Wall Street Monday offered a pessimistic outlook for Dish Network, with one analyst projecting that Charlie Ergen’s satellite company will lose 400,000 subscribers next year due to the demise of its reselling deal with AT&T.
The analyst reports were issued in response to the news late Friday that AT&T was switching from Dish Network and picked DirecTV as its sole re-selling partner after Jan. 31 next year.
That leaves Dish Network without a major telco partner to market and sell its satellite offering as part of a bundle of video, voice and Internet services.
Last week, Dish Network had disclosed that it had extended its deal with AT&T through Jan. 31.
In his report Monday, Sanford Bernstein analyst Craig Moffett noted that in the past Dish Network has said that about 15% of its gross subscriber additions were attributable to its deal with AT&T.
“As a result, we now expect Dish Network to post a sizable (-400,000) subscriber loss for full year 2009,” Moffett wrote. “We had previously expected approximately flat net growth. For DirecTV, we now expect a gain of 800,000 where previously we had expected approximately half that.ƒn The loss of this relationship leaves Dish without any major RBOC relationship; their largest telco partner will now be Embarq.”
Moffett said that wasn’t the only negative repercussion from the news that AT&T had picked DirecTV as its reselling partner.
“The announcement also likely puts to rest any remaining prospect of an acquisitionby AT&T,” Moffett wrote. “Adding insult to injury, Liberty Media Chairman John Malone said Friday at Liberty’s analyst day that a merger between the DirecTV and Dish isn't feasible either, and is off the table. Dish Network faces going it alone…alone.”
Thomas Eagan, an analyst for Collins Stewart, in his report also revised his estimates for Dish Network, projecting that it will add 12,000 subscribers in 2009 instead of his prior figure of 218,000.
Eagan raised his estimated for DirecTV, projecting a gain of 915,000 subscribers next year, up 167,000 from his original 748,000 estimate.
“More strategically, this new agreement puts DirecTV in the enviable position of being the satellite TV player AT&T may consider acquiring should their U-Verse TV service not meet expectations next year,” Eagan wrote.
JRPG Investment Research analyst Gerard Hallaren also did a report on the impact of the new AT&T-DirecTV deal, which he said will: cause subscriber additions to fall dramatically for Dish Network; subscriber acquisition costs to likely climb for Dish; and churn likely to increase for Dish.
Dish Network is ending a difficult year. The satellite provider in the second quarter saw its first subscriber loss ever, of 25,000 customers.