AT&T is divorcing DISH Network, and has found a new girlfriend in DIRECTV. That news, announced late yesterday spells big trouble for DISH Network, as they are losing their largest resale partner.
The new deal between AT&T and DIRECTV will not start until February 2009, as AT&T is still bound as a DISH Network partner until then. AT&T announced earlier this year that they would be dropping DISH Network at the end of the year, but that was mainly a negotiating tactic in order to strike the best possible deal with one of the satellite TV players.
AT&T had been partnering with DISH Network since 2003, selling the satellite service to its own customers across the country. AT&T has hedged its bets over the past few years, rolling out its own pay television service, U-Verse in many markets. While the service has begun to gain traction in many areas, the cost to AT&T has been high. AT&T has stated it expects to have 1 million U-Verse customers by the end of 2009. The time and labor involved in deploying the service also plays a factor in AT&T continuing to market a satellite service.
The news will no doubt fuel speculation about the future of DISH Network. Struggling with churn issues due to a slowing economy, DISH Network seemed to be getting back on the right track by expanding their HD channel suite including their 100% hi-def packages called Turbo HD. While the company at one time was rumored to be a takeover target of AT&T, rumors of any sort of deal have been iced by the new DIRECTV-AT&T deal. Frequent rumors of a DISH Network-DIRECTV deal have also been in the news, but the current regulatory environment would not likely approve such a deal. Is there another player in the market who would be interested in DISH Network? If so, they would likely be able to negotiate a much better deal now considering the obstacles facing DISH Network.
For DIRECTV, the good news just keeps coming. On the heels of their dramatic HD expansion last year and their one-of-a-kind premium sports packages like NFL Sunday Ticket, the new AT&T deal will push DIRECTV into even more homes. DIRECTV already has resale agreements in place with the other two major telecom carriers, Verizon and Qwest. With the addition of AT&T, every customer served by AT&T, Verizon or Qwest who is looking for a video service will have the option of getting a DIRECTV deal with their phone and/or internet service carrier.
