AT&T's EchoStar Pursuit Cools

AT&T's (T Quote) hot pursuit of EchoStar (DISH Quote) cooled suddenly last week as investors took a chilly view of the deal, but the talks continue.

The phone giant's board of directors grew concerned last week over the stock market's reaction to reports that the company was closing in on a bid between $64 and $68 a share for EchoStar, says a source familiar with AT&T's plans.

AT&T shares fell $1.80, or 4%, last Monday after TheStreet.com reported that the company was nearing a $29.5 billion deal for EchoStar. Since the discussions were first reported on Sept. 27, AT&T shares have fallen 12%.

But the deal isn't dead, say people close to both companies.

"Conversations are still going on," says another source familiar with the EchoStar side of the discussions. And the two sides are still talking of a price somewhere in the $60 range, the source adds.

AT&T had hoped to wrap up the deal with the Dish network broadcaster last week, but the phone company's board eased up a bit given the lack of investor enthusiasm. As one source said: "AT&T is digesting it."

Representatives for AT&T and EchoStar said the companies had no comment.

"From what I understand, it is still happening, just not as fast as expected," says another source who has talked to people close to the discussions.