One of the nation’s leading telecommunications companies could try to acquire EchoStar or DirecTV this year, according to a recent analyst note.
“Investors are increasingly contemplating a telco-DBS (direct broadcast satellite) merger,” wrote Citigroup analyst Jason B. Bazinet after a company conference this month in Las Vegas. “Most investors believe AT&T is more likely the acquirer.”
He offered four possible scenarios for the industry over the next 12 months: a merger between EchoStar and DirecTV; a telecom acquisition of EchoStar; a telecom acquisition of DirecTV; or no activity at all.
DirecTV has 15.3 million satellite TV subscribers, compared with 13 million for EchoStar.
Bazinet said AT&T would most likely be the company acquiring DirecTV or EchoStar. AT&T partners with EchoStar and resells its Dish Network service. BellSouth, which has been acquired by AT&T, resells DirecTV service.
Although he viewed the possibility of a telecom acquisition of El Segundo, Calif.- based DirecTV as “fairly low,” such a move would have a negative impact on EchoStar and Liberty Capital, Bazinet said.
Liberty Capital is the investment arm of Liberty Media Corp., which last month gained 38 percent of DirecTV in a stock-for-asset swap with News Corp. That deal is expected to close this year.
Both Liberty and EchoStar are based in Douglas County.
“If a telco acquires DirecTV, it would require the current DirecTV/News Corp./Liberty Capital transaction to unwind,” said the note. “This would put pressure on Liberty (Capital) because we believe investors have already begun to reflect some of the value that Liberty Capital captured in the recently announced … transaction.”
Such a move would also have a negative effect on EchoStar, reducing the additional value that has “leaked into Echo Star’s shares” because of merger speculation, Bazinet wrote.
One analyst disagreed with Bazinet’s speculation, stating that telecommunications companies such as AT&T and Verizon are too focused and financially invested in their efforts to roll out a television offering – Internet protocol TV – to make acquiring a satellite company a priority this year.
“I just don’t see it. The telcos are not going to know if IPTV has failed,” said Jimmy Schaeffler, senior multichannel analyst for The Carmel Group. “That’s a three- to five-year decision, not a 12-month one. You don’t dilute IPTV efforts this early in the game.”
Staff writer Kimberly S. Johnson can be reached at 303-954-1088 or kjohnson@denverpost.com.
