AT&T will exclusively sell DIRECTV services alongside its own U-verse TV offering when its current agreement with Dish Network expires, extended by a month to the end of January 2009. AT&T previously had marketing agreements with both Dish and DIRECTV. It looks like bad news for Dish Network, which recently announced its first ever net subscriber loss and relies on AT&T for 15% of its new customers.

The partnership is as important for the satellite operators as it is for AT&T as they jointly compete with cable operators to provide bundled video, voice and data services.

DIRECTV has a similar agreement with Verizon, which markets the satellite service in areas where its FiOS TV offering is currently not available.

AT&T is slowly rolling out its own U-verse video and high-speed broadband service, which still has only around half a million subscribers, but in the meantime needs to offer a satellite package to compete with cable.

“Our focus is on providing customers with a better TV experience than cable,” said Jeff Weber, AT&T vice president for video and entertainment. “AT&T | DIRECTV complements our premier AT&T U-verse TV service and gives customers another great choice for state-of-the-art, 100 percent digital programming.”

AT&T said existing AT&T Dish Network customers will be unaffected and it would not be offering any discount or incentive for them to switch to DIRECTV. The company did not give any reason for dropping Dish.

DIRECTV is now half owned by Liberty Media. Chairman John Malone rejects speculation that the company could merge with Dish. Speaking to investors he said: “I don’t think it is worth either company’s energy or effort to approach the regulatory agencies with that proposal”. However he suggested that the two companies could share resources in the future.