The 24% decline in the shares of EchoStar Communications Corp. over the last month has reinvigorated AT&T Inc.'s reported interest — or at least the media's speculation — in buying the satellite TV company. The latest purveyor of the rumor is Barron's, which is reporting AT&T is trying to put together a bid for EchoStar before the end of the year, but the story indicates the two can't come to terms on price. AT&T reportedly offered $65 a share, but EchoStar is asking for $75 a share.

While AT&T has previously said it does not not need to own satellite assets, rumors of a possible satellite deal have propelled shares of EchoStar and chief rival DirecTV Group Inc. higher much of the year.

The rumors are prompted by AT&T's lack of a strong TV service to answer cablers Comcast Corp., Time Warner Cable Inc. and the rest of the industry, which are stealing phone service customers. Even its chief rival Verizon Communications Inc. has rolled out a TV service called FiOS, which recently reported over a million subscribers.

AT&T does have a terrestrial-based TV service similar to FiOS called Uverse, but it has a tiny fraction of the subscriber base of Verizon's service. Although EchoStar may be the smaller of the two satellite TV services, its 12 million subscribers would far exceed Verizon's. However, the cost of acquiring EchoStar doesn't make sense when compared to Verizon's fiber optic push. Assuming AT&T agrees to pay EchoStar's $75 a share asking price, then it would pay $33.5 billion. However, that's far more than the estimated $18 billion or more Verizon is expected to invest in FiOS. While on a per-subscriber basis the EchoStar deal still looks better than Verizon's FiOS investment, in reality it may not be because EchoStar only offers TV service whereas FiOS also provides Verizon an Internet access business that is considerably faster than both cable and traditional DSL. In other words, FiOS has the possibility of offering more bundled services on one network — like cable — rather than cobbling together a so-called triple play via satellite and DSL.

AT&T’s interest in TV goes back years. The "new" AT&T’s predecessor SBC Communications made an unsuccessful bid for DirecTV in 2003 and forged a partnership with EchoStar in 2004. Even the "old" AT&T had a brush with TV service when it acquired John Malone's TCI. It later sold the cable business to Comcast. An EchoStar buyout sounds like an "old" AT&T move, and we all know how well those deals turned out. — Matthew Wurtzel

See story from Barron's Tech Trader Daily blog
See story from TheStreet
See related Nov. 19 story from The Deal newsweekly: Malone's playbook
See Dealscape Oct. 24 entry: AT&T keeping up with the Joneses
See Dealscape Oct. 24 entry: AT&T seeks guidance for a satellite deal
See Dealscape Oct. 18 entry: AT&T covets DirecTV?
See Dealscape Oct. 16 entry: AT&T may have EchoStar in its future?
See related July 2003 story from The Deal: Bells ease into satellite business
See related Feb. 2003 story from The Deal: SBC vies with Murdoch for prize
See related July 2001 story from The Deal: Comcast bids $58B for AT&T Broadband
See related May 2000 Postmortem from The Deal: Ma Bell's big gamble