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DISH tumbles after AT&T picks DirecTV

Shares in DISH Network Corp fell more than 14 percent on Monday after phone company AT&T Inc said it would end a marketing agreement with the satellite company next year in favor of a pact with DISH's rival DIRECTV Group.
/ Source: Reuters

Shares in DISH Network Corp fell more than 14 percent on Monday after phone company AT&T Inc said it would end a marketing agreement with the satellite company next year in favor of a pact with DISH's rival DIRECTV Group.

AT&T said on Friday that after its five-year contract with DISH ends on Jan 31, DirecTV would take over a multiyear partnership to jointly sell video services alongside AT&T's fixed line phone, wireless phone and high speed Internet.

DirecTV will be the video partner in regions that AT&T's new advanced video service, U-verse, does not reach.

Analysts said the long-expected decision by AT&T leaves DISH in a difficult position versus DirecTV and other cable competitors.

Craig Moffett, analyst at Sanford Bernstein said AT&T's decision means that around 400,000 subscribers who otherwise would have opted for DISH as part of the bundled service will end up with DirecTV instead.

"The announcement also likely puts to rest any remaining prospect of an acquisition by AT&T," said Moffett in a note to clients.

"Adding insult to injury, Liberty Media Chairman John Malone said Friday at Liberty's analyst day that a merger between the DirecTV and DISH isn't feasible either, and is off the table," Moffett wrote.

Moffett said DISH's future is now almost certainly as an independent company after years of speculation that it may merge or be bought.

Shares in DISH fell by $3.49 to $21.06 while DirecTV rose by 27 cents to $26.82 in early trading on the Nasdaq.