AT&T to drop Dish

Dish Network saw its stock take a dive yesterday after AT&T decided to stop marketing Dish programming services. The long-running deal will end December 31st.

The marketing deal began back when what’s now AT&T was still called SBC, one of the regional bell companies. It marketed the Dish Network satellite TV service in packages with its local telephone and Internet service – later adding long distance to packages as well after merging with AT&T and adopting that historic name.

Some Wall Street analysts think the move by AT&T doesn’t necessarily mean it won’t sell Dish Network in the future. Rather, there’s speculation that AT&T issued the termination notice to Dish so it would be free to negotiate with DirecTV. So, it could be back selling one or the other in packages with its phone and Internet offerings next year.

Should DirecTV pick up the affiliation, though, it would shut Dish out of the big telcos and leave only smaller, rural phone companies as marketing partners. Lehman Brothers analyst Vijay Jayant told clients that if Dish doesn’t hold onto AT&T in the end, he expects its new customer sign-up to decline and churn to increase.

RBR/TVBR observation: There had long been speculation, if not hope, among Wall Street speculators that AT&T would buy Dish Network as a way to jump into the video delivery business without having to spend so much on a fiber build-out, where AT&T has been less aggressive than rival Verizon. But those hopes were dashed last month when a subsidiary of AT&T required Dish to buy back a half billion in notes. That was step one in the breakup. This completes it.

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