes standards for reporting and display
of comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. In June 1997,
the FASB issued FAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information" ("FAS No. 131") which establishes standards for reporting
information about operating segments in annual financial statements of public
business enterprises and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders and for related disclosures about products and services,
geographic areas, and major customers.  FAS No. 130 and FAS No. 131 are
effective for financial statements for periods beginning after December 15,
1997.  The adoption of FAS No. 130 and FAS No. 131 may require additional
disclosure in the Company's financial statements.

RECLASSIFICATIONS

     Certain amounts from the prior years consolidated financial statements
have been reclassified to conform with the 1997 presentation.


                                     F-13
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

3.  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                             LIFE      ----------------------
                                          (IN YEARS)      1996         1997
                                          ----------   ----------------------
<S>                                       <C>          <C>          <C>
     EchoStar I.........................        12     $ 201,607    $ 201,607
     EchoStar II........................        12       228,694      228,694
     Furniture, fixtures and equipment..      2-12        72,932       92,170
     Buildings and improvements.........      7-40        21,649       22,114
     Tooling and other..................         2         3,253        4,336
     Land...............................         -         1,613        1,636
     Vehicles...........................         7         1,323        1,320
     Construction in progress...........         -         4,137       39,253
                                                       ----------------------
       Total property and equipment.....                 535,208      591,130
     Accumulated depreciation...........                ( 35,219)    ( 85,783)
                                                       ----------------------
       Property and equipment, net......               $ 499,989    $ 505,347
                                                       ----------------------
                                                       ----------------------
</TABLE>

4.   LONG-TERM DEBT

1994 NOTES

     In June 1994, Dish, Ltd. completed an offering of 12 7/8% Senior Secured
Discount Notes due June 1, 2004 (the "1994 Notes") and Common Stock Warrants
(the "Warrants") (collectively, the "1994 Notes Offering").  The 1994 Notes
Offering resulted in net proceeds to Dish, Ltd. of $323 million (including
amounts attributable to the issuance of the Warrants and after payment of
underwriting discounts and other issuance costs aggregating approximately $13
million).

     The 1994 Notes bear interest at a rate of 12 7/8% computed on a semi-
annual bond equivalent basis.  Interest on the 1994 Notes will not be payable
in cash prior to June 1, 1999, with the 1994 Notes accreting to a principal
value at stated maturity of $624 million by that date.  Commencing December 1,
1999, interest on the 1994 Notes will be payable in cash on December 1 and
June 1 of each year.

     The 1994 Notes rank senior in right of payment to all subordinated
indebtedness of Dish, Ltd. and PARI PASSU in right of payment with all other
senior indebtedness of Dish, Ltd.  The 1994 Notes are secured by liens on
certain assets of Dish, Ltd., including EchoStar I, EchoStar II and all other
components of the EchoStar DBS System owned by Dish, Ltd. and its subsidiaries.
The 1994 Notes are further guaranteed by each material, direct subsidiary of
Dish, Ltd. (see Note 10).  Although the 1994 Notes are titled "Senior," Dish,
Ltd. has not issued, and does not have any current arrangements to issue, any
significant indebtedness to which the 1994 Notes would be senior.  The 1996
Notes and the 1997 Notes are effectively subordinated to the 1994 Notes and all
other liabilities of Dish, Ltd. and its subsidiaries.  Furthermore, at
December 31, 1997, the 1994 Notes were effectively subordinated to
approximately $9 million of mortgage indebtedness with respect to certain
assets of Dish, Ltd.'s subsidiaries, not including the EchoStar DBS System, and
rank PARI PASSU with the security interest of approximately $30 million of
satellite vendor financing.

     Except under certain circumstances requiring prepayment premiums, and in
other limited circumstances, the 1994 Notes are not redeemable at Dish, Ltd.'s
option prior to June 1, 1999.  Thereafter, the 1994 Notes will be subject to
redemption, at the option of Dish, Ltd., in whole or in part, at redemption
prices ranging from 104.828% during the year commencing June 1, 1999, to 100%
of principal value at stated maturity on or after June 1, 2002, together with
accrued and unpaid interest thereon to the redemption date.  On each of June 1,
2002, and June 1, 2003, Dish, Ltd. will be required to redeem 25% of the
original aggregate principal amount of 1994 Notes at a redemption price equal
to 100% of principal value at stated maturity thereof, together with accrued
and unpaid interest thereon to the redemption date.  The remaining principal of
the 1994 Notes matures on June 1, 2004.


                                     F-14
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

4.   LONG-TERM DEBT - CONTINUED

     In the event of a change of control and upon the occurrence of certain
other events, as described in the indenture related to the 1994 Notes (the
"1994 Notes Indenture"), Dish, Ltd. will be required to make an offer to each
holder of 1994 Notes to repurchase all or any part of such holder's 1994 Notes
at a purchase price equal to 101% of the accreted value thereof on the date of
purchase, if prior to June 1, 1999, or 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest thereon to the date of
purchase, if on or after June 1, 1999.

     The 1994 Notes Indenture contains restrictive covenants that, among other
things, impose limitations on Dish, Ltd. and its subsidiaries with respect to
their ability to: (i) incur additional indebtedness; (ii) issue preferred
stock; (iii) apply the proceeds of certain asset sales; (iv) create, incur or
assume liens; (v) create dividend and other payment restrictions with respect
to Dish, Ltd.'s subsidiaries; (vi) merge, consolidate or sell
assets; (vii) incur subordinated or junior debt; and (viii) enter into
transactions with affiliates.  In addition, Dish, Ltd., may pay dividends on
its equity securities only if (1) no default is continuing under the 1994 Notes
Indenture; and (2) after giving effect to such dividend, Dish, Ltd.'s ratio of
total indebtedness to cash flow (calculated in accordance with the 1994 Notes
Indenture) would not exceed 4.0 to 1.0.  Moreover, the aggregate amount of such
dividends generally may not exceed the sum of 50% of Dish, Ltd.'s consolidated
net income (calculated in accordance with the 1994 Notes Indenture) from April
1, 1994, plus 100% of the aggregate net proceeds to Dish, Ltd. from the
issuance and sale of certain equity interests of Dish, Ltd. (including common
stock).

1996 NOTES

     In March 1996, ESBC, an indirect wholly-owned subsidiary of ECC, completed
an offering (the "1996 Notes Offering") of 13 1/8% Senior Secured Discount
Notes due 2004 (the "1996 Notes").  The 1996 Notes Offering resulted in net
proceeds to ESBC of approximately $337 million (after payment of underwriting
discounts and other issuance costs aggregating approximately $13 million).  The
1996 Notes bear interest at a rate of 13 1/8%, computed on a semi-annual bond
equivalent basis.  Interest on the 1996 Notes will not be payable in cash prior
to March 15, 2000, with the 1996 Notes accreting to a principal amount at
stated maturity of $580 million by that date.  Commencing September 15, 2000,
interest on the 1996 Notes will be payable in cash on September 15 and March 15
of each year.  The 1996 Notes mature on March 15, 2004.

     The 1996 Notes rank PARI PASSU in right of payment with all senior
indebtedness of ESBC.  The 1996 Notes are guaranteed on a subordinated basis by
ECC, and are secured by liens on certain assets of ESBC, ECC and certain of
ECC's subsidiaries, including all of the outstanding capital stock of Dish,
Ltd., which currently owns substantially all of ECC's operating subsidiaries.
Although the 1996 Notes are titled "Senior:" (i) ESBC has not issued, and does
not have any current arrangements to issue, any significant indebtedness to
which the 1996 Notes would be senior; and (ii) the 1996 Notes are effectively
subordinated to all liabilities of ECC (except liabilities to general
creditors) and its other subsidiaries (except liabilities of ESBC), including
liabilities to general creditors.  As of December 31, 1997, EchoStar's
liabilities, exclusive of the 1996 Notes and the 1997 Notes (as defined),
aggregated approximately $882 million.  Further, net cash flows generated by
the assets and operations of ESBC's subsidiaries will be available to satisfy
the obligations of the 1996 Notes only to the extent of allowable dividend
payments by Dish, Ltd. under the 1994 Notes Indenture.

     Except under certain circumstances requiring prepayment premiums, and in
other limited circumstances, the 1996 Notes are not redeemable at ESBC's option
prior to March 15, 2000.  Thereafter, the 1996 Notes will be subject to
redemption, at the option of ESBC, in whole or in part, at redemption prices
ranging from 106.5625% during the year commencing March 15, 2000, to 100% on or
after March 15, 2003 of principal amount at stated maturity, together with
accrued and unpaid interest thereon to the redemption date.  The entire
principal balance of the 1996 Notes will mature on March 15, 2004.

     The indenture related to the 1996 Notes (the "1996 Notes Indenture")
contains restrictive covenants that, among other things, impose limitations on
ESBC with respect to its ability to: (i) incur additional indebtedness;
(ii) issue preferred stock; (iii) sell assets and apply the proceeds thereof;
(iv) create, incur or assume liens; (v) create dividend and other payment
restrictions with respect to ESBC's subsidiaries; (vi) merge, consolidate or
sell


                                     F-15
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

4.   LONG-TERM DEBT - CONTINUED

substantially all of its assets; and (vii) enter into transactions with
affiliates.  The 1996 Notes Indenture permits ESBC to pay dividends and make
other distributions to DBS Corp without restrictions.

     In the event of a change of control, as described in the 1996 Notes
Indenture, ESBC will be required to make an offer to each holder of 1996 Notes
to repurchase all of such holder's 1996 Notes at a purchase price equal to 101%
of the accreted value thereof on the date of purchase, if prior to March 15,
2000, or 101% of the aggregate principal amount at stated maturity thereof,
together with accrued and unpaid interest thereon to the date of purchase, if
on or after March 15, 2000.

CONTINGENT GUARANTEE OF DBS CORP'S 1997 NOTES

     In June 1997, DBS Corp consummated an offering (the "1997 Notes Offering")
of 12 1/2% Senior Secured Notes due 2002 (the "1997 Notes").  The 1997 Notes
Offering resulted in net proceeds to DBS Corp of approximately $363 million
(after payment of underwriting discounts and other issuance costs aggregating
approximately $12 million).  The 1997 Notes are guaranteed on a subordinated
basis by ECC and, contingent upon the occurrence of certain events, will be
guaranteed by ESBC, Dish, Ltd., and certain other subsidiaries of DBS Corp and
ECC.  ESBC will become a guarantor of the 1997 Notes on the first date that
ESBC is permitted under the 1996 Indenture to guarantee the 1997 Notes and the
1996 Notes are no longer outstanding or have been defeased.

MORTGAGES AND OTHER NOTES PAYABLE

     Mortgages and other notes payable consists of the following (in
thousands):
<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                    -------------------
                                                                      1996        1997
                                                                    -------------------
<S>                                                                 <C>        <C>
8.25% note payable for satellite vendor financing for EchoStar I
  due in equal monthly installments of $722, including interest,
  through February 2001...........................................  $ 30,463   $ 24,073
8.25% note payable for satellite vendor financing for EchoStar II
  due in equal monthly installments of $562, including interest,
  through November 2001...........................................    27,161     22,489
Mortgages and other unsecured notes payable due in installments
  through April 2009 with interest rates ranging from 8% to 10.5%.     5,138      8,857
                                                                    -------------------
Total.............................................................    62,762     55,419
Less current portion..............................................   (11,334)   (14,924)
                                                                    -------------------
Mortgages and other notes payable, net of current portion.........  $ 51,428   $ 40,495
                                                                    -------------------
                                                                    -------------------

</TABLE>

     Future maturities of amounts outstanding under the Company's long-term
debt facilities as of December 31, 1997 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
                                                          MORTGAGES
                                                OTHER        AND
                                     1994        1996       NOTES
                                    NOTES       NOTES      PAYABLE       TOTAL
                                  ----------------------------------------------
<S>                               <C>         <C>         <C>        <C>
   YEAR ENDING DECEMBER 31,
      1998......................  $       -   $       -   $  14,924  $    14,924
      1999......................          -           -      15,101       15,101
      2000......................          -           -      14,908       14,908
      2001......................          -           -       7,691        7,691
      2002......................    156,000           -         356      156,356
      Thereafter................    468,000     580,000       2,439    1,050,439
      Unamortized discount......   (124,137)   (141,488)          -   (  265,625)
                                  ----------------------------------------------
   Total........................  $ 499,863   $ 438,512   $  55,419   $  993,794
                                  ----------------------------------------------
                                  ----------------------------------------------
</TABLE>


                                     F-16
<PAGE>
                     ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

4. LONG-TERM DEBT - CONTINUED

SATELLITE VENDOR FINANCING

     The purchase price for satellites is required to be paid in progress
payments, some of which are non-contingent payments deferred until after the
respective satellites are in orbit (satellite vendor financing).  The Company
utilized $36 million and $28 million of satellite vendor financing for
EchoStar I and EchoStar II, respectively.  The satellite vendor financing
with respect to EchoStar I and EchoStar II is secured by substantially all
assets of Dish, Ltd. and its subsidiaries (subject to certain restrictions)
and a corporate guarantee of ECC.

5.INCOME TAXES

     The components of the (provision for) benefit from income taxes are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                           1995          1996           1997
                                                      -----------------------------------------
     <S>                                               <C>             <C>       <C>
     Current (provision) benefit:
       Federal...................................       $  1,711       $  4,596  $ (       358)
       State.....................................        (    44)       (    49)   (         9)
       Foreign...................................        (   301)       (   209)   (       137)
                                                      -----------------------------------------
                                                           1,366          4,338    (       504)
     Deferred benefit:
       Federal...................................          4,440         48,050        102,957
       State.....................................            385          2,472          7,738
       Increase in valuation allowance...........              -              -       (110,337)
                                                      -----------------------------------------
                                                           4,825         50,522            358
                                                      -----------------------------------------
         Total benefit (provision)...............       $  6,191       $ 54,860  $ (       146)
                                                      -----------------------------------------
                                                      -----------------------------------------
</TABLE>

     As of December 31, 1997, the Company had net operating loss
carryforwards ("NOLs") for Federal income tax purposes of approximately $314
million.  The NOLs expire beginning in the year 2011.  The use of the NOLs is
subject to statutory and regulatory limitations regarding changes in
ownership.  FAS No. 109, "Accounting for Income Taxes," requires that the
potential future tax benefit of NOLs be recorded as an asset.  FAS No. 109
also requires that deferred tax assets and liabilities be recorded for the
estimated future tax effects of temporary differences between the tax basis
and book value of assets and liabilities.  Deferred tax assets are offset by
a valuation allowance if deemed necessary.

     In 1997, the Company increased its valuation allowance sufficient to
fully offset net deferred tax assets arising during the year.  Realization of
net deferred tax assets is not assured and is principally dependent on
generating future taxable income prior to expiration of the NOLs.  Management
believes existing net deferred tax assets in excess of the valuation
allowance will, more likely than not, be realized.  The Company continuously
reviews the adequacy of its valuation allowance.  Future decreases to the
valuation allowance will be made only as changed circumstances indicate that
it is more likely that not the additional benefits will be realized.  Any
future adjustments to the valuation allowance will be recognized as a
separate component of the Company's provision for income taxes.

                                     F-17

<PAGE>

                     ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

5. INCOME TAXES - CONTINUED

     The actual tax benefit (provision) for 1995, 1996 and 1997 are
reconciled to the amounts computed by applying the statutory Federal tax rate
to income before taxes as follows:

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                             -----------------------------------------
                                                                   1995        1996           1997
                                                             -----------------------------------------
<S>                                                             <C>          <C>             <C>
Statutory rate...........................................        35.0%          35.0%          35.0%
State income taxes, net of Federal benefit...............         1.2            1.8            1.6
Tax exempt interest income...............................         0.1            -              -
Research and development and foreign tax credits.........         0.2            -              0.7
Non-deductible interest expense..........................        (1.7)          (1.4)         ( 0.5)
Other....................................................        (1.4)          (0.2)         ( 0.8)
Increase in valuation allowance..........................         -               -           (36.0)
                                                             -----------------------------------------
Total benefit from income taxes..........................        33.4%          35.2%          -%
                                                             -----------------------------------------
                                                             -----------------------------------------
</TABLE>

     The temporary differences which give rise to deferred tax assets and
liabilities as of December 31, 1996 and 1997 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                              DECEMBER 31,
                                                             -----------------------------------------
                                                                         1996             1997
                                                             -----------------------------------------
<S>                                                                  <C>                <C>
     Current deferred tax assets:
       Accrued royalties..................................             $  3,029         $  6,506
       Inventory reserves and cost methods................                1,811            1,180
       Accrued expenses...................................                1,414            6,391
       Allowance for doubtful accounts....................                  674              517
       Reserve for warranty costs.........................                  284              270
       Other..............................................                   57                -
                                                             -----------------------------------------
     Total current deferred tax assets....................                7,269           14,864

     Current deferred tax liabilities:
       Subscriber acquisition costs and other.............             ( 19,943)       (   6,846)
                                                             -----------------------------------------
     Total current deferred tax liabilities...............             ( 19,943)       (   6,846)
                                                             -----------------------------------------
     Gross current deferred tax assets (liabilities)......             ( 12,674)           8,018
     Valuation allowance..................................                    -        (   5,661)
                                                             -----------------------------------------
     Net current deferred tax assets (liabilities)........             ( 12,674)           2,357

     Noncurrent deferred tax assets:
       General business and foreign tax credits...........                    -            2,224
       Net operating loss carryforwards...................               77,910          114,948
       Amortization of original issue discount
        on 1994 Notes and 1996 Notes......................               34,912           60,831
       Other..............................................                3,458            7,571
                                                             -----------------------------------------
     Total noncurrent deferred tax assets.................              116,280          185,574
     Noncurrent deferred tax liabilities:
       Capitalized costs deducted for tax.................             ( 17,683)               -
       Depreciation.......................................             ( 18,927)       (  15,671)
       Other..............................................                    -      (       230)
                                                             -----------------------------------------
     Total noncurrent deferred tax liabilities............             ( 36,610)       (  15,901)
                                                             -----------------------------------------
     Gross deferred tax assets............................               79,670          169,673
                                                             -----------------------------------------
     Valuation allowance..................................                    -         (104,676)
                                                             -----------------------------------------
     Net noncurrent deferred tax assets...................               79,670           64,997
                                                             -----------------------------------------
     Net deferred tax assets..............................            $  66,996        $  67,354
                                                             -----------------------------------------
                                                             -----------------------------------------
</TABLE>

                                      F-18

<PAGE>
                     ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

6. STOCK COMPENSATION PLANS

STOCK INCENTIVE PLAN

     In April 1994, EchoStar adopted a stock incentive plan (the "Stock
Incentive Plan") to provide incentive to attract and retain officers,
directors and key employees.  EchoStar has reserved up to 10 million shares
of its Class A Common Stock for granting awards under the Stock Incentive
Plan.  All stock options granted through December 31, 1997 have included
exercise prices not less than the fair market value of EchoStar's Class A
Common Stock at the date of grant, and vest, as determined by EchoStar's
Board of Directors, generally at the rate of 20% per year.

     A summary of EchoStar's incentive stock option activity for the years
ended December 31, 1995, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>

                                                        1995                      1996                       1997
                                               ----------------------------------------------------------------------------------
                                                         WEIGHTED-AVERAGE            WEIGHTED-AVERAGE            WEIGHTED-AVERAGE
                                               OPTIONS    EXERCISE PRICE   OPTIONS    EXERCISE PRICE   OPTIONS    EXERCISE PRICE
                                               --------------------------- --------------------------- --------------------------
<S>                                            <C>       <C>               <C>      <C>                <C>       <C>

Options outstanding, beginning of year........   744,872     $  9.33       1,117,133       $12.23      1,025,273        $14.27
Granted.......................................   419,772       17.13         138,790        27.02        779,550         17.05
Repriced......................................         -           -               -            -        255,794         17.00
Exercised.....................................   ( 4,284)       9.33        (103,766)       10.24      (  98,158)         9.64
Forfeited.....................................   (43,227)      10.55        (126,884)       13.27      ( 437,892)        19.46
                                               ----------------------------------------------------------------------------------
Options outstanding, end of year.............. 1,117,133      $12.23       1,025,273       $14.27      1,524,567        $14.99
                                               ----------------------------------------------------------------------------------
                                               ----------------------------------------------------------------------------------
Exercisable at end of year....................   142,474      $ 9.33         258,368       $11.31        347,009        $12.15
                                               ----------------------------------------------------------------------------------
                                               ----------------------------------------------------------------------------------
</TABLE>

     Exercise prices for options outstanding as of December 31, 1997 are as
follows:


<TABLE>
<CAPTION>

                                                          OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                           ------------------------------------------------------------------------------------------------------
                             NUMBER OUTSTANDING     WEIGHTED-AVERAGE                           NUMBER EXERCISABLE
    RANGE OF                     AS OF                 REMAINING           WEIGHTED-AVERAGE         AS OF          WEIGHTED-AVERAGE
  EXERCISE PRICES             DECEMBER 31, 1997     CONTRACTUAL LIFE        EXERCISE PRICE     DECEMBER 31, 1997   EXERCISE PRICE
---------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                     <C>                    <C>                 <C>                  <C>

$  9.333 -  $11.870              429,644                4.60                  $  9.53              226,771           $  9.48
  17.000 -   17.000            1,053,683                7.11                    17.00              117,990             17.00
  18.290 -   26.688               41,240                4.79                    20.58                2,248             26.69
---------------------------------------------------------------------------------------------------------------------------------
$  9.333 -  $26.688            1,524,567                6.34                   $14.99              347,009            $12.15
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     On July 1, 1997, the Board of Directors approved a repricing of
substantially all outstanding options with an exercise price greater than
$17.00 per share of Class A Common Stock to $17.00 per share.  The Board of
Directors would not typically consider reducing the exercise price of
previously granted options.  However, these options were repriced due to the
occurrence of certain events beyond the reasonable control of the employees
of EchoStar which significantly reduced the incentive these options were
intended to create.  The fair market value of the Class A Common Stock was
$15.25 on the date of the repricing.  Options to purchase approximately
256,000 shares of Class A Common Stock were affected by this repricing.

ACCOUNTING FOR STOCK-BASED COMPENSATION

     The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," ("APB 25") and related
interpretations in accounting for its stock-based compensation plans.  Under
APB 25, because the exercise price of EchoStar's employee stock options is
equal to the market price of the underlying stock on the date of the grant,
no compensation expense is recognized.  In October 1995, the FASB issued

                                     F-19

<PAGE>
                     ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

6. STOCK COMPENSATION PLANS - CONTINUED

FAS No. 123, "Accounting and Disclosure of Stock-Based Compensation," ("FAS
No. 123") which established an alternative method of expense recognition for
stock-based compensation awards to employees based on fair values.  The
Company elected to not adopt FAS No. 123 for expense recognition purposes.

     Pro forma information regarding net income is required by FAS No. 123
and has been determined as if the Company had accounted for its stock-based
compensation plans using the fair value method prescribed by that statement.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period.  All
options are initially assumed to vest.  Compensation previously recognized is
reversed to the extent applicable to forfeitures of unvested options.  The
fair value of each option grant was estimated at the date of the grant using
a Black-Scholes option pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                                        ------------------------------------------------
                                                              1995              1996           1997
                                                        ------------------------------------------------
<S>                                                      <C>               <C>             <C>
Risk-free interest rate..............................        6.12%              6.80%           6.09%
Volatility factor....................................          62%                62%             68%
Dividend yield.......................................        0.00%              0.00%           0.00%
Expected term of options.............................       6 years            6 years         6 years
Weighted-average fair value of options granted.......     $  9.86           $  16.96        $  10.38

</TABLE>

     The Company's pro forma net loss was $13 million, $102 million and $310
million for the years ended December 31, 1995, 1996 and 1997, respectively.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable.  In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of its stock-based compensation awards.

7.EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK PURCHASE PLAN

     During 1997, the Board of Directors and shareholders of ECC approved an
employee stock purchase plan (the "ESPP"), effective beginning October 1,
1997. Under the ESPP, EchoStar is authorized to issue a total of 100,000
shares of ECC's Class A Common Stock.  Substantially all full-time employees
who have been employed by EchoStar for at least one calendar quarter are
eligible to participate in the ESPP.  Employee stock purchases are made
through payroll deductions.  Under the terms of the ESPP, employees may not
deduct an amount which would permit such employee to purchase capital stock
of EchoStar under all stock purchase plans of EchoStar at a rate which would
exceed $25,000 in fair market value of capital stock in any one year.  The
purchase price of the stock is 85% of the closing price of ECC's Class A
Common Stock on the last business day of each calendar quarter in which such
shares of ECC's Class A Common Stock are deemed sold to an employee under the
ESPP.  The ESPP shall terminate upon the first to occur of (i) October 1,
2007 or (ii) the date on which the ESPP is terminated by the Board of
Directors.  During the fourth quarter of 1997, employees of the Company
purchased 4,430 shares of ECC's Class A Common Stock through the ESPP.

401(K) EMPLOYEE SAVINGS PLAN

     EchoStar sponsors a 401(k) Employee Savings Plan (the "401(k) Plan") for
eligible employees.  Voluntary employee contributions to the 401(k) Plan may
be matched 50% by EchoStar, subject to a maximum annual contribution by
EchoStar of $1,000 per employee.  EchoStar also may make an annual
discretionary contribution to

                                     F-20

<PAGE>

                     ECHOSTAR SATELLITE BROADCASTING CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

7. EMPLOYEE BENEFIT PLANS - CONTINUED

the plan with approval by EchoStar's Board of Directors, subject to the
maximum deductible limit provided by the Internal Revenue Code of 1986, as
amended.  The Company's cash contributions to the 401(k) Plan totaled
$177,000, $226,000 and $329,000 during 1995, 1996 and 1997, respectively.
Additionally, the Company contributed 55,000 shares of EchoStar's Class A
Common Stock in 1995 and 1996, (fair value of $1 million and $935,000,
respectively) to the 401(k) Plan as discretionary contributions. During 1998,
the Company expects to contribute 80,000 shares of EchoStar's Class A Common
Stock (fair value of approximately $2 million) to the 401(k) Plan related to
its 1997 discretionary contribution.

8. C-BAND AND OTHER REVENUE

     Effective January 1, 1998, the Company ceased operation of its C-band
programming business.  Consequently, the net result of the Company's C-band
programming business is reported as "C-band and other revenue" in the
accompanying statements of operations.  C-band and other revenue consists of
the following (in thousands):



<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                                        ------------------------------------------------
                                                              1995              1996           1997
                                                        ------------------------------------------------
<S>                                                      <C>               <C>             <C>
  C-band equipment sales and other...................     $  110,992      $  54,592      $  32,308
  C-band programming sales...........................         15,232         11,921          7,100
  C-band programming - cost of sales.................      (  13,520)       (10,510)      (  6,712)
                                                        ------------------------------------------------
  C-band and other revenue, net......................     $  112,704      $  56,003      $  32,696
                                                        ------------------------------------------------
                                                        ------------------------------------------------

</TABLE>

9. OTHER COMMITMENTS AND CONTINGENCIES

     EchoStar has contracted with Lockheed-Khrunichev-Energia-International,
Inc. ("LKE") for the launch of EchoStar IV from the Baikonur Cosmodrome in
the Republic of Kazakhstan, a territory of the former Soviet Union, utilizing
a Proton launch vehicle (the "LKE Contract").  The launch is currently
expected to occur in the Spring of 1998.  Either party may request a delay in
the launch period, subject to the payment of penalties based on the length of
the delay and the proximity of the request to the launch date.  During 1998,
EchoStar expects to expend approximately $68 million in connection with
the construction launch and insurance of EchoStar IV.  These expenditures
will be funded from the Satellite Escrow.

     EchoStar has filed applications with the Federal Communications
Commission ("FCC") for authorization to construct, launch and operate a two
satellite FSS (fixed satellite service) Ku-band system and a two satellite
FSS Ka-band satellite system.  No assurance can be given that EchoStar's
applications will be approved by the FCC or that, if approved, EchoStar will
be able to successfully develop the FSS Ku-band or the Ka-band systems.
EchoStar believes that establishment of the FSS Ku-band system or the FSS
Ka-band system would enhance its competitive position in the DTH industry.
In the event EchoStar's FSS Ku-band or Ka-band system applications are
approved by the FCC, additional debt or equity financing would be required.
No assurance can be given that such financing will be available, or that it
will be available on terms acceptable to EchoStar.

PURCHASE COMMITMENTS

     As of December 31, 1997, the Company's purchase commitments totaled
approximately $87 million.  The majority of these commitments relate to
EchoStar Receiver Systems and related components.  All of the purchases
related to these commitments are expected to be made during 1998.  The
Company expects to finance these purchases from existing unrestricted cash
balances and future cash flows generated from operations, if any.



                                     F-21

<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

9.   OTHER COMMITMENTS AND CONTINGENCIES - CONTINUED

OTHER RISKS AND CONTINGENCIES

     During February 1997, EchoStar and The News Corporation Limited ("News")
announced an agreement (the "News Agreement") pursuant to which, among other
things, News agreed to acquire approximately 50% of the outstanding capital
stock of EchoStar.  News also agreed to make available for use by EchoStar the
DBS permit for 28 frequencies at 110DEG. West Longitude purchased by MCI
Communications Corporation for over $682 million following a 1996 FCC auction.
During late April 1997, substantial disagreements arose between the parties
regarding their obligations under the News Agreement.

     In May 1997, EchoStar filed a Complaint requesting that the Court confirm
EchoStar's position and declare that News is obligated pursuant to the News
Agreement to lend $200 million to EchoStar without interest and upon such other
terms as the Court orders.  EchoStar also filed a First Amended Complaint
significantly expanding the scope of the litigation, to include breach of
contract, failure to act in good faith, and other causes of action.  EchoStar
seeks specific performance of the News Agreement and damages, including lost
profits based on, among other things, a jointly prepared ten-year business plan
showing expected profits for EchoStar in excess of $10 billion based on
consummation of the transactions contemplated by the News Agreement.

     In June 1997, News filed an answer and counterclaims seeking unspecified
damages.  News' answer denies all of the material allegations in the First
Amended Complaint and asserts numerous defenses, including bad faith,
misconduct and failure to disclose material information on the part of EchoStar
and its Chairman and Chief Executive Officer, Charles W. Ergen.  The
counterclaims, in which News is joined by its subsidiary American Sky
Broadcasting, L.L.C., assert that EchoStar and Ergen breached their agreements
with News and failed to act and negotiate with News in good faith.  EchoStar
has responded to News' answer and denied the allegations in their
counterclaims.  EchoStar also has asserted various affirmative defenses.
EchoStar intends to vigorously defend against the counterclaims.  Discovery
commenced on July 3, 1997 and depositions are currently being taken.  The case
has been set for trial commencing November 1998, but that date could be
postponed.

     While EchoStar is confident of its position and believes it will
ultimately prevail, the litigation process could continue for many years and
there can be no assurance concerning the outcome of the litigation.

     EchoStar is subject to various other legal proceedings and claims which
arise in the ordinary course of its business.  In the opinion of management,
the amount of ultimate liability with respect to those actions will not
materially affect the financial position or results of operations of EchoStar.

10.  PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY GUARANTORS

     The following pages present the consolidating financial information for
EchoStar and its subsidiaries as of December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997.  See Note 4 for a more
complete description of the subsidiary guarantors of each of the 1997 Notes,
the 1996 Notes and the 1994 Notes.  Because the formations of EchoStar
(incorporated in 1995), DBS Corp (incorporated in 1996), and ESBC (incorporated
in 1996) were all accounted for as reorganizations of entities under common
control, the consolidated statements of operations and cash flows of Dish, Ltd.
for the year ended December 31, 1995 also represent the consolidated statements
of operations and cash flows of EchoStar, DBS Corp and ESBC.  Consolidating
financial information is presented for the following entities:

            Consolidated Dish, Ltd. (referred to as Dish)
            ESBC Parent Company Only (referred to as ESBC - PC)
            Consolidating and eliminating adjustments (referred to as C&E)
            Consolidated ESBC (referred to as ESBC)
            DBS Corp Parent Company Only (referred to as DBS Corp - PC)
            Consolidated DBS Corp (referred to as DBS Corp)
            ECC Parent Company Only (referred to as ECC - PC)
            Other direct wholly-owned subs of ECC (referred to as Other)
            Consolidated ECC (referred to as ECC)


                                     F-22
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING BALANCE SHEETS - AS OF DECEMBER 31, 1996 (IN MILLIONS)
<TABLE>
<CAPTION>
                                                                           DBS
                                               ESBC-                      CORP-             DBS      ECC-
                                        DISH    PC      C&E      ESBC      PC      C&E      Corp      PC     OTHER    C&E      ECC
                                        -------------------------------------------------------------------------------------------
<S>                                     <C>    <C>     <C>       <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
ASSETS
Current Assets:
  Cash and cash equivalents...........  $ 25   $ 14    $   -    $   39     $  -    $  -    $   39    $  -    $  -    $  -     $  39
  Marketable investment securities....     -     19        -        19        -       -        19       -       -       -        19
  Trade accounts receivable, net......    14      -        -        14        -       -        14       -       -       -        14
  Inventories.........................    73      -        -        73        -       -        73       -       -       -        73
  Subscriber acquisition costs, net...    68      -        -        68        -       -        68       -       -       -        68
  Other current assets................    19      -        -        19        -       -        19       1       3       -        23
                                        -------------------------------------------------------------------------------------------
  Total current assets................   199     33        -       232        -       -       232       1       3       -       236

Investment in subsidiary..............     -      3     (  3)        -        -       -         -       -       -       -         -
Advances to affiliates, net...........     -    280     (135)      145        -     (76)       69       -       -     (69)        -
Restricted cash and marketable.
  investment securities...............    32     47        -        79        -       -        79       -       -       -        79
Property and equipment, net...........   500      -        -       500       29       -       529       -      62       -       591
FCC authorizations, net...............    12      -        -        12       60       -        72       -       -       -        72
Other noncurrent assets...............    88     17        -       105        -       -       105      70       1     (13)      163
                                        -------------------------------------------------------------------------------------------
    Total assets......................  $831   $380    $(138)   $1,073     $ 89    $(76)   $1,086    $ 71   $  66    $(82)   $1,141
                                        -------------------------------------------------------------------------------------------
                                        -------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)
Current Liabilities:
  Trade accounts payable..............  $ 41   $  -    $   -    $   41     $  -    $  -    $   41    $  -    $  1    $( 1)     $  41
  Deferred revenue....................   104      -        -       104        -       -       104       -       -       -       104
  Accrued expenses....................    41      -        -        41        2       -        43       1       -     ( 2)       42
  Advances from affiliates, net.......   135      -     (135)        -       76     (76)        -       2      64     (66)        -
  Current portion of long-term debt...    11      -        -        11        -       -        11       -       -       -        11
                                        -------------------------------------------------------------------------------------------
Total current liabilities.............   332      -     (135)      197       78     (76)      199       3      65     (69)      198

Long term obligations, net of
 current portion:
  Investment in subsidiaries..........     -      -        -         -        6     ( 6)        -       7       -     ( 7)        -
  1994 Notes..........................   437      -        -       437        -       -       437       -       -       -       437
  1996 Notes..........................     -    386        -       386        -       -       386       -       -       -       386
  Mortgages and other notes payable,
   net of current portion.............    52      -        -        52       12       -        64       -       -     (12)       52
  Long-term deferred satellite services
   revenue and other long-term
   liabilities........................     7      -        -         7        -       -         7       -       -       -         7
                                        -------------------------------------------------------------------------------------------
Total long-term liabilities...........   496    386        -       882       18     ( 6)      894       7       -     (19)      882
                                        -------------------------------------------------------------------------------------------
    Total liabilities.................   828    386     (135)    1,079       96     (82)    1,093      10      65     (88)    1,080

Stockholders' equity (deficit)........     3     (6)    (  3)    (   6)     ( 7)      6     (   7)     61       1       6        61
                                        -------------------------------------------------------------------------------------------
    Total liabilities and stockholders'
     equity (deficit).................  $831   $380    $(138)   $1,073     $ 89    $(76)   $1,086    $ 71    $ 66    $(82)   $1,141
                                        -------------------------------------------------------------------------------------------
                                        -------------------------------------------------------------------------------------------

</TABLE>


                                     F-23
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING BALANCE SHEETS - AS OF DECEMBER 31, 1997 (IN MILLIONS)
<TABLE>
<CAPTION>
                                                                         DBS
                                                ESBC-                    CORP-             DBS      ECC-
                                       DISH      PC      C&E    ESBC      PC      C&E      Corp      PC     OTHER    C&E      ECC
                                      --------------------------------------------------------------------------------------------
<S>                                   <C>      <C>     <C>     <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
ASSETS
Current Assets:
  Cash and cash equivalents.........  $   36   $  10   $   -   $   46   $  16    $   -   $   62    $ 83     $  -    $   -   $  145
  Marketable investment securities..       -       -       -        -       4        -        4     271        -        -      275
  Trade accounts receivable, net....      66       -       -       66       -        -       66       -        -        -       66
  Inventories.......................      23       -       -       23       -        -       23       -        -        -       23
  Subscriber acquisition costs, net.      19       -       -       19       -        -       19       -        -        -       19
  Other current assets..............       8       -       -        8       -        -        8      10        3       (5)      16
                                      --------------------------------------------------------------------------------------------
Total current assets................     152      10       -      162      20        -      182     364        3       (5)     544

Advances to affiliates, net.........       -     386    (194)     192      38        -      230      13        -     (243)       -
Restricted cash and marketable
 investment securities..............       2       -       -        2     186        -      188       -        -        -      188
Property and equipment, net.........     505       -       -      505      64        -      569       -      306        -      875
FCC authorizations, net.............      12       -       -       12      69        -       81       -       18        -       99
Other noncurrent assets.............      73      16       -       89      12        -      101      47        1      (49)     100
                                      --------------------------------------------------------------------------------------------
    Total assets....................  $  744   $ 412   $(194)  $  962   $ 389    $   -   $1,351    $424     $328    $(297)   $1,806
                                      --------------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)
Current Liabilities:
  Trade accounts payable............  $   68   $   -   $   -   $   68   $   -    $   -   $   68    $  -     $  -     $  -   $   68
  Deferred revenue..................     122       -       -      122       -        -      122       -        -        1      123
  Accrued expenses..................      72       -       -       72      25        -       97       3       11       (9)     102
  Advances from affiliates, net.....     194       -    (194)       -       -        -        -       -      243     (243)       -
  Current portion of long-term debt.      15       -       -       15       -        -       15       -        3        -       18
                                      --------------------------------------------------------------------------------------------
Total current liabilities...........     471       -    (194)     277      25        -      302       3      257     (251)      311

Long term obligations, net of
 current portion:
  Investment in subsidiaries........       -     288    (288)       -     314     (314)       -     311              (311)       -
  1994 Notes........................     500       -       -      500       -        -      500       -        -        -      500
  1996 Notes........................       -     438       -      438       -        -      438       -        -        -      438
  1997 Notes........................       -       -       -        -     375        -      375       -        -        -      375
  Mortgages and other notes payable,
   net of current portion...........      41       -       -       41       -        -       41       -       57      (46)      52
  Long-term deferred satellite
    services revenue and other
    long-term liabilities...........      20       -       -       20       -        -       20       -        -        -       20
                                      --------------------------------------------------------------------------------------------
Total long-term liabilities.........     561     726    (288)     999     689     (314)   1,374     311       57     (357)   1,385
                                      --------------------------------------------------------------------------------------------
    Total liabilities...............   1,032     726    (482)   1,276     714     (314)   1,676     314      314     (608)   1,696

12 1/8% Series B Senior Redeemable
 Exchangeable Preferred Stock.......       -       -       -        -       -        -        -      199       -        -      199

Stockholders' equity (deficit)......    (288)   (314)    288     (314)   (325)     314     (325)    (89)      14      311      (89)
                                      --------------------------------------------------------------------------------------------
    Total liabilities and
     stockholders'equity (deficit)..  $  744   $ 412   $(194)  $  962   $ 389    $   -   $1,351    $424     $328    $(297)  $1,806
                                      --------------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------------
</TABLE>


                                     F-24
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
                                                            DISH        ECC - PC          C&E           ECC
                                                           ----------------------------------------------------
<S>                                                        <C>          <C>              <C>            <C>
REVENUE:
  DTH equipment sales and integration services...........  $ 36           $  -           $   -          $ 36
  C-band and other.......................................   112              -               -           112
                                                           ----------------------------------------------------
Total revenue............................................   148              -               -           148

COSTS AND EXPENSES:
  Cost of sales - DTH equipment and integration services.    30              -               -            30
  Cost of sales - C-band and other.......................    85              -               -            85
  Advertising and other..................................     2              -               -             2
  General and administrative.............................    36              -               -            36
  Depreciation and amortization..........................     3              -               -             3
                                                           ----------------------------------------------------
Total costs and expenses.................................   156              -               -           156
                                                           ----------------------------------------------------

Operating loss                                              ( 8)             -               -           ( 8)

Other Income (Expense):
  Interest income........................................    13              1               -            14
  Interest expense, net of amounts capitalized...........   (24)             -               -           (24)
  Other..................................................     1              -               -             1
  Equity in losses of subsidiaries.......................     -            (12)             12             -
                                                           ----------------------------------------------------
Total other income (expense).............................   (10)           (11)             12           ( 9)
                                                           ----------------------------------------------------
Loss before income taxes.................................   (18)           (11)             12           (17)
Income tax benefit (provision), net......................     6              -              -              6
                                                           ----------------------------------------------------
Net loss.................................................  $(12)          $(11)            $12          $(11)
                                                           ----------------------------------------------------
                                                           ----------------------------------------------------
</TABLE>


                                     F-25
<PAGE>


                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 1996 (IN
MILLIONS)
<TABLE>
<CAPTION>
                                                                          DBS
                                                ESBC-                     CORP-            DBS      ECC-
                                         DISH    PC      C&E    ESBC       PC      C&E     Corp      PC     OTHER    C&E      ECC
                                        ------------------------------------------------------------------------------------------
<S>                                     <C>     <C>     <C>     <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
REVENUE:
  DISH Network:
    Subscription television services..  $  50   $   -    $ -    $  50     $  -    $  -    $  50     $   -   $  -     $  -    $  50
    C-band and other..................      8       -      -        8        -       -        8         -      2        -       10
                                        ------------------------------------------------------------------------------------------
  Total DISH Network..................     58       -      -       58        -       -       58         -      2        -       60
  DTH equipment sales and integration
   services...........................     77       -      -       77        -       -       77         -      7       (6)      78
  Satellite services..................      6       -      -        6        -       -        6         -      -        -        6
  Other...............................     56       -      -       56        -       -       56         -      1       (2)      55
                                        ------------------------------------------------------------------------------------------
Total revenue.........................    197       -      -      197        -       -      197         -     10       (8)     199

COSTS AND EXPENSES:
  DISH Network Operating Expenses:
    Subscriber-related expenses.......     23       -      -       23        -       -       23         -      -        -       23
    Customer service center and other.     13       -      -       13        -       -       13         -      1       (1)      13
    Satellite and transmission........      7       -      -        7        -       -        7         -      -        -        7
                                        ------------------------------------------------------------------------------------------
  Total DISH Network operating
   expenses...........................     43       -      -       43        -       -       43         -      1       (1)      43
  Cost of sales - DTH equipment and
   integration services...............     76       -      -       76        -       -       76         -      6       (6)      76
  Cost of sales - C-band and other....     42       -      -       42        -       -       42         -      -        -       42
  Marketing:
    Subscriber promotion subsidies....     35       -      -       35        -       -       35         -      -       (1)      34
    Advertising and other.............     18       -      -       18        -       -       18         -      -        -       18
                                        ------------------------------------------------------------------------------------------
  Total marketing expenses............     53       -      -       53        -       -       53         -      -       (1)      52
  General and administrative..........     49       -      -       49        -       -       49         -      3        -       52
  Amortization of subscriber
   acquisition costs..................     16       -      -       16        -       -       16         -      -        -       16
  Depreciation and amortization.......     27       -      -       27        -       -       27         -      -        -       27
                                        ------------------------------------------------------------------------------------------
Total costs and expenses..............    306       -      -      306        -       -      306         -     10       (8)     308
                                        ------------------------------------------------------------------------------------------

Operating loss........................   (109)      -      -     (109)       -       -     (109)        -      -        -     (109)

Other Income (Expense):
  Interest income.....................      4      10      -       14        -       -       14         1      -        -       15
  Interest expense, net of amounts
   capitalized........................   ( 37)   ( 24)     -     ( 61)    (  1)      -     ( 62)        -     (1)       1     ( 62)
  Equity in losses of subsidiaries....      -    ( 92)    92        -     (101)    101        -      (101)     -      101        -
                                        ------------------------------------------------------------------------------------------
Total other income (expense)..........   ( 33)   (106)    92     ( 47)    (102)    101     ( 48)     (100)    (1)     102     ( 47)
                                        ------------------------------------------------------------------------------------------

Loss before income taxes..............   (142)   (106)    92     (156)    (102)    101     (157)     (100)    (1)     102     (156)
Income tax benefit (provision), net...     50       5     -        55        -       -       55      (  1)     1        -       55
                                        ------------------------------------------------------------------------------------------
Net loss..............................  $( 92)  $(101)   $92    $(101)   $(102)   $101    $(102)    $(101)  $  -     $102    $(101)
                                        ------------------------------------------------------------------------------------------
                                        ------------------------------------------------------------------------------------------

</TABLE>

                                     F-26
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
                                                                          DBS
                                                ESBC-                     CORP-            DBS      ECC-
                                         DISH    PC      C&E    ESBC       PC      C&E     Corp      PC     OTHER    C&E      ECC
                                        ------------------------------------------------------------------------------------------
<S>                                     <C>     <C>     <C>     <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
REVENUE:
  DISH Network:
    Subscription television services..  $ 299   $   -   $  -    $ 299    $   -    $  -    $ 299     $   -   $  -      $  -   $ 299
    Other.............................     43       -      -       43        -       -       43         -      1         1      45
                                        ------------------------------------------------------------------------------------------
  Total DISH Network..................    342       -      -      342        -       -      342         -      1         1     344
  DTH equipment sales and integration
   services...........................     90       -      -       90        -       -       90         -     15       (13)     92
  Satellite services..................     11       -      -       11        -       -       11         -      -         -      11
  C-band and other....................     33       -      -       33        -       -       33         -      1       ( 4)     30
                                        ------------------------------------------------------------------------------------------
Total revenue.........................    476       -      -      476        -       -      476         -     17       (16)    477

COSTS AND EXPENSES:
  DISH Network Operating Expenses:
    Subscriber-related expenses.......    144       -      -      144        -       -      144         -      -         -     144
    Customer service center and other.     35       -      -       35        -       -       35         -      3       ( 3)     35
    Satellite and transmission........     14       -      -       14        -       -       14         -      -         -      14
                                        ------------------------------------------------------------------------------------------
  Total DISH Network operating
   expenses...........................    193       -      -      193        -       -      193         -      3       ( 3)    193
  Cost of sales - DTH equipment and
   integration services...............     61       -      -       61        -       -       61         -      9       ( 8)     62
  Cost of sales - C-band and other....     24       -      -       24        -       -       24         -      1       ( 1)     24
  Marketing:
    Subscriber promotion subsidies....    149       -      -      149        -       -      149         -      -       ( 4)    145
    Advertising and other.............     35       -      -       35        -       -       35         -      -         -      35
                                        ------------------------------------------------------------------------------------------
  Total marketing expenses............    184       -      -      184        -       -      184         -      -       ( 4)    180
  General and administrative..........     66       -      -       66        -       -       66         1      2         -      69
  Amortization of subscriber
   acquisition & costs................    121       -      -      121        -       -      121         -      -         1     122
  Depreciation and amortization.......     51       -      -       51        -       -       51         -      -         -      51
                                        ------------------------------------------------------------------------------------------
Total costs and expenses..............    700       -      -      700        -       -      700         1     15      (15)     701
                                        ------------------------------------------------------------------------------------------

Operating loss........................   (224)      -      -     (224)       -       -     (224)      ( 1)     2      ( 1)    (224)

Other Income (Expense):
  Interest income.....................      3       2      -        5        8       -       13        11      -      ( 7)      17
  Interest expense, net of amounts
   capitalized........................   ( 68)   ( 19)     -     ( 87)    ( 18)      -     (105)        -    ( 5)        6    (104)
  Other...............................   (  2)      -      -     (  2)       -       -     (  2)        -      -         -    (  2)
  Equity in losses of subsidiaries....      -    (291)   291        -     (308)    308        -      (323)     -       323       -
                                        ------------------------------------------------------------------------------------------
Total other income (expense)..........   ( 67)   (308)   291     ( 84)    (318)    308     ( 94)     (312)   ( 5)      322    ( 89)
                                        ------------------------------------------------------------------------------------------

Loss before income taxes..............   (291)   (308)   291     (308)    (318)    308     (318)     (313)   ( 3)      321    (313)
Income tax benefit (provision), net...      -       -     -         -        -       -        -         -      -        -        -
                                        ------------------------------------------------------------------------------------------
Net loss..............................  $(291)  $(308)  $291    $(308)   $(318)   $308    $(318)    $(313)  $( 3)    $ 321   $(313)
                                        ------------------------------------------------------------------------------------------
                                        ------------------------------------------------------------------------------------------
</TABLE>

                                      F-27
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.    PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY
       GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
                                                               DISH         ECC - PC         OTHER          C&E             ECC
                                                              --------------------------------------------------------------------
<S>                                                           <C>           <C>              <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $( 12)          $(11)          $  -           $ 12          $( 11)
Adjustments to reconcile net income (loss) to net cash
 flows from operating activities:
 Equity in (earnings) losses of subsidiaries................      -             12              -            (12)             -
 Depreciation and amortization..............................      3              -              -              -              3
 Deferred income tax benefit................................   (  5)             -              -              -           (  5)
 Amortization of debt discount and deferred financing costs.     24              -              -              -             24
 Other, net.................................................      1              -              -              -              1
 Changes in current assets and current liabilities, net.....   ( 33)           (20)            20              -           ( 33)
                                                              --------------------------------------------------------------------
Net cash flows from operating activities....................   ( 22)           (19)            20              -           ( 21)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investment securities...............   (  3)           (22)             -              -            (25)
Sales of marketable investment securities...................     34              7              -              -             41
Purchases of restricted marketable investment securities....   ( 15)             -              -              -           ( 15)
Purchases of property and equipment.........................   (114)             -            (20)             -           (134)
Offering proceeds and investment earnings placed in escrow..   ( 10)             -              -              -           ( 10)
Funds released from escrow accounts.........................    122              -              -              -            122
Investment in convertible subordinated debentures from DBSI.      -            ( 1)             -              -           (  1)
Investment in DBSC..........................................      5            ( 5)             -              -              -
Long-term notes receivable from and investment in DBSC......      -            (16)             -              -           ( 16)
                                                              --------------------------------------------------------------------
Net cash flows from investing activities....................     19            (37)           (20)             -           ( 38)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Class A Common Stock..........      -             63              -              -             63
                                                              --------------------------------------------------------------------
Net cash flows from financing activities....................      -             63              -              -             63
                                                              --------------------------------------------------------------------
                                                              --------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents........   (  3)             7              -              -              4
Cash and cash equivalents, beginning of year................     18              -              -              -             18
                                                              --------------------------------------------------------------------
Cash and cash equivalents, end of year......................  $  15           $  7           $  -           $  -          $  22
                                                              --------------------------------------------------------------------
                                                              --------------------------------------------------------------------
</TABLE>


                                     F-28
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.  PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
                                                                          DBS
                                                ESBC-                     CORP-            DBS      ECC-
                                         DISH    PC      C&E    ESBC       PC      C&E     Corp      PC     OTHER    C&E      ECC
                                        ------------------------------------------------------------------------------------------
<S>                                     <C>     <C>     <C>     <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).....................  $( 92)  $(101)  $ 92    $(101)   $(102)   $ 101   $(102)    $(101)  $  -     $102    $(101)
Adjustments to reconcile net income
 (loss) to net cash flows from
 operating activities:
  Equity in (earnings) losses of
   subsidiaries.......................      -      92    (92)       -      101     (101)      -       101      -     (101)       -
  Depreciation and amortization.......     27       -      -       27        -        -      27         -      -        -       27
  Amortization of subscriber
   acquisition costs..................     16       -      -       16        -        -      16         -      -        -       16
  Deferred income tax benefit.........   ( 45)   (  5)     -     ( 50)       -        -    ( 50)        -      -        -     ( 50)
  Amortization of debt discount and
   deferred financing costs...........     34      24      3       61        -        -      61         -      -        -       61
  Other, net..........................     10       -      -       10        -        -      10      (  2)     -        -        8
  Changes in current assets and
   current liabilities, net...........    152    (268)   ( 3)    (119)      70        -    ( 49)       26     38     (  4)      11
                                        ------------------------------------------------------------------------------------------
Net cash flows from operating
 activities...........................    102    (258)     -     (156)      69        -    ( 87)       24     38     (  3)    ( 28)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investment
 securities...........................      -    (138)     -     (138)       -        -    (138)        -      -        -     (138)
Sales of marketable investment
 securities...........................      -     120      -      120        -        -     120        15      -        -      135
Purchases of restricted marketable
 investment securities................   ( 21)      -      -     ( 21)       -        -    ( 21)        -      -        -     ( 21)
Funds released from escrow and
 restricted cash and marketable
 investment securities................    100     136      -      236        -        -     236         -      -        -      236
Purchases of property and equipment...   (158)      -      -     (158)    ( 26)       -    (184)        -    (38)       -     (222)
Offering proceeds and investment
 earnings placed in escrow............   ( 11)   (183)     -     (194)       -        -    (194)        -      -        -     (194)
Payments received on convertible
 subordinated debentures from SSET....      6       -      -        6        -        -       6         -      -        -        6
Long-term notes receivable from DBSC..      -       -      -        -        -        -       -      ( 30)     -        -     ( 30)
Long-term note receivable from
 DBS Corp.............................      -       -      -        -        -        -       -      ( 12)     -       12        -
Expenditures for FCC authorizations...      -       -      -        -     ( 55)       -    ( 55)        -      -        -     ( 55)
Other.................................      -       -      -        -        -        -       -      (  6)     -        3     (  3)
                                        ------------------------------------------------------------------------------------------
Net cash flows from investing
 activities...........................   ( 84)   ( 65)     -     (149)    ( 81)       -    (230)     ( 33)   (38)      15     (286)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of
 1996 Notes...........................      -     337      -      337        -        -     337         -      -        -      337
Proceeds from note payable to ECC.....      -       -      -        -       12        -      12         -      -     ( 12)       -
Repayments of mortgage indebtedness
 and notes payable....................   (  8)      -      -     (  8)       -        -    (  8)        -      -        -     (  8)
Stock options exercised...............      -       -      -        -        -        -       -         2      -        -        2
                                        ------------------------------------------------------------------------------------------
Net cash flows from financing
 activities...........................   (  8)    337      -      329       12        -     341         2      -     ( 12)     331
                                        ------------------------------------------------------------------------------------------

Net increase (decrease) in cash
 and cash equivalents.................     10      14      -       24        -        -      24      (  7)     -        -       17
Cash and cash equivalents,
 beginning of year....................     15       -      -       15        -        -      15         7      -        -       22
                                        ------------------------------------------------------------------------------------------
Cash and cash equivalents,
 end of year..........................  $  25   $  14   $  -    $  39    $   -    $   -   $  39     $   -   $  -     $  -    $  39
                                        ------------------------------------------------------------------------------------------
                                        ------------------------------------------------------------------------------------------
</TABLE>

                                      F-29
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

10.  PARENT COMPANY ONLY AND CONSOLIDATION OF SUBSIDIARY GUARANTORS - CONTINUED

CONSOLIDATING STATEMENTS OF CASH FLOWS - YEAR ENDED DECEMBER 31, 1997 (IN
MILLIONS)
<TABLE>
<CAPTION>
                                                                          DBS
                                                ESBC-                     CORP-            DBS      ECC-
                                         DISH    PC      C&E    ESBC       PC      C&E     Corp      PC     OTHER    C&E      ECC
                                        ------------------------------------------------------------------------------------------
<S>                                     <C>     <C>     <C>     <C>      <C>      <C>     <C>       <C>     <C>      <C>     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).....................  $(291)  $(308)  $ 291   $(308)   $(318)   $ 308   $(318)    $(313)  $(  3)   $ 321   $(313)
Adjustments to reconcile net income
 (loss) to net cash flows from
 operating activities:
  Equity in (earnings) losses of
   subsidiaries.......................      -     291    (291)      -      308     (308)      -       323       -     (323)      -
  Depreciation and amortization.......     51       -       -      51        -        -      51         -       -        -      51
  Amortization of subscriber acquisition
   costs..............................    121       -       -     121        -        -     121         -       -        -     121
  Amortization of debt discount and
   deferred financing costs...........     63      19       -      82        1        -      83         -       -        -      83
  Other, net..........................     11       -       -      11        -        -      11         -       -        -      11
  Changes in current assets and
   current liabilities, net...........     88    ( 71)      -      17     (106)       -    ( 89)     ( 18)    158     (  4)     47
                                        ------------------------------------------------------------------------------------------
Net cash flows from operating
 activities...........................     43    ( 69)      -    ( 26)    (115)       -    (141)     (  8)    155     (  6)      -

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investment
 securities...........................      -    (  5)      -    (  5)    ( 32)       -    ( 37)     (271)      -        -    (308)
Sales of marketable investment
 securities...........................      -      23       -      23       29        -      52         -       -        -      52
Purchases of restricted marketable
 investment securities................   (  1)      -       -    (  1)       -        -    (  1)        -       -        -    (  1)
Funds released from escrow and
 restricted cash and marketable
 investment securities................     31      48       -      79       41        -     120         -       -        -     120
Purchases of property and equipment...   ( 49)      -       -    ( 49)    ( 30)       -    ( 79)        -    (153)       -    (232)
Offering proceeds and investment
 earnings placed in escrow............      -       -       -       -     (228)       -    (228)        -       -        -    (228)
Other.................................      -    (  1)      -    (  1)       -        -    (  1)        8    (  2)    (  6)   (  1)
                                        ------------------------------------------------------------------------------------------
Net cash flows from
 investing activities.................   ( 19)     65       -      46     (220)       -    (174)     (263)   (155)    (  6)   (598)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of
 Class A Common Stock.................      -       -       -       -        -        -       -        63       -        -      63
Net proceeds from issuance of
 1997 Notes...........................      -       -       -       -      363        -     363         -       -        -     363
Net proceeds from issuance of
 12 1/8% Series B Senior Redeemable
 Exchangeable Preferred...............      -       -       -       -        -        -       -       193       -        -     193
Net proceeds from issuance of 6 3/4%
 Series C Cumulative Convertible
 Preferred Stock......................      -       -       -       -        -        -       -        97       -        -      97
Repayment of note payable to ECC......      -       -       -       -     ( 12)       -    ( 12)        -       -       12       -
Repayments of mortgage indebtedness
 and notes payable....................   ( 13)      -       -    ( 13)       -        -    ( 13)        -       -        -    ( 13)
Net proceeds from Class A Common
 Stock options exercised and
 Class A Common Stock issued to
 Employee Stock Purchase Plan.........      -       -       -       -        -        -       -         1       -        -       1
                                        ------------------------------------------------------------------------------------------
Net cash flows from financing
 activities...........................   ( 13)      -       -    ( 13)     351        -     338       354       -       12     704
                                        ------------------------------------------------------------------------------------------

Net increase (decrease) in cash and
 cash equivalents.....................     11    (  4)      -       7       16        -      23        83       -        -     106
Cash and cash equivalents,
 beginning of year....................     25      14       -      39        -        -      39         -       -        -      39
                                        ------------------------------------------------------------------------------------------
Cash and cash equivalents,
 end of year..........................  $  36   $  10   $   -   $  46    $  16    $   -   $  62     $  83   $   -    $   -   $ 145
                                        ------------------------------------------------------------------------------------------
                                        ------------------------------------------------------------------------------------------
</TABLE>


                                     F-30

<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

11.  OPERATIONS IN GEOGRAPHIC AREAS

     The Company sells certain of its products on a worldwide basis and has
operations in Europe and the Pacific Rim.  Information about the Company's
operations in different geographic areas as of December 31, 1995, 1996 and
1997 and for the years then ended, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                        OTHER
                                                   UNITED STATES         EUROPE      INTERNATIONAL      TOTAL
                                                  ---------------   --------------- --------------- ---------------
<S>                                               <C>                <C>           <C>             <C>
1995
Total revenue.................................        $   95,259      $  31,351      $  21,910      $  148,520
                                                  ---------------   --------------- --------------- ---------------
                                                  ---------------   --------------- --------------- ---------------
Export sales..................................        $    6,317
                                                  ---------------
                                                  ---------------
Operating income (loss).......................        $(   7,895)     $     146      $(    257)     $(   8,006)
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Other income (expense), net...................                                                      $(  10,546)
                                                                                                    ---------------
Net loss before income taxes..................                                                      $(  18,552)
                                                                                                    ---------------
                                                                                                    ---------------
Identifiable assets...........................        $   63,136      $  10,088      $   3,788      $   77,012
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Corporate assets..............................                                                      $  482,283
                                                                                                    ---------------
Total assets..................................                                                      $  559,295
                                                                                                    ---------------
                                                                                                    ---------------

1996
Total revenue.................................        $  159,611      $  26,984      $  10,508      $  197,103
                                                  ---------------   --------------- --------------- ---------------
                                                  ---------------   --------------- --------------- ---------------
Export sales..................................        $    1,536
                                                  ---------------
                                                  ---------------
Operating loss................................        $ (106,695)     $(  1,274)     $(    896)     $( 108,865)
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Other income (expense), net...................                                                      $(  46,743)
                                                                                                    ---------------
Net loss before income taxes..................                                                      $( 155,608)
                                                                                                    ---------------
                                                                                                    ---------------
Identifiable assets...........................        $  836,596      $   5,795      $   1,871      $  844,262
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Corporate assets..............................                                                      $  228,829
                                                                                                    ---------------
Total assets..................................                                                      $1,073,091
                                                                                                    ---------------
                                                                                                    ---------------

1997
Total revenue.................................        $  446,461      $  20,592      $   8,849      $  475,902
                                                  ---------------   --------------- --------------- ---------------
                                                  ---------------   --------------- --------------- ---------------
Export sales..................................        $   74,065
                                                  ---------------
                                                  ---------------
Operating loss................................        $ (222,692)     $(  1,224)     $(    402)     $( 224,318)
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Other income (expense), net...................                                                      $(  83,584)
                                                                                                    ---------------
Net loss before income taxes..................                                                      $( 307,902)
                                                                                                    ---------------
                                                                                                    ---------------
Identifiable assets...........................        $  720,390      $   5,696      $   2,682      $  728,768
                                                  ---------------   --------------- ---------------
                                                  ---------------   --------------- ---------------
Corporate assets..............................                                                      $  233,817
                                                                                                    ---------------
Total assets..................................                                                      $  962,585
                                                                                                    ---------------
                                                                                                    ---------------

</TABLE>

                                     F-31

<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

12.  VALUATION AND QUALIFYING ACCOUNTS

     The Company's valuation and qualifying accounts as of December 31, 1995,
1996 and 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                       BALANCE AT              CHARGED TO                        BALANCE AT
                                                     BEGINNING OF YEAR      COSTS AND EXPENSES     DEDUCTIONS    END OF YEAR
                                                     -----------------------------------------------------------------------
<S>                                                  <C>                  <C>                     <C>            <C>
YEAR ENDED DECEMBER 31, 1995:
Assets:
  Allowance for doubtful accounts................         $  186             $  1,160              $(   240)         $1,106
  Loan loss reserve..............................             95                   19               (    36)             78
  Reserve for inventory..........................          1,585                1,511               (   299)          2,797
Liabilities:
  Reserve for warranty costs and other...........          1,493                  562               (   950)          1,105

YEAR ENDED DECEMBER 31, 1996:
Assets:
  Allowance for doubtful accounts................         $1,106             $  2,340              $ (1,952)         $1,494
  Loan loss reserve..............................             78                  157                (   94)            141
  Reserve for inventory..........................          2,797                4,304                (1,438)          5,663
Liabilities:
  Reserve for warranty costs and other...........          1,105               (  342)                    -             763

YEAR ENDED DECEMBER 31, 1997:
Assets:
  Allowance for doubtful accounts................         $1,494             $  4,343              $( 4,490)         $1,347
  Loan loss reserve..............................            141                    7                (   87)             61
  Reserve for inventory..........................          5,663                1,650                (3,473)          3,840
  Liabilities:
Reserve for warranty costs and other.............            763                    -                (   53)            710


</TABLE>



13.    QUARTERLY FINANCIAL DATA (UNAUDITED)

     The Company's quarterly results of operations are summarized as follows
(in thousands):

<TABLE>
<CAPTION>


                                                                               THREE MONTHS ENDED
                                                     -----------------------------------------------------------------------
                                                        MARCH 31       JUNE 30      SEPTEMBER 30     DECEMBER 31
                                                     -----------------------------------------------------------------------
<S>                                                  <C>             <C>            <C>             <C>
Year Ended December 31, 1996:
  Total revenue..................................      $  37,057      $  66,478      $  37,506      $  56,062
  Operating loss.................................       (  8,908)       (17,671)       (27,601)       (54,685)
  Net loss.......................................       (  7,654)       (20,837)       (26,526)       (45,731)

Year Ended December 31, 1997:
  Total revenue.................................       $  68,967      $  97,831      $ 129,662      $ 179,442
  Operating loss.................................        (43,328)       (43,503)      ( 91,202)      ( 46,285)
  Net loss.......................................        (61,604)       (63,872)      (112,823)      ( 69,749)



</TABLE>

     Certain revenue amounts reflected above have been reclassified to
conform with the 1997 presentation.




                                     F-32