As Echostar Corp. improves its financial performance – the company netted $5.7 million during the last quarter compared to a net loss of $18.5 million a year ago – it is also beginning to talk about possible plans for spectrum it recently acquired in the 700 MHz auction and just how its subsidiary Sling Media Inc. might come into play.
Echostar was split in two late last year to wrap its satellite TV service into one company, Dish Network Corp., and left its remaining fixed-satellite services, set-top box business and Sling Media under Echostar. To make matters more confusing, the auction bidding was done by Frontier, a Dish subsidiary, and now Dish is spearheading recent moves in the mobile space.
Charlie Ergen, who heads both companies, talked about the opportunities Sling Media presents as a mobile technology alongside its nearly nationwide swath of spectrum.
ROI is the challenge
While Ergen is confident the company has been successful putting together the building blocks it needs to form a successful strategy over the past two or three years, he reminded investors that making money can still prove elusive, even with everything seemingly in place.
Ergen harkened back to broadband Internet services and how satellite companies like his invested heavily in that area only to write it off because the service never piqued customer interest.
“We couldn’t figure out how we would make money even though we had willing partners and technology and building blocks,” Ergen said in a conference call after the company reported financial results from the first quarter.
“So we’ve made some mistakes along the way. It remains to be seen whether 700 MHz or Sling or anything . that we’re doing, we can piece together to make money at, but we think the odds are in our favor.”
After plunking down $380 million last fall to acquire Sling Media, the company paid nearly $712 million for 168 licenses of 6 megahertz of unpaired spectrum in channel 56 throughout most of the country. Dish’s license holdings cover 76% of the U.S. population.
Centered on Sling
The Sling place-shifting technology reminds him of the early days of DVR, when Echostar and others initially found it difficult to explain the technology to consumers. “It is a core fundamental building block that I think people are going to want in their video experience because they are going to want to be able to take their video with them,” Ergen said. “There are a lot of things we can do in terms integrating the chipset in to chipsets to go into anybody’s set box, whether it be a cable company or satellite company or phone company.”
Calling Sling Media a “core technology for portability and mobility of video,” Ergen said “it is a building block for the future and its going to take a little bit of time to integrate it, but that is a focus.”
Adding the 700 MHz component is an interesting concept for the company, particularly in light of Dish’s recent deal with Alcatel-Lucent to test DVB-SH mobile broadcast technology as a viable option in a trial at a lab in Atlanta. The technology being used in the trial is a variant of DVB-H that relies on satellite delivery, yet it’s largely unproven (only satellite radio can be pointed to as a similar commercially launched service) for mobile TV services.
“The conjunctions make for an interesting potential play,” Ergen said.
“The key is how would you develop that technology in a way that would be easy for consumers and something that people would want to more robustly deploy,” he added. “Anybody who’s got a broadband connection at their video sources is a potential customer. So I think there is a lot of development for technologies that can be more widely deployed.”
