Analyst scratches head over potential AT&T / EchoStar deal
By Darren Murph 
posted Dec 6th 2007 12:52AM
posted Dec 6th 2007 12:52AM
No sooner than chatter began flying over a potential AT&T / EchoStar deal, Sanford C. Bernstein & Co. is wondering who actually thought (or still thinks) that this is a match made in heaven. According to media analyst Craig Moffett, "the very notion of an AT&T / EchoStar combination is based on a flawed premise; i.e. that AT&T needs video in order to compete with cable." He went on to say that AT&T is losing phone lines to cable because cable simply "has a marginal cost advantage," and noted that pairing up the two "does nothing to address AT&T's underlying cost problem." Stepping back, we actually see quite a bit of logic in Mr. Moffett's reasoning, and when you mix in the fact that AT&T's U-Verse could pose "a strategic threat to EchoStar," one really wonders how effective a partnership would be.
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If they do it, it means that AT&T is punting on U-verse.
AT&T is losing telephone lines because of Voice over IP and the increase in mobile telephony communications. Of course, for any ILEC the revenue from land lines is a cash cow because it is a matured system deployed and paid for long ago. Why anyone would consider buying Echostar is beyond me.
I worked at DirecTV when they acquired Primestar and resulted in a world of issues. If AT&T does merge with/acquire Echostar, AT&T will meet several quarters of unexpected, ballooning costs.
Didn't buying Cablevision kill the old AT&T?