AT&T-EchoStar Talks Heat Up

Updated from 10:53 a.m.

AT&T's (T Quote) long-running discussions with EchoStar (DISH Quote) seem to be heating up.

The most recent talks have AT&T offering $55 a share with EchoStar hoping to hold out for $65 a share, say people familiar with the companies. Sensing a deal in the works, Oppenheimer analyst Tom Eagan raised his rating on the Dish satellite broadcaster to a buy, speculating in a research note Thursday that AT&T would likely pay about $56 a share for the TV service.

AT&T didn't comment, and EchoStar declined to comment.

On Tuesday, EchoStar said it would pay $380 million for TV-over-the-Internet device maker Slingbox and possibly split the company into two publicly traded units. One operation would be the consumer TV service that AT&T is interested in, and the second would be EchoStar's wholesale satellite transmission service.

The Slingbox device would be part of the consumer service and could be a key offering down the road as new radio wave spectrum becomes available to so-called open standard devices, says one person familiar with the companies.

The move would also help AT&T bolster its disappointing video effort. Project Lightspeed, a fiber optic network expansion plan to deliver a triple play of TV, Net and phone service under the U-verse brand, has been plagued by technology glitches including slow channel changing speeds. AT&T says its channel-changing speed is "fast" and "gets high marks" from users.

AT&T has partnered with EchoStar to offer satellite TV as part of a product bundle to battle cable companies that compete with triple play offerings of their own.

Dish shares rose 56 cents to $44.03 and AT&T was up 6 cents to $42.89 in early trading Thursday.

To watch Scott Moritz's video take of this column, click here.