AT&T has informed satellite TV provider DISH Network that it will end the companies' bundling partnership at the end of this year, opening the way for a new companywide satellite deal with DISH or DirecTV starting in 2009.
In the first quarter, AT&T announced it would exclusively resell DISH satellite TV services through the end of 2008, including in the nine states served by BellSouth, which AT&T acquired last year and which had a deal with DirecTV, the nation's largest satellite provider.
DirecTV already has exclusive bundling deals with Verizon and Qwest.
DirecTV has about 16 million households, and DISH has nearly 14 million.
DISH disclosed in a regulatory filing Tuesday with the Securities and Exchange Commission that it received a notice of termination from AT&T on June 30 that ends the deal that began in 2003.
DISH referred queries to AT&T, where spokeswoman Jenny Parker told Multichannel.com, "We continue to discuss options with DISH," adding that "we don't comment on specifics about our business-to-business relationships, but we are evaluating our options."
DirecTV spokeswoman Jade Ekstedt wrote in an e-mail that "this news is between DISH and AT&T, but as we have said in the past, we are still negotiating with AT&T," Multichannel.com reported.
AT&T offers bundles that include satellite TV with its phone and Internet service, although it has begun offering its own U-verse TV service in some areas, including portions of the Milwaukee, Racine, Green Bay and Fox Valley areas in Wisconsin. It has not said when it will launch U-verse in the Madison area but is expected to be within the next several months.
Analysts have said bundling with a satellite provider is important for AT&T until it can roll U-verse out in all of its markets.
Sanford Bernstein senior analyst Craig Moffett, in a June 17 note to investors, said that AT&T exercising its rights could be "the final nail in the coffin of merger speculation" regarding AT&T and DISH, Multichannel.com reported.