Satellite : Street Eyes AT&T/DIRECTV Deal

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Wall Street reacted to news that AT&T is going with DIRECTV as its DBS partner, leaving DISH Network out of the telco's sales and marketing mix after Jan. 31, 2009.

AT&T announced late Friday its plan to switch from DISH to DIRECTV for its exclusive satellite TV sales and marketing efforts. The news had financial analysts scrambling to revise subscriber forecasts for the two DBS companies.

Tom Eagan of Collins Stewart raised his 2009 subscriber net adds estimate for DIRECTV from 748,000 to 915,000. As for the other small dish platform, the analyst said he expects DISH will add just 12,000 net adds next year, down from a previous estimate of 218,000 net adds.

Eagan said the AT&T/DIRECTV agreement "puts DIRECTV in the enviable position of being the satellite TV player AT&T may consider acquiring should its U-Verse TV service does not meet expectations next year."

Craig Moffett of Bernstein Research called the AT&T/DIRECTV announcement "a clear negative for DISH Network." The analyst said he expects DISH to post a sizable subscriber loss (up to 400,000 customers) for full year 2009. Moffett had previously expected flat net growth for the No. 2 small dish service.

Moffett said he expects DIRECTV to gain 800,000 customers next year, a doubling of previous expectations.

Bernstein lowered its price target for DISH shares to $23 and jumped its price target for DIRECTV shares to $36.