EchoStar (DISH) play, a move into mobile video

Sirius XM (NASDAQ: SIRI) was showing early versions of mobile video for cars five years ago at the Consumer Electronics show. With it heavy debt load and questions about how large the market might be, the satellite radio company never took the step of offering it as a product.

The promise of mobile video may be behind that willingness of EchoStar (NASDAQ:DISH) to buy tens of million if not hundreds of millions of dollars of Sirius debt. The move could get EchoStar control of the satellite radio company. According to Reuters, "EchoStar chief Charlie Ergen's surprising interest in Sirius XM Radio Inc belies his ambition to liberate his satellite television service from the living room into cars and mobile devices."

EchoStar is taking a very big risk. First, it is putting money into the debt of a company which has never had an operating profit and which is experiencing slowing growth. Satellite radio is being hurt by competition from other consumer electronic products like multimedia phones.New car sales, it primary source of new subscribers, are falling sharply.

The second risk is that pushing video over the Sirius infrastructure may not work. The bandwidth from the satellite to the cars is very limited, closer to dial-up speeds than broadband, Sirius may not be able to "compress" the video files enough to get them though its system. In other words, the technology may not exist to put video on a system which was designed for audio transmission.

Other than the fact that it may not work, EchoStar's potential plans are brilliant.

Douglas A. McIntyre is an editor at 24/7 Wall St.