DirecTV Wins AT&T Sweepstakes
5:30 PM -- AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV) made their long expected resale partnership official last Friday. The new agreement kicks in after the Jan. 31, 2009, expiration of AT&T’s resale relationship with
Dish Network LLC (Nasdaq: DISH). The deal gives DirecTV a virtual coup with the remaining “baby bells,” having notched resale agreements with AT&T,
Verizon Communications Inc. (NYSE: VZ), and
Qwest Communications International Inc. (NYSE: Q) (you can throw
Cincinnati Bell Inc. (NYSE: CBB) in for good measure). DirecTV now has a massive lead over Dish, relative to telco resale opportunities.
Dish has resale relationships with the next four largest telcos in the U.S. -- Embarq Corp. (NYSE: EQ), Windstream Communications Inc. (Nasdaq: WIN), Frontier Communications Corp. (NYSE: FTR), and CenturyLink Inc. (NYSE: CTL). Based on just access line counts, Dish’s resale opportunities pale in comparison to DirecTV’s. Collectively, DirecTV’s telco partners have 130 million (give or take a few million, depending on who’s counting) access lines, compared to Dish’s partners, who collectively represent approximately 14 million. But we can’t just look at traditional access lines as an opportunity metric -- DirecTV partners also have more than 140 million (and growing) wireless customer relationships to exploit. Dish’s partners have zero wireless relationships (I’m not counting wireless resale relationships).
It adds up to an ugly telco partnership picture for Dish, and with pretty bad timing. They haven’t exactly been tearing up on the performance front lately, having registered their first actual loss in subscriber count last quarter. Does this scenario put them into play from an acquisition stand point? Maybe, but beyond the largest telcos, who would have an interest in buying them? Maybe Embarq, provided they have the financial horsepower to pull it off. Is Dish the video strategy that Embarq is busily looking to define? Reckless speculation on my part, but Dish seems to be in a real pickle. Dwindling resale opportunities, no triple play strategy of their own, and falling subscriber counts. It’s a recipe for something dramatic.
— Bernardin Arnason, Managing Partner, Pivot Group , and Chairman, TelcoTV 2008
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