EchoStar buys Sling Media — and a shot at the future

What does EchoStar's $380 million deal to buy Sling Media mean? In some ways, Sling's decision to sell out seems odd. Satellite TV is on the downswing, most people believe. Rupert Murdoch, after all, sold News Corp.'s stake in DirecTV, in part to raise cash to buy Dow Jones — favoring content, in other words, over distribution. But Charlie Ergen, the obstreperous entrepreneur behind EchoStar, may have a larger plan for Sling's Net-connected set-top boxes. "This is just the beginning," says Sling founder Blake Krikorian in an interview with PaidContent. He's not kidding. The rich EchoStar buy, I believe, is a move by Ergen to prepare his company for life after satellite TV.

Sling Media's main product, the Slingbox, differs in a key way from popular digital video recorders like TiVo. Instead of recording programs for later display in the living room, the Slingbox rebroadcasts what's on your TV, live, to your laptop, cell phone, or other Net-connected screens. While TiVo lets you shift TV shows in time, Slingbox lets you move TV programming to other places. (This is especially handy if, say, you want to follow your home team's games, only available on your local cable system, while you're on the road.)

Obviously, a Slingbox could be hooked up to EchoStar's Dish Network boxes. But it could just as easily be connected to a DirecTV box, or a cable hookup. So why would EchoStar buy something that's so hard to turn into a proprietary advantage?

Obviously, EchoStar could introduce set-top boxes that have Slingbox functions, saving space under the TV set. But I think there's more to it than that. Internet bandwidth looks set to increase continuously, while capacity on EchoStar's satellites appears increasingly constrained. If the Slingbox rebroadcasts any video signal over the Internet, couldn't EchoStar, one day, skip the satellite altogether and pump television programming over the Internet — what's known in the industry as IPTV?

Of course, in IPTV, EchoStar will face competition ranging from AT&T to Microsoft. No small challenge. But Krikorian, the Sling Media founder, has faced unlikely odds in introducing a new, difficult-to-explain piece of hardware, winning critical praise and blog buzz, and now selling his company at a more than healthy price. If he's sincere in staying on at EchoStar, as he told PaidContent, Ergen's company has a chance to transcend its satellite-TV heritage. That seems worth a few hundred million dollars.