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AT&T Partners with DirecTV: Bad News for EchoStar

by: Julia Boorstin September 29, 2008 | about stocks: DISH / DTV / T    

Julia Boorstin

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There are three types of companies battling to own the pipeline of content to your TV: the cable giants, satellite TV operators, and most recently, telecom players AT&T (T) and Verizon (VZ) have been building out their own television options, U-Verse, and FIOS, respectively.

But now AT&T and DirecTV (DTV) are teaming up in a deal that will give DirecTV, the largest satellite provider, even more of an advantage over its rival, EchoStar (DISH). Starting in February, AT&T will market and sell DirecTV's service as part of the telecom company's "Advanced TV" service. AT&T has been marketing Echostar'sDish Network service, but that contract expires Jan 31.

This is good news for DirecTV, and bad news for already suffering Dish Network, which last month reported the first quarterly decline in customers ever for a satellite TV provider, the company reporting a 25,000 drop in subscribers. DirecTV has a higher income customer base and is distinguished by a slew of high definition TV channels.

DirecTV is also offering exclusive content, like NBC's (GE) "Friday Night Lights," before it premieres on regular TV. Dish on the other hand has the lower-income customers who traded up (say when they bought new houses with highly leveraged mortgages). Now, with consumer spending pulling back, a subscription to Dish TV doesn't seem so crucial.

So why is AT&T selling a TV service if it has one of its own? AT&T's U-Verse TV is delivered over the Internet, and is rolling out very slowly; aiming for 1 million customers by the end of the year. Since the service is available to such a small sliver of the population, AT&T is using DirecTV as a stopgap, expanding its TV offerings and TV revenue while it expands its own service.

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This article has 4 comments:

  •  
    Sep 30 10:20 PM
    mark deaton and supermax trader is a fraud
    Reply
  •  
    Oct 01 02:14 PM
    FYI, U-Verse is not delivered over the Internet; it's delivered via IP over AT&T's "Lightspeed" network. So...another reason for this deal is that U-Verse will likely never be available outside of AT&T's local footprint (22 states).
    Reply
  •  
    Oct 02 01:46 AM
    AT&T had made a lot a bad decisions lately, that is disaster with the cellular business (I know they calculating their losses on the Singular buy), dummy response to U-verse, and everyday struggle with the VOIP companies. I am sure that Echostar had rejected AT&T proposals and they turned to more weak DirectTV. But, my, would you expect any sale with AT&T.
    Watch AT&T stock spiraling down
    Reply
  •  
    Oct 16 11:38 PM
    Look at Charter Communications (CHTR), now it worth less than a first class stamp. 38 cents.
    CHTR charges too much for their services. Internet service is OK but phone service break down very often. I may switch to VZ soon.
    Reply
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