Telecommunications giant AT&T may be looking at DirecTV in addition to EchoStar as it sizes up whether it wants to acquire a satellite-television provider, according to a news report.
AT&T has consulted lawyers in Washington, D.C., about how long it would take to get government approval “to purchase either EchoStar … or DirecTV,” according to a report in the Wall Street Journal on Wednesday.
The news sent shares of Douglas County-based EchoStar up 3.4 percent, or $1.64, Wednesday to $49.99. EchoStar, which operates Dish Network, is the country’s second-largest satellite-TV company.
Douglas County-based Liberty Media Corp. is in the process of taking control of DirecTV, the nation’s largest satellite provider, from News Corp. DirecTV is based in El Segundo, Calif.
Although none of the parties would comment on whether AT&T was negotiating with them, one industry expert said such rumors generally last a few days. The EchoStar-AT&T speculation has lasted several weeks.
“I’ve never seen a rumor have this kind of legs,” said J. Armand Musey, a former Wall Street satellite analyst. “It’s interesting that (EchoStar) isn’t outright saying it isn’t true.”
He said while a deal with EchoStar would make more sense and be easier to complete than one with DirecTV, it’s likely that AT&T would talk to both companies.
“It could be seen as a negative that Liberty owns 38 percent of DirecTV,” said Janco Partners equity- research analyst April Horace.
EchoStar has strong ties to AT&T, as the phone company bundles and resells EchoStar’s Dish Network service. It also used EchoStar technology to offer its Homezone video-on- demand service.
Competition is getting stiffer for telecommunications companies looking to break into the pay-TV market and for satellite companies that don’t offer high-speed Internet access, Musey said.
AT&T has rolled out its U-Verse video service in select markets but may be looking for a player that’s already ensconced in millions of homes.
“Look at how long it took EchoStar to build up to almost 14 million customers – 10 years,” Musey said. “A telco doesn’t have that long.”
Rumors that AT&T would seek to acquire EchoStar have intensified since late September, when EchoStar said it would like to split the company into two separate entities – Dish and a technology business.
That move is an effort to realize more value from the technology division, which develops, designs and manufactures set-top boxes and digital video recorders.
Kimberly S. Johnson: 303-954-1088 or kjohnson@denverpost.com
