Satellite

AT&T Might Be Calling Malone

12/29/2006 7:00 PM Eastern

Four days before John Malone’s Liberty Media sealed a deal to buy DirecTV Group — but with that outcome in mind — UBS Investment Research’s Aryeh Bourkoff opined in a note that AT&T might try to “deepen” its ties to satellite TV next year.

And Bourkoff thinks DirecTV is AT&T’s most logical dance partner.

That’s counter to investor sentiment favoring a hookup between AT&T and Charlie Ergen’s Dish Network, a sentiment that’s bolstered Dish parent EchoStar Communications’ stock. AT&T (broadband) and Dish (TV) services are bundled together in a product called HomeZone, which affords natural ties.

But in his Dec. 18 note, Bourkoff said DirecTV has more satellite-TV customers in the combined territories of AT&T and BellSouth (which AT&T is buying) than Dish has.

DirecTV has a stronger brand than EchoStar, higher average revenue per subscriber and the National Football League’s “NFL Sunday Ticket” out-of-market pay-per-view package.

Why would AT&T possibly buy a stake in DirecTV?

Because the U-Verse TV IPTV video service is taking too long to roll out, and might not have enough bandwidth to be competitive with cable in the long run anyway, in Bourkoff’s opinion.

Bourkoff said Liberty CEO Greg Maffei indicated Liberty could sell part of its DirecTV stake, “which we believe could set up potential entry for AT&T into the company.”

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