AT&T Continues to Explore Possibility of EchoStar Acquisition

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AT&T Continues to Explore Possibility of EchoStar Acquisition

5:00 am on January 9, 2006 | Category: Business, Wireless Technology, Television, Corporate

Exploratory talks of a merger between AT&T and satellite TV provider, EchoStar Communications (DISH) may be a sign of a change of strategy for EchoStar CEO and majority shareholder, Charles Ergen.

In the past, Ergen has refused to consider any merger proposals, but with EchoStar shares shooting up 9% on rumors of the possible acquisition, Ergen appears willing to rethink his position. His ability to negotiate, however, will likely be what makes or breaks this deal.

Rupert Murdoch of News Corp already approached EchoStar for a possible purchase agreement, but Eugen’s unwillingness to sell at a reasonable price prevented the deal from going ahead. And his position now is a lot less favorable, with the satellite television industry facing increased competition from fiber-optic networks, and internet TV services.

So far, these latest merger talks have made little or no progress, due to the lack of agreement on a price that is acceptable to both parties.

While gutsy, Ergen’s insistence to keep EchoStar independent for all these years has resulted in the company facing a steady financial decline. If Ergen refuses to bargain at this point, he could be putting the entire company in a dangerous position, so it is in his best interests to make a success out of these negotiations while he still can.