http://biz.yahoo.com/rb/060306/telecoms_bellsouth_satellite.html?.v=1
They said DirecTV, which has a multiyear marketing partnership with BellSouth, is likely to lose that contract because AT&T is expected to choose its existing partner Echostar as its single satellite ally.
Satellite companies are locked in a dogfight for market share with cable companies. DirecTV and EchoStar forged partnerships with phone companies to sell high-speed Internet services, because satellite companies don't have the capacity to offer such services economically.
Without a high-speed Internet offering, satellite is at a disadvantage to cable companies, which can offer video, Internet and phone service in a single bundle of services.
"Although (DirecTV) extended their partnership with BellSouth for five years, it is the case that both parties can get out with a change in control," said Tom Eagan, an analyst from Oppenheimer & Co. He added that he expects BellSouth to opt out after the merger deal closes within a year or so.
A spokesman for DirecTV said it was too early to comment on the impact of the AT&T deal, saying the company had a strong relationship with BellSouth and its other telecommunications partners. Echostar declined to comment.
DirecTV's shares fell as much as 2.3 percent, or 36 cents, in Monday trade before paring losses to close down 1.8 percent to $15.48. EchoStar's shares rose as much as 2.5 percent, or 73 cents, but finished just three cents higher at $29.13.
AT&T said on Sunday it would acquire BellSouth for stock worth nearly $65 billion, aiming to expand into the southeastern United States as it battles growing competition from cable television and Internet companies.
There had been speculation in January that AT&T would buy EchoStar, which had helped to push up Echostar's stock by nearly 10 percent at the start of the year.
"It is likely to be EchoStar that's the (sole) satellite partner as it's AT&T who are pushing this deal," said Craig Moffett analyst Bernstein & Co.
"The most immediate reaction will be from speculative investors in EchoStar speculating on an acquisition of EchoStar by AT&T," said Moffett who added such a move is unlikely now in the short term.
Analysts said the future of EchoStar's marketing relationship with AT&T is likely to be safe in the short to medium term, even as the phone company builds out its own IPTV (Internet protocol television) network.
The reach of the IPTV network and its customers are going to be relatively low compared to the entire AT&T network of customers, analysts said.
According to Leichtman Research Group, DirecTV holds 55 percent of the U.S. satellite television market, or 15.1 million homes. while EchoStar has 45 percent or 11.9 million.
Of the total number of homes with satellite TV, around 1.5 million are from relationships between the satellite companies and the main telecoms companies: AT&T, Verizon Inc. (NYSE:VZ - News), BellSouth, Qwest Communications (NYSE:Q - News) and Sprint Nextel (NYSE:S - News).
Direct TV and EchoStar are in discussions to create a wireless high-speed network, a partnership that analysts said will not be affected by the AT&T-BellSouth merger.
They said DirecTV, which has a multiyear marketing partnership with BellSouth, is likely to lose that contract because AT&T is expected to choose its existing partner Echostar as its single satellite ally.
Satellite companies are locked in a dogfight for market share with cable companies. DirecTV and EchoStar forged partnerships with phone companies to sell high-speed Internet services, because satellite companies don't have the capacity to offer such services economically.
Without a high-speed Internet offering, satellite is at a disadvantage to cable companies, which can offer video, Internet and phone service in a single bundle of services.
"Although (DirecTV) extended their partnership with BellSouth for five years, it is the case that both parties can get out with a change in control," said Tom Eagan, an analyst from Oppenheimer & Co. He added that he expects BellSouth to opt out after the merger deal closes within a year or so.
A spokesman for DirecTV said it was too early to comment on the impact of the AT&T deal, saying the company had a strong relationship with BellSouth and its other telecommunications partners. Echostar declined to comment.
DirecTV's shares fell as much as 2.3 percent, or 36 cents, in Monday trade before paring losses to close down 1.8 percent to $15.48. EchoStar's shares rose as much as 2.5 percent, or 73 cents, but finished just three cents higher at $29.13.
AT&T said on Sunday it would acquire BellSouth for stock worth nearly $65 billion, aiming to expand into the southeastern United States as it battles growing competition from cable television and Internet companies.
There had been speculation in January that AT&T would buy EchoStar, which had helped to push up Echostar's stock by nearly 10 percent at the start of the year.
"It is likely to be EchoStar that's the (sole) satellite partner as it's AT&T who are pushing this deal," said Craig Moffett analyst Bernstein & Co.
"The most immediate reaction will be from speculative investors in EchoStar speculating on an acquisition of EchoStar by AT&T," said Moffett who added such a move is unlikely now in the short term.
Analysts said the future of EchoStar's marketing relationship with AT&T is likely to be safe in the short to medium term, even as the phone company builds out its own IPTV (Internet protocol television) network.
The reach of the IPTV network and its customers are going to be relatively low compared to the entire AT&T network of customers, analysts said.
According to Leichtman Research Group, DirecTV holds 55 percent of the U.S. satellite television market, or 15.1 million homes. while EchoStar has 45 percent or 11.9 million.
Of the total number of homes with satellite TV, around 1.5 million are from relationships between the satellite companies and the main telecoms companies: AT&T, Verizon Inc. (NYSE:VZ - News), BellSouth, Qwest Communications (NYSE:Q - News) and Sprint Nextel (NYSE:S - News).
Direct TV and EchoStar are in discussions to create a wireless high-speed network, a partnership that analysts said will not be affected by the AT&T-BellSouth merger.
