Reprieve a Negative For Dish

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Collins Stewart media analyst Tom Eagan didn’t see Dish Network’s announcement last week that it received a one-month reprieve in its AT&T co-marketing deal as a good thing. Instead, the longtime cable and satellite watcher believes the additional month is merely prolonging the inevitable.

AT&T said in June that it was terminating its 2003 deal to co-market the Dish Network service at the end of the year. At the time AT&T said that it would either strike a new deal with Dish or with its chief satellite rival, DirecTV Group. On Sept. 23, Dish said in a Securities and Exchange Commission filing that the AT&T deal, set to expire on Dec., 31, would instead be extended to Jan. 31. The company gave no explanation as to why.

In a research note, Eagan guessed that one or more of three reasons prompted the extension — Dish wanted more time to show a fourth-quarter improvement over what many analysts (including Eagan) believe will be disappointing third-quarter subscriber growth; AT&T wanted to wait until after Liberty Entertainment (which will include Liberty Media’s controlling stake in DirecTV) transformed from a tracking stock to an asset-based stock; or AT&T just needed more time to decide.

If Dish loses the AT&T deal, Eagan estimates, its 2009 gross subscriber additions could decline by more than 400,000 customers, or about 15%.