<PAGE>
                                                                   EXHIBIT 99.4
                                          
                                          
                       QUARTERLY REPORT FOR THE PERIOD ENDED
                                   JUNE 30, 1998




            CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS OF
                                   ECHO SATELLITE
        (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
               COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)


          

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

                                   (303) 723-1000
                      (Telephone number, including area code)
                                          




<PAGE>

                                          
                                 TABLE OF CONTENTS
                                          
                           PART I - FINANCIAL INFORMATION

<TABLE>

<S>       <C>                                                          <C>
Item 1.   Financial Statements

          Condensed Combined and Consolidated Balance Sheets -
            December 31, 1997 and June 30, 1998 (Unaudited). . . . . .    1
          
          Condensed Combined and Consolidated Statements of Operations 
            for the three and six months ended June 30, 1997 
            and 1998 (Unaudited) . . . . . . . . . . . . . . . . . . .    2
          
          Condensed Combined and Consolidated Statements of Cash Flows 
            for the six months ended June 30, 1997 
            and 1998 (Unaudited) . . . . . . . . . . . . . . . . . . .    3
          
          Notes to Condensed Combined and Consolidated Financial 
            Statements (Unaudited) . . . . . . . . . . . . . . . . . .    4

Item 2.   Management's Narrative Analysis of Results of Operations . .    9

Item 3.   Quantitative and Qualitative Disclosures About Market 
            Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . None


                             PART II - OTHER INFORMATION


Item 1.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .   16

Item 2.   Changes in Securities and Use of Proceeds. . . . . . . . . .    *

Item 3.   Defaults Upon Senior Securities. . . . . . . . . . . . . . .    *

Item 4.   Submission of Matters to a Vote of Security Holders. . . . .    *

Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . . . None

Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . . .  N/A

</TABLE>

                                          
                                          
     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 (H)(1)(a) and (b) of Form 10-Q.

<PAGE>

                             ECHO SATELLITE
   (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
             COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
            CONDENSED COMBINED AND CONSOLIDATED BALANCE SHEETS
                           (Dollars in thousands)
                                          
<TABLE>
<CAPTION>

                                                                                                   DECEMBER 31,         JUNE 30,
                                                                                                       1997               1998
                                                                                                 -------------------------------
                                                                                                                      (Unaudited)
<S>                                                                                              <C>                 <C>
 ASSETS
 Current Assets:
    Cash and cash equivalents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $     45,653        $    29,938
    Trade accounts receivable, net of allowance for uncollectible                        
       accounts of $1,347 and, $3,272, respectively  . . . . . . . . . . . . . . . . . .               66,045             95,072
    Inventories  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               22,993             53,540
    Subscriber acquisition costs, net  . . . . . . . . . . . . . . . . . . . . . . . . .               18,819              1,964
    Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                9,424              7,095
                                                                                                 -------------------------------
 Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              162,934            187,609
 Restricted cash and marketable investment securities  . . . . . . . . . . . . . . . . .                2,245              2,245
 Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              597,755            622,750
 Advances to affiliates, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              161,222            148,257
 Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              118,747            115,184
                                                                                                 -------------------------------
      Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $  1,042,903        $ 1,076,045
                                                                                                 -------------------------------
                                                                                                 -------------------------------

 LIABILITIES AND  STOCKHOLDER'S EQUITY (DEFICIT)                                                                          
 Current Liabilities:                                                                                                     
    Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $    68,800         $   100,941
    Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             122,215             109,361
    Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              72,605             115,201
    Current portion of long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . .              17,885              18,509
                                                                                                 -------------------------------
 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             281,505             344,012
 Long-term obligations, net of current portion:                                                                           
    1994 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             499,863             534,330
    1996 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             438,512             467,005
    Notes payable to ECC including accumulated interest  . . . . . . . . . . . . . . . .              54,597              57,183
    Mortgages and other notes payable, net of current portion  . . . . . . . . . . . . .              51,846              43,055
    Long-term deferred satellite services revenue and other long-term liabilities  . . .              19,500              25,660
                                                                                                 -------------------------------
 Total long-term obligations, net of current portion . . . . . . . . . . . . . . . . . .           1,064,318           1,127,233
                                                                                                 -------------------------------
      Total liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1,345,823           1,471,245
                                                                                                                          
 Commitments and Contingencies (Note 5)                                                                                   
                                                                                                                          
 Stockholder's Equity (Deficit):                                                                                          
    Common Stock, $.01 par value, 2,000 shares authorized, issued and outstanding  . . .                   -                   -
    Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             125,162             125,162
    Accumulated deficit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (428,082)           (520,362)
                                                                                                 -------------------------------
 Total stockholder's equity (deficit)  . . . . . . . . . . . . . . . . . . . . . . . . .            (302,920)           (395,200)
                                                                                                 -------------------------------
      Total liabilities and stockholder's equity (deficit) . . . . . . . . . . . . . . .         $ 1,042,903         $ 1,076,045
                                                                                                 -------------------------------
                                                                                                 -------------------------------

</TABLE>

            See accompanying Notes to Condensed Combined and Consolidated 
                                Financial Statements.

                                          1
<PAGE>

                            ECHO SATELLITE
    (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
             COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1) 
      CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
                            (In thousands)
                              (Unaudited)

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED JUNE 30,             SIX MONTHS ENDED JUNE 30,
                                                          -----------------------------          -----------------------------
                                                              1997                1998                1997                1998
                                                          -----------------------------          -----------------------------
<S>                                                       <C>                <C>                 <C>                 <C>
 REVENUE:
    DISH Network:
      Subscription television services . . . . . . . .     $62,858            $151,527            $110,908            $280,068 
      Other  . . . . . . . . . . . . . . . . . . . . .      11,767               3,238              19,973               9,422 
                                                          -----------------------------          -----------------------------
    Total DISH Network . . . . . . . . . . . . . . . .      74,625             154,765             130,881             289,490 
    DTH equipment sales and integration services . . .      13,477              80,050              15,435             146,866 
    Satellite services . . . . . . . . . . . . . . . .       2,045               5,774               4,210              10,369 
    C-band and other . . . . . . . . . . . . . . . . .       7,685               5,575              16,273              13,463 
                                                          -----------------------------          -----------------------------
 Total revenue . . . . . . . . . . . . . . . . . . . .      97,832             246,164             166,799             460,188 
                                                       
 COSTS AND EXPENSES:
    DISH Network Operating Expenses:
      Subscriber-related expenses  . . . . . . . . . .      31,491              69,388              54,531             133,197 
      Customer service center and other  . . . . . . .       5,941              14,369              12,386              26,102 
      Satellite and transmission . . . . . . . . . . .       3,449               5,460               6,234              10,712 
                                                          -----------------------------          -----------------------------
    Total DISH Network operating expenses  . . . . . .      40,881              89,217              73,151             170,011 
    Cost of sales - DTH equipment and integration     
      services . . . . . . . . . . . . . . . . . . . .      12,079              53,749              14,307             101,000 
    Cost of sales - C-band and other . . . . . . . . .       5,124               3,282              11,132               9,224 
    Marketing:
      Subscriber promotion subsidies . . . . . . . . .      18,313              59,993              31,090             104,828 
      Advertising and other  . . . . . . . . . . . . .       4,034               9,337               7,310              17,587 
                                                          -----------------------------          -----------------------------
    Total marketing expenses . . . . . . . . . . . . .      22,347              69,330              38,400             122,415 
    General and administrative . . . . . . . . . . . .      15,021              23,142              30,052              42,431 
    Amortization of subscriber acquisition costs . . .      33,228               5,884              61,290              16,855 
    Depreciation and amortization  . . . . . . . . . .      12,655              15,683              25,298              31,102 
                                                          -----------------------------          -----------------------------
 Total costs and expenses  . . . . . . . . . . . . . .     141,335             260,287             253,630             493,038 
                                                          -----------------------------          -----------------------------

 Operating loss  . . . . . . . . . . . . . . . . . . .     (43,503)            (14,123)            (86,831)            (32,850) 
                                                       
 Other Income (Expense):
    Interest income  . . . . . . . . . . . . . . . . .       1,141                 745               2,790               1,518 
    Interest expense, net of amounts capitalized . . .     (22,962)            (30,583)            (44,161)            (60,571) 
    Other  . . . . . . . . . . . . . . . . . . . . . .        (115)                 (1)               (175)                (94) 
                                                          -----------------------------          -----------------------------
 Total other income (expense)  . . . . . . . . . . . .     (21,936)            (29,839)            (41,546)            (59,147) 
                                                           -----------------------------          -----------------------------
                                                
 Loss before income taxes  . . . . . . . . . . . . . .     (65,439)            (43,962)           (128,377)            (91,997)
 Income tax provision, net . . . . . . . . . . . . . .         (25)               (112)                (44)               (283)
                                                          -----------------------------           -----------------------------
                                         
 Net loss  . . . . . . . . . . . . . . . . . . . . . .    $(65,464)           $(44,074)          $(128,421)           $(92,280)
                                                          -----------------------------          -----------------------------
                                                          -----------------------------          -----------------------------

</TABLE>

            See accompanying Notes to Condensed Combined and Consolidated 
                                Financial Statements.

                                          2

<PAGE>
                           ECHO SATELLITE
   (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
            COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
       CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands)
                             (Unaudited)

<TABLE>
<CAPTION>

                                                                                                    SIX MONTHS ENDED JUNE 30, 
                                                                                               -------------------------------
                                                                                                     1997             1998
                                                                                               -------------------------------
<S>                                                                                            <C>                    <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $(128,421)            $(92,280) 
 Adjustments to reconcile net loss to net cash flows from operating activities:
      Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . . . . . .         25,298               31,102
      Amortization of subscriber acquisition costs . . . . . . . . . . . . . . . . . . . .         61,290               16,855
      Amortization of debt discount and deferred financing costs . . . . . . . . . . . . .         38,698               55,141
      Interest on notes payable to ECC added to principal  . . . . . . . . . . . . . . . .          2,907                2,586
      Change in reserve for excess and obsolete inventory  . . . . . . . . . . . . . . . .          1,987                   17
      Change in long-term deferred satellite services revenue and other long-term          
        liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,880                6,159
      Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (365)                   -
      Changes in current assets and current liabilities, net . . . . . . . . . . . . . . .        (59,628)              24,645
                                                                                               -------------------------------
 Net cash flows from operating activities  . . . . . . . . . . . . . . . . . . . . . . . .        (52,354)              44,225
                                                                                            
 CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of marketable investment securities . . . . . . . . . . . . . . . . . . . . . .         (4,706)                   -
 Sales of marketable investment securities . . . . . . . . . . . . . . . . . . . . . . . .         18,560                    -
 Purchases of restricted marketable investment securities  . . . . . . . . . . . . . . . .         (1,995)                   -
 Funds released from escrow and restricted cash and marketable investment securities . . .         72,491                    -
 Investment earnings placed in escrow  . . . . . . . . . . . . . . . . . . . . . . . . . .              -                    - 
 Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .        (28,451)             (52,652)
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (851)                 879
                                                                                               -------------------------------
 Net cash flows from investing activities  . . . . . . . . . . . . . . . . . . . . . . . .         55,048              (51,773)
                                                                                            
 CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayments of mortgage indebtedness and notes payable . . . . . . . . . . . . . . . . . .         (5,551)              (8,167)
                                                                                               -------------------------------
 Net cash flows from financing activities  . . . . . . . . . . . . . . . . . . . . . . . .         (5,551)              (8,167)
                                                                                               -------------------------------

 Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .         (2,857)             (15,715)
 Cash and cash equivalents, beginning of period  . . . . . . . . . . . . . . . . . . . . .         38,429               45,653
                                                                                               -------------------------------
 Cash and cash equivalents, end of period  . . . . . . . . . . . . . . . . . . . . . . . .     $   35,572             $ 29,938
                                                                                               -------------------------------
                                                                                               -------------------------------
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                              
 Capitalized interest, including amounts due to affiliates . . . . . . . . . . . . . . . .     $   21,736             $  9,193
 Accrued capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          4,200                    -
 The purchase price of DBSC was "pushed-down" by EchoStar Communications Corporation to DBSC                    
      as follows in the related purchase accounting:
      Satellite construction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .         51,241                    -
      FCC authorization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         16,651                    -
      Notes payable to EchoStar, including accrued interest of $3,382  . . . . . . . . . .        (49,382)                   -
      Trade accounts payable and accrued expenses  . . . . . . . . . . . . . . . . . . . .         (1,687)                   -
      Other notes payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (500)                   -
      Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (16,323)                   -

</TABLE>


            See accompanying Notes to Condensed Combined and Consolidated 
                                Financial Statements.

                                          3

<PAGE>


                           ECHO SATELLITE
   (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
            COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
   NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS 
                           (Unaudited)


1.   ORGANIZATION AND BUSINESS ACTIVITIES

PRINCIPAL BUSINESS 

     The following represents Echo Satellite, a combination of EchoStar 
Satellite Broadcasting Corporation ("ESBC") and Direct Broadcasting Satellite 
Corporation, a Colorado corporation ("DBSC").  Both ESBC and DBSC are 
wholly-owned subsidiaries of EchoStar Communications Corporation ("ECC," and 
together with its subsidiaries, "EchoStar"), a publicly-traded company on the 
Nasdaq National Market.  ESBC was formed in January 1996 for the initial 
purpose of completing an offering of $580 million principal amount at 
maturity of 13 1/8% Senior Secured Discount Notes (the "1996 Notes") due 2002 
(the "1996 Notes Offering").  On January 8, 1997, Direct Broadcasting 
Satellite Corporation, a Delaware corporation ("Old DBSC"), was merged (the 
"Merger") with DBSC.  This transaction was accounted for as a purchase and 
the excess of the purchase price over the fair value of Old DBSC's assets was 
allocated to FCC authorizations in the related purchase accounting.  Upon 
consummation of the Merger, Old DBSC, which was incorporated January 23, 1981 
in the State of Delaware, ceased to exist and DBSC became a guarantor of the 
1996 Notes.  DBSC is the FCC licensee for a satellite permit and orbital slot 
assignments and the owner of EchoStar III, a satellite built to become an 
integral part of the DISH Network, but has no operations as a stand-alone 
entity.  DBSC is dependent on ECC and ECC's other subsidiaries for all 
necessary funding and all management and administrative functions.
     
     The accompanying financial statements represent the combined and 
consolidated financial statements of ESBC and DBSC ("Echo Satellite" or the 
"Company").  Readers of this Quarterly Report should refer to EchoStar's 
Quarterly Report on Form 10-Q for the three months ended June 30, 1998.
     
     Substantially all of EchoStar's operations are conducted by subsidiaries 
of ESBC.  EchoStar's operations include three interrelated business units:
     
          -    THE DISH NETWORK - a direct broadcast satellite ("DBS")
               subscription television service in the United States.  As of June
               30, 1998, EchoStar had approximately 1.4 million DISH Network
               subscribers.
          
          -    ECHOSTAR TECHNOLOGIES CORPORATION ("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 DBS spectrum, DBS satellites ("EchoStar I," "EchoStar II," 
"EchoStar III," and "EchoStar IV"), 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 competitive alternative to cable television 
service.

2.   SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements 
have been prepared in accordance with generally accepted accounting 
principles and with the instructions to Form 10-Q and Article 10 of 
Regulation S-X for interim financial information.  Accordingly, these 
statements do not include all of the information and footnotes 

                                          4

<PAGE>

                             ECHO SATELLITE
     (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
              COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS-Continued 
                              (Unaudited)


required by generally accepted accounting principles for complete financial 
statements.  In the opinion of management, all adjustments (consisting of 
normal recurring adjustments) considered necessary for a fair presentation 
have been included.  All significant intercompany accounts and transactions 
have been eliminated in consolidation.  Operating results for the three and 
six months ended June 30, 1998 are not necessarily indicative of the results 
that may be expected for the year ending December 31, 1998.  For further 
information, refer to the consolidated financial statements and footnotes 
thereto included in the Company's Annual Report filed as Exhibit 99.4 to 
EchoStar Satellite Broadcasting Corporation's Annual Report on Form 10-K for 
the year ended December 31, 1997. Certain prior year amounts have been 
reclassified to conform with the current year presentation.

PURPOSE OF FINANCIAL STATEMENTS

     Echo Satellite currently is not subject to the reporting requirements of 
Section 13 or 15(d) of the Securities and Exchange Act of 1934 (the "Exchange 
Act").  However, pursuant to the terms of an indenture between ESBC and First 
Trust National Association dated March 25, 1996 (the "Indenture"), Echo 
Satellite is required to provide quarterly and annual reports comparable to 
that which would have been required if Echo Satellite were subject to the 
requirements of Section 13 or 15(d) of the Exchange Act.  Since Echo 
Satellite does not have a separate Commission File Number with the Securities 
and Exchange Commission, Echo Satellite has made these financial statements, 
complete with Management's Narrative Analysis of Results of Operations, 
publicly available. These financial statements were prepared solely to comply 
with the reporting requirements under the Indenture.  For further 
information, refer to the consolidated financial statements and footnotes 
thereto included in EchoStar's Annual Report on Form 10-K filed with the 
Securities and Exchange Commission for the year ended December 31, 1997.

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.

COMPREHENSIVE INCOME
     
     The Company adopted Statement of Financial Accounting Standards ("FAS") 
No.130, "Reporting Comprehensive Income" ("FAS No. 130") effective as of the 
first quarter of 1998.  FAS No. 130 establishes new rules for the reporting 
and display of comprehensive income and its components, however it has no 
impact on the Company's net income or stockholder's equity.  The components 
of comprehensive loss, net of tax, are as follows (in thousands):

<TABLE>
<CAPTION>
                          THREE MONTHS ENDED JUNE 30,  SIX MONTHS ENDED JUNE 30, 
                          ---------------------------  ------------------------
                            1997              1998        1997          1998
                          ---------------------------  ------------------------
                                 (Unaudited)                  (Unaudited)
<S>                       <C>              <C>          <C>           <C>
Net loss..............    $(65,464)        $(44,074)     $(128,421)   $(92,280)
Change in unrealized 
 gain (loss) on 
 available-for-sales 
 securities...........           -                -             (1)          -
                          ---------------------------  ------------------------
Comprehensive loss....    $(65,464)        $(44,074)     $(128,422)   $(92,280)
                          ---------------------------  ------------------------
                          ---------------------------  ------------------------

</TABLE>

                                          5

<PAGE>

                              ECHO SATELLITE
      (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
               COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS-Continued
                               (Unaudited)


3.   INVENTORIES

     Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                   DECEMBER 31,       JUNE 30,
                                                       1997             1998
                                                  ----------------------------
                                                                   (Unaudited)
<S>                                                <C>              <C>
      EchoStar Receiver Systems  . . . . . . . .    $  7,649        $25,967 
      DBS receiver components  . . . . . . . . .      12,506         24,254 
      Consigned DBS receiver components  . . . .       3,122          4,135 
      Finished goods - analog DTH               
                equipment  . . . . . . . . . . .       2,116          1,959 
      Spare parts and other  . . . . . . . . . .       1,440          1,082 
      Reserve for excess and obsolete           
                inventory  . . . . . . . . . . .      (3,840)        (3,857)
                                                  ----------------------------
                                                     $22,993        $53,540
                                                  ----------------------------
                                                  ----------------------------
</TABLE>

4.   ACCRUED EXPENSES

     Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                   DECEMBER 31,       JUNE 30,
                                                       1997             1998
                                                  ----------------------------
                                                                   (Unaudited)
<S>                                                <C>              <C>
                                                 
      Accrued royalties and copyright . . . . . .   $21,573          $  37,974
      Accrued expenses  . . . . . . . . . . . . .    26,354             27,336 
      Accrued programming . . . . . . . . . . . .    20,018             25,516
      Accrued marketing expenses  . . . . . . . .     4,660             24,375
                                                  ----------------------------
                                                    $72,605          $115,201
                                                  ----------------------------
                                                  ----------------------------

</TABLE>

5.   COMMITMENTS 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, 

                                          6

<PAGE>

                              ECHO SATELLITE
      (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
               COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS-Continued
                              (Unaudited)


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 is 
vigorously defending against the counterclaims.  The case has been set for 
trial commencing March 1999, 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.
     
     In November 1998 and 1999, certain meteoroid events will occur as the 
earth's orbit passes through the particulate trail of Comet 55P 
(Tempel-Tuttle). These meteoroid events pose a potential threat to all 
in-orbit geosynchronous satellites, including EchoStar's DBS satellites.  
EchoStar is presently evaluating the potential effects that these meteoroid 
events may have on its DBS satellites.  At this time, EchoStar has not 
finally determined the impact, if any, these meteoroid events could have on 
EchoStar's DBS satellites.  However, many of the most sophisticated satellite 
operators have assessed the risk of satellite damage as very small.

6.   SUBSEQUENT EVENTS
     
     EchoStar IV was launched on May 8, 1998 from the Baikonur Cosmodrome, 
Kazakhstan and was originally expected to provide video, audio and data 
services to the continental United States, Alaska and Hawaii from the 
119DEG. West Longitude ("WL") orbital location.  Following launch and 
deployment of EchoStar IV, EchoStar I was expected to be relocated from its 
current position at 119DEG. WL to the 148DEG. WL orbital location.  As a result 
of anomalies described below, EchoStar IV has instead been moved to the 
148DEG. WL orbital location where it is expected to provide local, 
educational, foreign language and other niche service to customers in the 
Western United States.  EchoStar I and EchoStar II will remain at 119DEG. WL 
and will continue to provide DISH Network service without interruption or 
change. 
     
     As previously announced, the south solar array on EchoStar IV did not 
properly deploy, resulting in a reduction of power available to operate the 
satellite.  While final evaluations have not been completed, it now appears 
likely that this anomaly will limit EchoStar to operation of a maximum of 22 
transponders on the satellite.  The number of available transponders will 
decrease over time, but based on existing data, approximately 16 transponders 
should be available for the full planned 12 year life of the satellite absent 
additional failures.
     
     An unrelated anomaly discovered subsequent to June 30, 1998 has resulted 
in the failure of four primary transponders (transponders 5, 6, 9 and 10), 
and two spare transponders on the satellite. The cause of this anomaly has 
not yet been established.  EchoStar recently received notification from the 
manufacturer of the satellite, Lockheed Martin, that several transponders, in 
addition to those which have failed, are not recommended for use until the 
root cause of the anomaly has been determined and corrective procedures, if 
possible, are implemented to avoid further failures.
     
     While EchoStar IV is equipped with 32 transponders, EchoStar is only 
licensed by the Federal Communications Commission ("FCC") to use 24 of the 
total of 32 frequencies at the 148DEG. WL orbital location, including 
frequencies 5, 6, 9 and 10, which correspond to the failed transponders.  
Consequently, while power continues to be available to operate 22 
transponders on the satellite, to fully utilize the remaining available 
capacity of the satellite, EchoStar will need to file an application with the 
FCC to obtain authorization to operate transponders which correspond to 
frequencies which are not currently assigned to EchoStar by the FCC.

                                          7

<PAGE>

                              ECHO SATELLITE
      (A COMBINATION OF CERTAIN WHOLLY-OWNED SUBSIDIARIES OF ECHOSTAR 
               COMMUNICATIONS CORPORATION, AS DEFINED IN NOTE 1)
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS-Continued
                               (Unaudited)


     EchoStar will also need to obtain FCC approval to operate EchoStar IV at 
148DEG. WL on a permanent basis.  FCC rules require that DBS satellites 
positioned at 148DEG. WL also provide service to Alaska and Hawaii.  In April 
1998, EchoStar received a waiver from the FCC with respect to this obligation 
because EchoStar planned to provide DBS service to those states via EchoStar 
IV from the 119DEG. WL orbital location. As a result of moving EchoStar IV to 
the 148DEG. WL orbital location, EchoStar will not be able to provide DBS 
service to Alaska and Hawaii from 119DEG. WL and probably will not be able to 
fulfill its original obligation to provide DBS service to Alaska and Hawaii 
from 148DEG. WL either.  Consequently, EchoStar will probably need to obtain a 
waiver of its obligation to provide service to Alaska and Hawaii in 
connection with its application to operate EchoStar IV at 148DEG. WL on a 
permanent basis.
     
     While the FCC has typically shown flexibility when satellite failures 
occur, there can be no assurance that EchoStar's request will be granted. 
Further, it is likely that EchoStar will encounter opposition from certain 
parties, including those attempting to enforce the obligation to serve Alaska 
and Hawaii.  To minimize potential opposition, EchoStar intends to enter into 
an agreement with a third-party to provide DTH programming services to Alaska 
and Hawaii on an interim basis on an fixed satellite service ("FSS") 
satellite. EchoStar also intends to construct and launch a replacement 
satellite at 119DEG. WL which would provide service to Alaska and Hawaii.  If 
the FCC were to deny EchoStar's request, EchoStar's ability to provide DBS 
service from EchoStar IV would be significantly reduced.  
     
     EchoStar will file an insurance claim with respect to EchoStar IV in the 
near future.  The Company expects to use insurance proceeds, together with 
other funds, to launch a new DBS satellite to its 119DEG. WL orbital location 
in approximately three years or less.  EchoStar also expects to file an 
insurance claim with respect to EchoStar III, which was launched October 5, 
1997.  Certain of EchoStar III's electric power converters ("EPC") are 
operating at temperatures slightly outside of engineering specifications.  
The high EPC temperatures may require certain transponders on EchoStar III to 
be turned off for several weeks during summer and winter solstice seasons to 
avoid overheating. 
     
     Based on information currently available, management has evaluated the 
potential financial statement impact of these satellite anomalies in 
accordance with its stated accounting policies.  The Company has not 
completed its assessment of the impairment of these satellites, but currently 
believes insurance proceeds will be sufficient to offset any write-downs of 
its satellite assets that are required because of lost transmission capacity 
caused by these anomalies.  However, no assurance can be provided as to the 
ultimate amount that may be received from these insurance claims.  EchoStar 
will continue to evaluate the operating performance of EchoStar III and 
EchoStar IV and may modify its loss assessment as new events or circumstances 
develop.  EchoStar does not maintain insurance for lost profit opportunity.

                                          8

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

     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:  A 
TOTAL OR PARTIAL LOSS OF A SATELLITE DUE TO OPERATIONAL FAILURES, SPACE 
DEBRIS OR OTHERWISE; A DECREASE IN SALES OF DIGITAL EQUIPMENT AND RELATED 
SERVICES TO INTERNATIONAL DIRECT-TO-HOME ("DTH") SERVICE PROVIDERS; A 
DECREASE IN DISH NETWORK SUBSCRIBER GROWTH; AN INCREASE IN SUBSCRIBER 
ACQUISITION COSTS AND SUBSCRIBER PROMOTION SUBSIDIES; AN UNEXPECTED PRODUCT 
SHORTAGE; IMPEDIMENTS TO THE RETRANSMISSION OF LOCAL OR DISTANT BROADCAST 
NETWORK SIGNALS; LOWER THAN EXPECTED DEMAND FOR ECHOSTAR'S DELIVERY OF LOCAL 
BROADCAST NETWORK SIGNALS; AN UNEXPECTED BUSINESS INTERRUPTION DUE TO THE 
FAILURE OF THIRD-PARTIES TO REMEDIATE YEAR 2000 ISSUES; THE INABILITY OF THE 
COMPANY TO RETAIN NECESSARY AUTHORIZATIONS FROM THE FEDERAL COMMUNICATIONS 
COMMISSION ("FCC"); AN INCREASE IN 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; 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.

RECENT DEVELOPMENTS

     SATELLITE ANOMALIES
     
     EchoStar IV was launched on May 8, 1998 from the Baikonur Cosmodrome, 
Kazakhstan and was originally expected to provide video, audio and data 
services to the continental United States, Alaska and Hawaii from the 119DEG. 
West Longitude ("WL") orbital location.  Following launch and deployment of 
EchoStar IV, EchoStar I was expected to be relocated from its current 
position at 119DEG. WL to the 148DEG. WL orbital location.  As a result of 
anomalies described below, EchoStar IV has instead been moved to the 
148DEG. WL orbital location where it is expected to provide local, 
educational, foreign language and other niche service to customers in the 
Western United States.  EchoStar I and EchoStar II will remain at 119DEG. WL 
and will continue to provide DISH Network service without interruption or 
change. 
     
     As previously announced, the south solar array on EchoStar IV did not 
properly deploy, resulting in a reduction of power available to operate the 
satellite.  While final evaluations have not been completed, it now appears 
likely that this anomaly will limit EchoStar to operation of a maximum of 22 
transponders on the satellite.  The number of available transponders will 
decrease over time, but based on existing data, approximately 16 transponders 
should be available for the full planned 12 year life of the satellite absent 
additional failures.
     
     An unrelated anomaly discovered subsequent to June 30, 1998 has resulted 
in the failure of four primary transponders (transponders 5, 6, 9 and 10), 
and two spare transponders on the satellite. The cause of this anomaly has 
not yet been established.  EchoStar recently received notification from the 
manufacturer of the satellite, Lockheed Martin, that several transponders, in 
addition to those which have failed, are not recommended for use until the 
root cause of the anomaly has been determined and corrective procedures, if 
possible, are implemented to avoid further failures.
     
     While EchoStar IV is equipped with 32 transponders, EchoStar is only 
licensed by the FCC to use 24 of the total of 32 frequencies at the 148DEG. WL 
orbital location, including frequencies 5, 6, 9 and 10, which correspond to 
the failed transponders.  Consequently, while power continues to be available 
to operate 22 transponders on the satellite, to fully utilize the remaining 
available capacity of the satellite, EchoStar will need to file an 
application 

                                          9

<PAGE>

ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED

with the FCC to obtain authorization to operate transponders which correspond 
to frequencies which are not currently assigned to EchoStar by the FCC.
     
     EchoStar will also need to obtain FCC approval to operate EchoStar IV at 
148DEG. WL on a permanent basis.  FCC rules require that DBS satellites 
positioned at 148DEG. WL also provide service to Alaska and Hawaii.  In April 
1998, EchoStar received a waiver from the FCC with respect to this obligation 
because EchoStar planned to provide DBS service to those states via EchoStar 
IV from the 119DEG. WL orbital location. As a result of moving EchoStar IV to 
the 148DEG. WL orbital location, EchoStar will not be able to provide DBS 
service to Alaska and Hawaii from 119DEG. WL and probably will not be able to 
fulfill its original obligation to provide DBS service to Alaska and Hawaii 
from 148DEG. WL either.  Consequently, EchoStar will probably need to obtain a 
waiver of its obligation to provide service to Alaska and Hawaii in 
connection with its application to operate EchoStar IV at 148DEG. WL on a 
permanent basis.
     
     While the FCC has typically shown flexibility when satellite failures 
occur, there can be no assurance that EchoStar's request will be granted. 
Further, it is likely that EchoStar will encounter opposition from certain 
parties, including those attempting to enforce the obligation to serve Alaska 
and Hawaii.  To minimize potential opposition, EchoStar intends to enter into 
an agreement with a third-party to provide DTH programming services to Alaska 
and Hawaii on an interim basis on an fixed satellite service ("FSS") 
satellite. EchoStar also intends to construct and launch a replacement 
satellite at 119DEG. WL which would provide service to Alaska and Hawaii.  If 
the FCC were to deny EchoStar's request, EchoStar's ability to provide DBS 
service from EchoStar IV would be significantly reduced.  
     
     EchoStar will file an insurance claim with respect to EchoStar IV in the 
near future.  The Company expects to use insurance proceeds, together with 
other funds, to launch a new DBS satellite to its 119DEG. WL orbital location 
in approximately three years or less.  EchoStar also expects to file an 
insurance claim with respect to EchoStar III, which was launched October 5, 
1997.  Certain of EchoStar III's electric power converters ("EPC") are 
operating at temperatures slightly outside of engineering specifications.  
The high EPC temperatures may require certain transponders on EchoStar III to 
be turned off for several weeks during summer and winter solstice seasons to 
avoid overheating. 
     
     Based on information currently available, management has evaluated the 
potential financial statement impact of these satellite anomalies in 
accordance with its stated accounting policies.  The Company has not 
completed its assessment of the impairment of these satellites, but currently 
believes insurance proceeds will be sufficient to offset any write-downs of 
its satellite assets that are required because of lost transmission capacity 
caused by these anomalies.  However, no assurance can be provided as to the 
ultimate amount that may be received from these insurance claims.  EchoStar 
will continue to evaluate the operating performance of EchoStar III and 
EchoStar IV and may modify its loss assessment as new events or circumstances 
develop.  EchoStar does not maintain insurance for lost profit opportunity.
     
     PRIMETIME 24

     Section 119 of the Satellite Home Viewer Act ("SHVA") authorizes 
EchoStar to sell satellite-delivered network signals (ABC, NBC, CBS Fox, 
etc.) to EchoStar subscribers, but only if those subscribers qualify as 
"unserved" households as that term is defined in the SHVA.  Historically, 
EchoStar obtained broadcast network signals for distribution to its 
subscribers through PrimeTime 24, Joint Venture ("PrimeTime 24").  PrimeTime 
24 also distributes network signals to certain of EchoStar's competitors in 
the satellite industry.
     
     Recently, a federal court in Florida issued a nationwide injunction in 
CBS INC., FOX BROADCASTING CO., ET. AL. V. PRIMETIME 24, JOINT VENTURE, NO. 
96-3650-CIV-NESBITT (S.D. FLA. JULY 10, 1998), severely restricting the 
ability of PrimeTime 24 and its distributors to sell Fox and CBS programming, 
and requiring the disconnection of significant numbers of existing PrimeTime 
24 subscribers nationwide by early October 1998.  The order also imposed 
other obligations on PrimeTime 24 and its distributors with respect to future 
sales of Fox and CBS programming nationwide.  Additionally, in a federal 
court suit in North Carolina, ABC, INC., V. PRIMETIME 24, JOINT 

                                          10

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED


VENTURE, NO. 1:97CV00090 (M.D.N.C. JULY 16, 1998), a judge recently granted 
summary judgment to ABC severely restricting the ability of PrimeTime 24 to 
sell ABC programming in Raleigh-Durham.
     
     As a result of:  (a) these rulings; (b) EchoStar's determination to sell 
local network channels back into the area from which they originate; (c) 1997 
adjustments to copyright royalties payable in connection with delivery of 
network signals by satellite; and (d) a number of other regulatory, 
political, legal, contractual and business factors, during July 1998, 
EchoStar ceased delivering PrimeTime 24 programming, and began uplinking and 
distributing network signals directly.  EchoStar has also implemented Section 
119 compliance procedures which will materially restrict the market for the 
sale of network signals by EchoStar.  It is also possible that some or all of 
the networks, and/or their affiliates, will bring copyright infringement 
actions against EchoStar, similar to those described above, in the near 
future.  In the event of a decision adverse to EchoStar in any such 
litigation, significant damage awards and additional material restrictions on 
the sale of network signals by EchoStar could result.  Among other things, 
EchoStar may be required to terminate delivery of network signals to a 
material portion of its subscriber base.  The compliance program implemented 
by EchoStar, and any further restrictions on sale of network channels imposed 
in the future, may result in decreases in subscriber activations and 
subscription television services revenue and an increase in subscriber churn.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 
1997.
     
     REVENUE.  Total revenue for the three months ended June 30, 1998 was 
$246 million, an increase of $148 million or 152%, as compared to total 
revenue for the three months ended June 30, 1997 of $98 million.  The 
increase in total revenue was primarily attributable to DISH Network 
subscriber growth combined with increased revenue from the Company's 
Technology business unit.  The Company expects that its revenues will 
continue to increase as the number of DISH Network subscribers increases.  
Consistent with the increases in total revenue and the number of DISH Network 
subscribers during the three months ended June 30, 1998, the Company 
experienced a corresponding increase in trade accounts receivable at June 30, 
1998.
     
     DISH Network subscription television services revenue totaled $152 
million for the three months ended June 30, 1998, an increase of $89 million, 
or 141% compared to the same period in 1997.  This increase was directly 
attributable to the increase in the number of DISH Network subscribers.  The 
average number of DISH Network subscribers during the three months ended June 
30, 1998 increased approximately 160%, as compared to the same period in 
1997.  Monthly revenue per subscriber approximated $39 during each of the 
three-month periods ended June 30, 1998 and 1997.  DISH Network subscription 
television services revenue principally consists of revenue from basic, 
premium and pay-per-view subscription television services.  DISH Network 
subscription television services revenue will continue to increase to the 
extent the Company is successful in increasing the number of DISH Network 
subscribers.
     
     For the three months ended June 30, 1998, DTH equipment sales and 
integration services totaled $80 million, an increase of $67 million compared 
to the three months ended June 30, 1997.  DTH equipment sales consist of 
sales of digital set-top boxes and other digital satellite broadcasting 
equipment by the Company to international DTH service operators.  The Company 
currently has agreements to provide equipment to DTH service operators in 
Spain and Canada. Sales pursuant to these agreements totaled $74 million for 
the three months ended June 30, 1998, an increase of $62 million, as compared 
to $12 million for the three months ended June 30, 1997.  Revenue for the 
three months ended June 30, 1998 primarily related to sales of digital 
set-top boxes and other equipment while revenue for the same period in 1997 
resulted from the provision of integration services.  The increase in DTH 
equipment sales and integration services revenue was primarily attributable 
to an increase in the volume of set-top boxes sold.
     
     A substantial portion of the Company's Technology revenues have resulted 
from sales to two DTH providers.  As a result, the Company's Technology 
business currently is economically dependent on these two DTH providers.  The 
Company's future revenue from the sale of DTH equipment and integration 
services in international markets depends largely on the success of these DTH 
operators and continued demand for EchoStar's digital set-top 

                                          11

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED

boxes.  Due to several factors, the Company expects that its DTH equipment 
and integration services revenue may decline during the third and fourth 
quarters of 1998 by as much as 30% to 40% as compared to such revenue 
reported during the first and second quarters of 1998.  These factors include 
an expected decrease in demand resulting from the fulfillment of initial 
stock orders combined with a decrease in the sales price of digital set-top 
boxes due to increased competition from other providers of DTH equipment.  
Further, during July 1998 Telefonica S.A. ("Telefonica"), one of the two DTH 
service providers described above, announced its intention to merge with 
Sogecable ("Canal Plus Satellite"), one of its primary competitors.  In 
addition to providing competitive DTH services in Spain, the Canal Plus 
satellite system in Spain has more set-top boxes in the field than 
Telefonica, and its conditional access and compression systems are not 
compatible with the equipment manufactured by EchoStar for Telefonica.  The 
Company can not yet determine the possible impact that such a merger might 
have on future sales to Telefonica.  The Company has binding purchase orders 
from Telefonica for additional 1998 and 1999 deliveries of DTH equipment.  
While the Company continues to actively pursue additional distribution and 
integration service opportunities, no assurance can be given that any such 
additional negotiations will be successful.
     
     Satellite services revenue totaled $6 million for the three months ended 
June 30, 1998, an increase of $4 million as compared to the same period in 
1997. These revenues include, among other things, fees charged to content 
providers for signal carriage and revenues earned from business television 
("BTV") customers.  The increase in satellite services revenue was primarily 
attributable to increased BTV revenue.  
     
     DISH NETWORK OPERATING EXPENSES.  DISH Network operating expenses 
totaled $89 million for the three months ended June 30, 1998, an increase of 
$48 million as compared to the same period in 1997.  The increase in DISH 
Network operating expenses was consistent with and primarily attributable to 
the increase in the number of DISH Network subscribers.  For the three months 
ended June 30, 1998, DISH Network operating expenses represented 59% of 
subscription television services revenue compared to 65% of subscription 
television revenue during the corresponding period in 1997.  While the 
Company expects DISH Network operating expenses as a percentage of 
subscription television services revenue to approximate this level in future 
periods, there can be no assurance that this expense to revenue ratio will 
not increase.
     
     Subscriber-related expenses totaled $69 million for the three months 
ended June 30, 1998, an increase of $38 million compared to the same period 
in 1997. Such expenses, which include programming expenses, copyright 
royalties, residuals payable to retailers and distributors, and billing, 
lockbox and other variable subscriber expenses, totaled 46% of subscription 
television services revenues for the three months ended June 30, 1998, 
compared to 50% of subscription television services revenues for the three 
months ended June 30, 1997.  The decrease in subscriber-related expenses as a 
percentage of subscription television services revenue resulted primarily 
from a decrease in programming expenses, which resulted from a change in 
product mix combined with price discounts received from certain content 
providers.
     
     Customer service center and other expenses principally consist of costs 
incurred in the operation of the Company's DISH Network customer service 
center, such as personnel and telephone expenses, as well as subscriber 
equipment installation and other operating expenses.  Customer service center 
and other expenses totaled $14 million for the three months ended June 30, 
1998, an increase of $8 million as compared to the three months ended June 
30, 1997.  The increase in customer service center and other expenses 
resulted from increased personnel expenses to support the growth of the DISH 
Network.  Customer service center and other expenses totaled 9% of 
subscription television services revenue during each of the three-month 
periods ended June 30, 1998 and 1997.  While the Company expects customer 
service center and other expenses as a percentage of subscription television 
services revenue to approximate this level for the remainder of 1998, there 
can be no assurance that this expense to revenue ratio will not increase.
     
     Satellite and transmission expenses include expenses associated with the 
operation of the Company's digital broadcast center, contracted satellite 
tracking, telemetry and control ("TT&C") services, and in-orbit insurance on 
the Company's DBS satellites.  Satellite and transmission expenses increased 
$2 million during the three months ended June 30, 1998, as compared to the 
same period during 1997.  This increase resulted from higher TT&C services 
expenses and other digital broadcast center operating expenses due to an 
increase in the number of the Company's operational DBS satellites.  The 
Company expects DISH Network operating expenses to continue to 

                                          12

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED

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 may decline.
     
     COST OF SALES - DTH EQUIPMENT AND INTEGRATION SERVICES.  Cost of sales 
- DTH equipment and integration services totaled $54 million for the three 
months ended June 30, 1998, an increase of $42 million, as compared to the 
three months ended June 30, 1997.  This increase is consistent with the 
increase in DTH equipment revenue. Cost of sales - DTH equipment and 
integration services principally includes costs associated with digital 
set-top boxes and related components sold to international DTH operators.  
     
     MARKETING EXPENSES.  Marketing expenses totaled $69 million for the 
three months ended June 30, 1998, an increase of $47 million as compared to 
the same period in 1997.  The increase in marketing expenses was primarily 
attributable to the increase in subscriber promotion subsidies.  Subscriber 
promotion subsidies include the excess of transaction costs over transaction 
proceeds at the time of sale of EchoStar Receiver Systems, activation 
allowances paid to retailers, and other promotional incentives.  The Company 
recognizes subscriber promotion subsidies as incurred.  These expenses 
totaled $60 million for the three months ended June 30, 1998, an increase of 
$42 million over the same period in 1997.  This increase resulted from 
increased subscriber activations and the immediate recognition of all 
subscriber promotion subsidies incurred in 1998, whereas during the 
three-month period ended June 30, 1997, a portion of such expenses were 
initially deferred and amortized over the related prepaid subscription term 
(generally one year).  This accelerated expense recognition resulted from the 
introduction of the "1997 Promotion" in June 1997.  The 1997 Promotion 
maintained the suggested retail price for a standard EchoStar Receiver System 
at $199, but eliminated the requirement for the coincident purchase of an 
extended subscription commitment.  For the three months ended June 30, 1998, 
the Company's subscriber acquisition costs, inclusive of acquisition 
marketing expenses, totaled $66 million (approximately $280 per new 
subscriber activation).  Comparatively, the Company's subscriber acquisition 
costs, inclusive of acquisition marketing expenses and deferred subscriber 
acquisition costs, totaled $43 million (in excess of $300 per new subscriber 
activation) during the same period in 1997.  The decrease in the Company's 
subscriber acquisition costs, on a per new subscriber activation basis, 
principally resulted from decreases in the manufactured cost of EchoStar 
Receiver Systems. The Company expects that its subscriber acquisition costs, 
on a per new subscriber activation basis, may increase during the remainder 
of 1998 as a result of increased competition for DBS subscribers.  
Advertising and other expenses totaled $9 million for the three months ended 
June 30, 1998, an increase of $5 million over the same period in 1997, as a 
result of increased marketing activity. 
     
     GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative ("G&A") 
expenses totaled $23 million for the three-month period ended June 30, 1998, 
an increase of $8 million as compared to the same period in 1997.  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 9% for the three months ended June 
30, 1998 compared to 15% for the corresponding period in 1997.  While the 
Company expects that G&A expenses as a percentage of total revenue will 
approximate this level for the remainder of 1998, there can be no assurance 
that this expense to revenue ratio will not increase.
     
     EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION 
("EBITDA"). EBITDA for the three months ended June 30, 1998 improved to $7 
million compared to $2 million for the same period in 1997.  This improvement 
in EBITDA principally resulted from increases in Technology (i.e., DTH 
equipment sales and integration services) and DISH Network revenues.  Due to 
expected increases in new subscriber activations, increased marketing 
activity and a decrease in Technology revenue (as previously described), the 
Company expects that EBITDA results during the third and fourth quarters of 
1998 may decline.  To the extent that new subscriber activations exceed 
expectations or subscriber acquisition costs materially increase, the 
Company's EBITDA results may be negatively impacted in the near-term because 
subscriber acquisition costs are expensed as incurred.
     
     The Company expects to begin production of its next generation of 
digital set-top boxes during the third quarter of 1998.  While there can be 
no assurance, the Company expects that the introduction of these digital 
set-top boxes may result in manufacturing cost reductions, thereby reducing 
subscriber acquisition costs.  Previous delays in the design of this new 
digital set-top box will have a negative impact on EBITDA during the third 
quarter of 1998.  In the event the Company experiences further delays in the 
production of its next generation digital set-top boxes, its inventory of 
digital  set-top boxes, and consequently, its future new subscriber 
activations, subscriber 

                                          13

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED

acquisition costs and EBITDA results may be negatively impacted.  While 
further delays are not expected, new product introductions often involve 
schedule risks that can not be anticipated or precisely quantified.
     
     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses 
for the three months ended June 30, 1998 (including amortization of 
subscriber acquisition costs of $6 million) aggregated $22 million, a 
decrease of $24 million as compared to the corresponding period in 1997.  The 
decrease in depreciation and amortization expenses principally resulted from 
the decrease in amortization of subscriber acquisition costs (decrease of $27 
million), partially offset by an increase in depreciation related to the 
commencement of operation of EchoStar III and other depreciable assets placed 
in service during 1998.  Beginning in October 1997, net subscriber 
acquisition costs are expensed as incurred.  Consequently, no additional 
subscriber acquisition costs are being deferred.  The unamortized balance of 
such costs is expected to be fully amortized by September 1998.
     
     OTHER INCOME AND EXPENSE.  Other expense, net totaled $30 million for 
the three months ended June 30, 1998, an increase of $8 million as compared 
to the same period in 1997.  The increase in other expense resulted primarily 
from increases in interest expense associated with increased accreted 
balances on the Company's 12 7/8% Senior Secured Discount Notes due 2004 (the 
"1994 Notes") and the Company's 13 1/8% Senior Secured Discount Notes due 
2004 (the "1996 Notes"). 

     
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997.
     
     REVENUE.  Total revenue for the six months ended June 30, 1998 was $460 
million, an increase of $293 million as compared to total revenue for the six 
months ended June 30, 1997 of $167 million.  The increase in total revenue 
was primarily attributable to DISH Network subscriber growth combined with 
increased revenue from the Company's Technology business unit.  
     
     DISH Network subscription television services revenue totaled $280 
million for the six months ended June 30, 1998, an increase of $169 million, 
or 153%, compared to the same period in 1997.  This increase was directly 
attributable to the increase in the number of DISH Network subscribers.  The 
average number of DISH Network subscribers during the six months ended June 
30, 1998 increased approximately 154% as compared to the same period in 1997.
     
     For the six months ended June 30, 1998, DTH equipment sales and 
integration services totaled $147 million, an increase of $132 million 
compared to the six months ended June 30, 1997.  The increase in DTH 
equipment sales and integration services revenue was primarily attributable 
to an increase in the volume of set-top boxes sold.  DTH equipment and 
integration services revenue for the six months ended June 30, 1998 
principally resulted from sales of digital set-top boxes and other equipment 
while revenue for the same period in 1997 related to the provision of 
integration services.
     
     Satellite services revenue totaled $10 million for the six months ended 
June 30, 1998, an increase of $6 million as compared to the same period in 
1997. The increase in satellite services revenue was primarily attributable 
to increased BTV revenue.  
     
     DISH NETWORK OPERATING EXPENSES.  DISH Network operating expenses 
totaled $170 million for the six months ended June 30, 1998, an increase of 
$97 million as compared to the same period in 1997.  The increase in DISH 
Network operating expenses was consistent with and primarily attributable to 
the increase in the number of DISH Network subscribers.  For the six months 
ended June 30, 1998, DISH Network operating expenses represented 61% of 
subscription television services revenue compared to 66% of subscription 
television revenue during the corresponding period in 1997.  
     
     Subscriber-related expenses totaled $133 million for the six months 
ended June 30, 1998, an increase of $78 million compared to the same period 
in 1997. Subscriber-related expenses totaled 48% of subscription television 
services revenues for the six months ended June 30, 1998, compared to 49% 
during the six months ended June 30, 1997. 

                                          14

<PAGE>


ITEM 2.   MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS -- 
          CONTINUED
     
     Customer service center and other expenses totaled $26 million for the 
six months ended June 30, 1998, an increase of $14 million as compared to the 
six months ended June 30, 1997.  The increase in customer service center and 
other expenses resulted from increased personnel expenses to support the 
growth of the DISH Network.  Customer service center and other expenses 
totaled 9% of subscription television services revenue during the six months 
ended June 30, 1998, compared to 11% of subscription television services 
revenue during the same period of the prior year.  
     
     Satellite and transmission expenses increased $5 million during the six 
months ended June 30, 1998, as compared to the same period during 1997. This 
increase resulted from higher TT&C services expenses and other digital 
broadcast center operating expenses due to an increase in the number of the 
Company's operational DBS satellites.
     
     COST OF SALES - DTH EQUIPMENT AND INTEGRATION SERVICES.  Cost of sales 
- DTH equipment and integration services totaled $101 million for the six 
months ended June 30, 1998, an increase of $87 million, as compared to the 
six months ended June 30, 1997.  This increase is consistent with the 
increase in DTH equipment revenue.  
     
     MARKETING EXPENSES.  Marketing expenses totaled $122 million for the six 
months ended June 30, 1998, an increase of $84 million as compared to the 
same period in 1997.  The increase in marketing expenses was primarily 
attributable to the increase in subscriber promotion subsidies.  These 
expenses totaled $105 million for the six months ended June 30, 1998, an 
increase of $74 million over the same period in 1997.  The increase in 
subscriber promotion subsidies resulted from increased subscriber activations 
and the introduction of the 1997 Promotion in June 1997.  Advertising and 
other expenses totaled $18 million for the six months ended June 30, 1998, an 
increase of $11 million over the same period in 1997, as a result of 
increased marketing activity. 
     
     GENERAL AND ADMINISTRATIVE EXPENSES.  G&A expenses totaled $42 million 
for the six-month period ended June 30, 1998, an increase of $12 million as 
compared to the same period in 1997.  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 9% for the six months ended June 30, 1998 compared to 18% for 
the corresponding period in 1997.
     
     EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION.  EBITDA 
for the six months ended June 30, 1998 improved to $15 million compared to 
negative EBITDA of $243,000 during the same period in 1997.  This improvement 
in EBITDA principally resulted from increases in Technology and DISH Network 
revenues.
     
     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses 
for the six months ended June 30, 1998 (including amortization of subscriber 
acquisition costs of $17 million) aggregated $48 million, a decrease of 
$39million as compared to the corresponding period in 1997.  The decrease in 
depreciation and amortization expenses principally resulted from the decrease 
in amortization of subscriber acquisition costs (decrease of $44 million), 
partially offset by an increase in depreciation related to the commencement 
of operation of EchoStar III and other depreciable assets placed in service 
during 1998.
     
     OTHER INCOME AND EXPENSE.  Other expense, net totaled $59 million for 
the six months ended June 30, 1998, an increase of $17 million as compared to 
the same period in 1997.  The increase in other expense resulted primarily 
from interest expense associated with the 1997 Notes, and increases in 
interest expense associated with increased accreted balances on the 1994 
Notes and the 1996 Notes.  

                                          15

<PAGE>


                            PART II - OTHER INFORMATION
                                          
ITEM 1.   LEGAL PROCEEDINGS

     
     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 is vigorously defending against the counterclaims.  The case has 
been set for trial commencing March 1999, 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.

                                          16