Hoping to boost its disappointing pay TV operations, phone giant AT&T is stepping up its courtship of satellite TV provider EchoStar, according to Wall Street insiders.
CitiGroup analyst Jason Bazinet handicapped the possible buy-out this week in a published report, stating that there is now a 65 percent chance that AT&T will consummate the EchoStar deal within a year.
subsequently reported that AT&T hired investment banker Goldman Sachs to orchestrate the deal, which Bazinet currently values at $65 per share. The story caused EchoStar stocks to surge up $2.04, or 4.2 percent, to $51.08 per share at the close of trading on Oct. 17.
"The deal would make sense for both companies," noted TV industry analyst Phillip Swann. In a report posted on his TVPredictions.com Web site, Swann said the deal could come at the right time, "with AT&T struggling with its TV service called U-verse and EchoStar facing competition from companies with deeper pockets such as DIRECTV."
EchoStar's Dish Network satellite TV service added 480,000 subscribers during the first six months of 2007, raising its total subscriptions to 13.6 million. So far, AT&T has only managed to attract about 100,000 subscribers to its U-verse pay-TV service.
The likelihood of AT&T buying EchoStar is not without its critics. In its Deal Journal blog, the Wall Street Journal stated, "we don’t expect AT&T will be pulling the trigger on a purchase of the $23 billion satellite TV company any time soon." The article went on to state that The Street's report of Goldman Sachs having been hired by AT&T to explore the deal "looks dubious."
quote: Why would it be? DISH competes with DirecTV, cable companies, and OTA stations....none of which are owned by AT&T. This acquisition doesn't reduce the level of competition in the least.