Despite rumors, AT&T not talking to EchoStar now
NEW YORK -- The reality? AT&T isn't even talking to EchoStar now and has no interest in trying to broker a deal anytime soon, according to people familiar with the situation. The sources declined to be identified by name or affiliation because they are not authorized to speak publicly on behalf of the companies.
They say AT&T has talked to EchoStar in recent months about the possibility of buying the company, but the discussions did not go far. Earlier this month, EchoStar reported disappointing financial results, causing its stock price to drop 20%. Thanks to the AT&T rumor, a lot of that loss was made up this week.
AT&T spokesman Larry Solomon declined to comment. EchoStar spokeswoman Kathie Gonzalez also declined to comment.
Under federal rules, a publicly traded company can deny a false merger rumor, but once it does so, it is obliged to keep issuing updates on the status of its merger activities. That is a primary reason companies rarely comment on deal rumors — they want to preserve their right to enter into secret negotiations later, should they decide to do so.
Media analyst Tim Horan of CIBC, for one, thinks an AT&T-EchoStar deal is unlikely. "Regulatory approval would be very difficult to receive, and it may already be too late to consummate prior to next year's election," he said in a note to investors.
AT&T's current strategy of building an advanced video network (called U-verse) and reselling satellite TV services in areas where U-verse isn't available "is already working well," Horan added.
AT&T has deals with both DirecTV and EchoStar's Dish Network to resell their services in parts of its sprawling territory.
Horan said the biggest argument against an EchoStar deal, by far, is the hefty price. Rumors this week had AT&T paying $29 billion for EchoStar, or $65 a share. That's a 55% premium over the current $42 price of EchoStar shares.
