Charlie Ergen’s EchoStar Communications, the No. 2 satellite TV provider, has boosted its media-to-go strategy by acquiring Sling Media for $380 million and set the stage for the spin-off of a new company containing its technology assets.
The acquisition of Sling Media, maker of the SlingBox, which funnels content from a user’s home TV content to any Internet-connected PC or mobile device, provided exits for venture capital and private equity firms that had plowed $57.1 million into the company in two rounds since 2004.
The Sling Media acquisition, announced late Monday, and the spin-off plan, announced early Tuesday, position EchoStar’s chief executive, Mr. Ergen, to create a deal-making vehicle in technology assets much as John Malone has done with media assets through Liberty Media.
“I always thought that Charlie Ergen wanted to do what John Malone has done and do deals,” said Thomas Watts, an analyst at Cowen and Company. “Malone sold his cable company and created Liberty Media. I expect Charlie to do the same.”
Liberty Media owns a large chunk of DirecTV, obtained in an asset swap with Rupert Murdoch’s News Corp., as well as the Atlanta Braves through a deal with Time Warner. Other assets include the Starz movie channel and the QVC home-shopping channel.
Sling Media fits a vision of anywhere, anytime media already embraced by EchoStar, which offers subscribers a 30 GB PocketDish. The device, whose specifications EchoStar compares to Apple’s iPod, which lets subscribers record TV shows or transfer photos or music to the handheld device.
“In the future, there will be two types of media: things you want to do live, like the Superbowl, and the rest, which will be time and space shifted,” Mr. Watts said.
EchoStar has asked the Internal Revenue Service to judge whether the stock spin-off would be tax free. Assets in the new company would include its set-top box design and manufacturing business, satellite services, and spectrum licenses not considered core to Dish Network.
Though Dish had a 9 percent year-over-year increase in subscribers for its quarter ended June 30 to 13.6 million, the company will be facing even more intense competition in the coming months. Along with traditional rivals like No. 1 satellite provider DirecTV and the cable companies, telco giants such as AT&T and Verizon Communications are rolling out so-called triple play packages of voice, Internet, and TV services based on Internet Protocol. Satellite companies have yet to match the triple-play offerings except through marketing alliances with the telcos.
EchoStar was among the slate of investors in Sling Media’s $46.6 million series B round in January 2006. Other investors in the Boulder, Colorado, company include Mobius Venture Capital, Hearst Media Corporation, Allen & Company, Goldman Sachs, Liberty Media and DCM, an investor in Red Herring.