DISH And AT&T Done; Agreement Terminates At End Of The Year

As anticipated, AT&T (NYSE: T) will not renew its resale agreement with DISH at the end of the year, according to a regulatory filing made by the satellite operator this evening. In a terse statement, it says that the agreement, originally established in 2003, will end Dec. 31, 2008. The prospect of this move was heightened last month when AT&T demanded immediate payment on a DISH convertible note, signaling AT&T’s diminished interest in a long-term relationship. The winner: Most likely DirecTV (NYSE: DTV). AT&T already had a reseller agreement with it, and now it can re-establish that. Shares of DISH are down almost 3 percent after hours.

Update: Sanford Bernstein senior analyst Craig Moffett: “AT&T has indicated that the termination is “procedural” in nature. A six-month notice of termination was required under the contract in order to reopen renegotiations between DISH and AT&T, and presumably, DirecTV and AT&T as well. Nevertheless, today’s announcement is not good news for DISH and dramatically increases the risk that the AT&T relationship now shifts to DTV. The potential loss of AT&T as a distributor comes just weeks after AT&T exercised a put option ending their prior financial interest in DISH, and is therefore not entirely a surprise. Nevertheless, the news strikes a heavy blow to DISH Network, which is already suffering from a steep decline in net additions.”

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