Dish Network drops after AT&T says deal to end

Dish shares fell $2.20, or 7.6 percent, to $26.91. The stock has traded between $25.72 and $42.78 during the past 52 weeks.

In a Securities and Exchange Commission filing late Tuesday, Dish said the agreement will conclude at the end of the year. The agreement dates back to 2003.

In a note to investors Wednesday, Lehman Brothers analyst Vijay Jayant said that AT&T's notice of termination does not necessarily mean that the company has not selected Dish as its satellite partner going forward. He said AT&T is "just protecting its option to switch, if it wants to, without a major delay."

The analyst, who said Dish remains the likely partner, maintained his "Overweight" rating on the stock.

If the partnership ends, Jayant expects Dish's new customer sign-ups to decline and its churn, or customer cancellations, to increase.

Sanford Bernstein analyst Craig E. Moffett said in a note to investors the agreement with AT&T likely contributes as much as 15 percent of Dish's gross customer additions. He called the announcement a "heavy blow" to Dish.

Citi analyst Jason B. Bazinet said he expects AT&T to negotiate with both Dish and rival DirecTV Group Inc. "in good faith" and said it is "still too early to count Dish out of the running." He maintained a "Buy" rating on Dish shares.

Kaufman Bros. analyst Todd Mitchell was less optimistic about Dish's chances. "Dish has likely lost AT&T for good, but it is not over until it's over," he said.

"If Dish loses AT&T, we think it is a safe bet that DirecTV gets it, effectively shutting Dish out of all but the small rural telcos," Mitchell said.