Dish: AT&T wants its money!
Posted
Jun 18 2008, 12:47 PM
by
Kim Peterson
A big setback for DISH Network has sent shares down 7% today. And while some analysts caution not to read too much into it, I say that DISH has plenty to be worried about.
AT&T is forcing DISH to pay back $500 million in debt that was supposed to be due in July of 2010. DISH says it has the money to do so, and won't have to take out a loan. AT&T played down the move, telling the Wall Street Journal that the money "could be put to better use." But this is also a clear message that AT&T has no interest in acquiring DISH. AT&T shares fell less than 1% today.
Rumors of a merger have been around for a while. AT&T partnered exclusively with DISH earlier this year, but is thinking of switching to DirecTV, which has more momentum these days because of its high-definition channels. A Lehman Brothers analyst told the Journal that AT&T simply made a financial decision, but Bernstein analyst Craig Moffett sees the writing on the wall.
"DISH Network is doubly the loser here," he said. The merger rumors are drying up, he said, and DISH could lose AT&T as a partner altogether.
DirecTV must be scrambling to woo AT&T now. It already has exclusives with Verizon and Qwest, and a trifecta with AT&T would leave DISH with just the smaller telcos. But keep in mind that AT&T is also quickly expanding U-Verse, its own Internet-based television service.
Silicon Alley Insider suggests a sinister strategy is at play: AT&T could be pushing DISH shares down to make an acquisition cheaper. Mwa-ha-ha-hah!!
DISH shares have been tumbling this month, going from $35.28 on June 2 to below $31 today.
Related reading:
Has DISH lost its mojo?
Tough day for EchoStar
AT&T goes after Comcast with digital TV service
DirecTV weeds out customers
DirecTV finally offering video-on-demand
