Echostar (DISH) take big chance on new technology

Major League Baseball has called the technology illegal. The NFL uses it to reach new viewers. Whichever position attorneys take, Echostar (NASDAQ: DISH) bought Slingbox for $380 million, according to Reuters. The company allows consumers to take signals from their TVs and move them to other devices like PCs. It is called "place-shifting TV."

The SlingBox connects to the back of a TV and streams the signal over the internet, where it can be watched on some mobile devices and almost all computers. Slingbox can pull in over-the-air TV, cable, satellite, and DVD content.

Why buy that company? Echostar and its rival DirecTV (NYSE: DTV) are under pressure from cable companies and the new fiber-to-the-home video products being offered by AT&T (NYSE: T) and Verizon (NYSE: VZ). Satellite's big disadvantage is that it does not work two-way like the rest of the technologies. So, it can't offer phone and broadband services. It is, in essence, a one-legged chair.

But, having the capacity to move home video to a device many miles away may appeal to consumers. An Echostar customer will now be able to watch a favorite TV show in a hotel room in LA while it runs on his home TV in New York.

It is the kind of edge the satellite TV companies need.

Douglas A. McIntyre is a partner at 24/7 Wall St.