<PAGE>

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

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


                                   FORM 10-Q
(MARK ONE)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 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 of            (I.R.S. Employer
 incorporation or organization)           Identification No.)

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

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

                                NOT APPLICABLE
             (Former name, former address and former fiscal year,
                         if changed since last report)

     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
                                               ---     ---
     AS OF AUGUST 11, 1998, THE REGISTRANT'S OUTSTANDING COMMON STOCK CONSISTED
OF 1,000 SHARES OF COMMON STOCK.

     THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
(H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE
REDUCED DISCLOSURE FORMAT.

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

<PAGE>

                               TABLE OF CONTENTS

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets -
          December 31, 1997 and June 30, 1998 (Unaudited)                     1

         Condensed Consolidated Statements of Operations for the
          three and six months ended June 30, 1997 and 1998 (Unaudited)       2

         Condensed Consolidated Statements of Cash Flows for the
          six months ended June 30, 1997 and 1998 (Unaudited)                 3

         Notes to Condensed Consolidated Financial Statements (Unaudited)     4

Item 2.  Management's Narrative Analysis of Results of Operations             8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk        None


                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                   15

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                                    16


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

<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)

<TABLE>
                                                                      DECEMBER 31,    JUNE 30,
                                                                          1997          1998
                                                                      -------------------------
                                                                                    (Unaudited)
<S>                                                                   <C>           <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                           $   45,653     $   29,894
  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                                                     8,769          7,947
                                                                      -------------------------
Total current assets                                                     162,279        188,417
Restricted cash and marketable investment securities                       2,245          2,245
Property and equipment, net                                              505,347        534,192
Advances to affiliates, net                                              191,823        180,965
Other noncurrent assets                                                  100,891         96,053
                                                                      -------------------------
   Total assets                                                       $  962,585     $1,001,872
                                                                      -------------------------
                                                                      -------------------------

LIABILITIES AND  STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
  Trade accounts payable                                              $   68,491     $  100,566
  Deferred revenue                                                       122,215        109,361
  Accrued expenses                                                        72,369        115,201
  Current portion of long-term debt                                       14,924         15,428
                                                                      -------------------------
Total current liabilities                                                277,999        340,556

Long-term obligations, net of current portion:
  1994 Notes                                                             499,863        534,330
  1996 Notes                                                             438,512        467,005
  Mortgages and other notes payable, net of current portion               40,495         33,037
  Long-term deferred satellite services revenue and other
   long-term liabilities                                                  19,500         25,660
                                                                      -------------------------
Total long-term obligations, net of current portion                      998,370      1,060,032
                                                                      -------------------------
   Total liabilities                                                   1,276,369      1,400,588

Commitments and Contingencies (Note 5)

Stockholder's Equity (Deficit):
  Common stock, $.01 par value, 1,000 shares authorized,
   issued and outstanding                                                      -              -
  Additional paid-in capital                                             108,838        108,838
  Accumulated deficit                                                   (422,622)      (507,554)
                                                                      -------------------------
Total stockholder's equity (deficit)                                    (313,784)      (398,716)
                                                                      -------------------------
   Total liabilities and stockholder's equity (deficit)               $  962,585     $1,001,872
                                                                      -------------------------
                                                                      -------------------------
</TABLE>

   See accompanying Notes to Condensed Consolidated Financial Statements.

                                      1
<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (In thousands)
                                 (Unaudited)

<TABLE>
                                                                THREE MONTHS                  SIX MONTHS
                                                               ENDED JUNE 30,               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         13,643         25,298         27,020
                                                          -----------------------      ------------------------
Total costs and expenses                                   141,335        258,247        253,630        488,956
                                                          -----------------------      ------------------------

Operating loss                                             (43,503)       (12,083)       (86,831)       (28,768)

Other Income (Expense):
  Interest income                                            1,141            745          2,790          1,518
  Interest expense, net of amounts capitalized             (21,370)       (29,002)       (41,216)       (57,305)
  Other                                                       (115)            (1)          (175)           (94)
                                                          -----------------------      ------------------------
Total other income (expense)                               (20,344)       (28,258)       (38,601)       (55,881)
                                                          -----------------------      ------------------------

Loss before income taxes                                   (63,847)       (40,341)      (125,432)       (84,649)
Income tax provision, net                                      (25)          (112)           (44)          (283)
                                                          -----------------------      ------------------------

Net loss                                                  $(63,872)      $(40,453)     $(125,476)      $(84,932)
                                                          -----------------------      ------------------------
                                                          -----------------------      ------------------------
</TABLE>

  See accompanying Notes to Condensed Consolidated Financial Statements.

                                       2

<PAGE>

                  ECHOSTAR SATELLITE BROADCASTING CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                 (Unaudited)

<TABLE>
                                                                       SIX MONTHS ENDED JUNE 30,
                                                                       -------------------------
                                                                          1997           1998
                                                                       -------------------------
<S>                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                               $(125,476)      $(84,932)
Adjustments to reconcile net loss to net cash flows from
 operating activities:
  Depreciation and amortization                                           25,298         27,020
  Amortization of subscriber acquisition costs                            61,290         16,855
  Amortization of debt discount and deferred financing costs              38,698         55,141
  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                      (69,663)        22,708
                                                                       ------------------------
Net cash flows from operating activities                                 (62,351)        42,968

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                                                    72,975              -
Investment earnings placed in escrow                                        (484)             -
Purchases of property and equipment                                      (18,453)       (52,652)
Other                                                                       (851)           879
                                                                       ------------------------
Net cash flows from investing activities                                  65,046        (51,773)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of mortgage indebtedness and notes payable                     (5,551)        (6,954)
                                                                       ------------------------
Net cash flows from financing activities                                  (5,551)        (6,954)
                                                                       ------------------------

Net decrease in cash and cash equivalents                                 (2,856)       (15,759)
Cash and cash equivalents, beginning of period                            38,428         45,653
                                                                       ------------------------
Cash and cash equivalents, end of period                               $  35,572       $ 29,894
                                                                       ------------------------
                                                                       ------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Capitalized interest, including amounts due from affiliates          $  16,632       $  9,193

</TABLE>

  See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

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").  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 Quarterly
Report on Form 10-Q 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.  The operations of EchoStar 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 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 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.

                                     4
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                 (Unaudited)

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>
                                                THREE MONTHS                 SIX MONTHS
                                               ENDED JUNE 30,              ENDED JUNE 30,
                                           ----------------------      -----------------------
                                              1997        1998            1997         1998
                                           ----------------------      -----------------------
                                                 (Unaudited)                  (Unaudited)
<S>                                        <C>           <C>           <C>            <C>
Net loss                                   $(63,872)     $(40,453)     $(125,476)     $(84,932)
Change in unrealized gain (loss) on
 available-for-sales securities                   -             -             (1)            -
                                           ----------------------      -----------------------
Comprehensive loss                         $(63,872)     $(40,453)     $(125,477)     $(84,932)
                                           ----------------------      -----------------------
                                           ----------------------      -----------------------
</TABLE>

3.  INVENTORIES

     Inventories consist of the following (in thousands):

<TABLE>
                                                       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>
                                                       DECEMBER 31,   JUNE 30,
                                                           1997         1998
                                                       ------------------------
                                                                     (Unaudited)
<S>                                                    <C>            <C>
     Accrued royalties and copyright                     $21,573      $ 37,975
     Accrued expenses                                     26,118        27,335
     Accrued programming                                  20,018        25,516
     Accrued marketing expenses                            4,660        24,375
                                                         ---------------------
                                                         $72,369      $115,201
                                                         ---------------------
                                                         ---------------------
</TABLE>

                                     5
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                 (Unaudited)

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, 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 

                                     6
<PAGE>

                 ECHOSTAR SATELLITE BROADCASTING CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                                 (Unaudited)

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.

     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.

                                     7
<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

                                     8

<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, 

                                     9
<PAGE>

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

JOINT 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 

                                     10
<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 

                                     11
<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 

                                     12
<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 $20 million, a decrease of $26
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 of $27 million.  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 $28 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.

                                     13

<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 $44 million, a decrease of $43 
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 of $44 million.

     OTHER INCOME AND EXPENSE.  Other expense, net totaled $56 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 increases in interest expense associated with increased accreted 
balances on the 1994 Notes and the 1996 Notes.

                                       14
<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.

                                       15
<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)    EXHIBITS.

<TABLE>
<S>        <C>
    27+    Financial Data Schedule.

    99.1*  Condensed Consolidated Financial Statements of EchoStar 
           Communications Corporation for the quarterly period ended 
           June 30, 1998 (incorporated by reference to EchoStar's Quarterly 
           Report on Form 10-Q for the quarterly period ended June 30, 1998).

    99.2*  Condensed Consolidated Financial Statements of Dish, Ltd. for the
           quarterly period ended June 30, 1998 (incorporated by reference to 
           Dish, Ltd.'s Quarterly Report on Form 10-Q for the quarterly period 
           ended June 30, 1998).

    99.3+  Financial Statements of DBSC for the quarterly period ended June 30, 
           1998.

    99.4+  Condensed Combined and Consolidated Financial Statements of Echo 
           Satellite for the quarterly period ended June 30, 1998.
</TABLE>
---------------------------------
    +      Filed herewith.

    *      Incorporated by reference.

(b)  REPORTS ON FORM 8-K.

     No reports on Form 8-K were filed during the second quarter of 1998.

                                       16
<PAGE>
                                       
                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                ECHOSTAR SATELLITE BROADCASTING CORPORATION


                By: /s/ DAVID K. MOSKOWITZ
                    -------------------------------------------------------
                    David K. Moskowitz
                    Senior Vice President, General Counsel, Secretary and 
                    Director


                By: /s/ JOHN R. HAGER
                    -------------------------------------------------------
                    John R. Hager
                    Vice President - Controller
                    (PRINCIPAL ACCOUNTING OFFICER)

Date:  August 11, 1998