• by Fern Siegel , September 30, 2008

AT&T will now sell DirecTV as a co-branded satellite TV service after Jan. 31, 2009.

Terms of the non-equity agreement were not disclosed. AT&T | DirecTV will be enveloped into the AT&T Advanced TV video portfolio, joining AT&T U, once the company's satellite agreement with Dish expires. However, Dish customers will continue to receive the same service.

Analysts say that Dish's failure to move aggressively into HD programming, coupled with a greater focus on the market's lower end, contributed to AT&T severing ties, according to a Wall Street Journal story.

"Our focus is on providing customers with a better TV experience than cable," said Jeff Weber, AT&T vice president-video and entertainment, in a statement. He calls the alliance "another great choice for state-of-the-art, 100% digital programming."

DirecTV customers will also get a discount if they choose to bundle their wireless, home phone and broadband services with AT&T. "The real winners of this agreement will be our joint customers who will enjoy a singular, high-quality experience," added Paul Guyardo, DirecTV chief sales and marketing officer.

Currently, DirecTV has partnerships with Verizon and Qwest Communications International. AT&T will provide DirecTV's service in an additional 22 states.