Light Reading

AT&T Closing on DirecTV?

Alan Breznick
5/13/2014
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Determined not to be dwarfed by the prospective union of Comcast and Time Warner Cable, AT&T appears close to buying satellite TV king DirecTV for about $50 billion, according to a Bloomberg report.

Bloomberg cites people familiar with the matter who say that AT&T Inc. (NYSE: T) is now in advanced talks with DirecTV Group Inc. (NYSE: DTV) about the deal. Under the plan being discussed, Bloomberg says, DirecTV management would continue to run the satellite service as a unit of AT&T. In addition, current DirecTV CEO Mike White would retire after 2015.

If the deal is actually sealed, it would create a huge phone/satellite/broadband monolith in the Americas, particularly in the US. In the pay-TV market alone, the new company would have more than 43 million video subscribers, including about 26 million in the US and the rest in Central and South America.

AT&T would also be scooping DirecTV out of the clutches of number two satellite TV player Dish Network LLC (Nasdaq: DISH), which has long craved to merge with DirecTV. Dish Chairman and Co-Founder Charlie Ergen has had his eye on DirecTV for years. (See Dish CEO: DirecTV Merger Possible.)

Of course, any deal struck by the two companies would be subject to big-time regulatory scrutiny by both the Antitrust Division of the U.S. Department of Justice and Federal Communications Commission (FCC) , which are already gearing up to consider the proposed acquisition of Time Warner Cable Inc. (NYSE: TWC) by Comcast Corp. (Nasdaq: CMCSA, CMCSK).

DirecTV's stock was buoyed by the M&A chatter, surging $5.29 (or about 6%) to $92.45 in after-hours trading on Monday evening. AT&T's share price dipped 6 cents to $36.51.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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sam masud
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sam masud,
User Rank: Light Sabre
5/14/2014 | 2:48:23 PM
Stop it
Russian is not particularly popular right now, but some government agency needs to say a loud "Nyet." I cannot imagine on what grounds such a deal could be justified, other than it would give AT&T even greater market cloud. Of course, the same goes for Comcast-TWC.
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
5/13/2014 | 2:23:25 PM
How is free over the air TV doing?
Pay TV seems to be consolidating and growing... And it makes me wonder what the digital transition did to OTA TV? I know my rabbit ears stopped working they way they used to... And my OTA options seem a lot worse, but is OTA TV dying or...?
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
5/13/2014 | 2:16:06 PM
Consolidation
Lots of consolidation in cable. Doesn't look good for competition. 
VernonDozier
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VernonDozier,
User Rank: Lightning
5/13/2014 | 1:16:48 PM
Re: Deal benefits?

For some reason, customers are willing to pay an AT&T premium for the same service; and it's a mystery of the ages.  No one really knows why.

But since Dallas-bassed Baby Bell, SBC, took over, AT&T is an interesting company.  AT&T changes the logo, lays off the good employees, that provide value to the services, Then AT&T promotes its own union rank-and-file into the company it acquired.

There was a chart that said AT&T UVerse actually costs less than AT&T DSL.  So my guess is that AT&T's marketing team hasn't done a good enough job letting people know about the 250GB cap it has every month.  This is about 5 UHDTV shows per month.

AT&T is just too big, so to create opportunities for promotions, for its workforce, and also grow its union membership, it has to acquire non-union companies, push the company's employees out, raise rates for an ad blitz.  Then, it'll be ready to acquire another company in 3 or 4 years. 

In most industries, technology increases efficiency and lowers rates.  However, AT&T isn't a telecom company.  AT&T Laboratories, based in Silicon Valley, is actually in the R&D business of inventing fees that outpace the technology and inflation.   Fact:  Your AT&T bill will never decrease, and you'll never get the same quantity and quality of service.

Why does this matter?  Well, if you were thinking of getting DirecTV, you may want to get it soon before AT&T jacks up the rate. As for DirecTV's 10-years of highest customer satisfaction... Well, judging from the past, those awards will go to another company next year.

After all, this is AT&T.

For over 100 years, AT&T's been in the business of lowering quality standards for all customers, making ads, and sponsoring sports teams, golf tournaments.

If I had $1.00 each time AT&T or a subsidary company that AT&T owns hired an ad agency to change its image, logo, or marketing tagline, I could personally purchase DirecTV.

$50,000,000,000.00?  Not a problem for AT&T.  They probably found this loose change between the Couch Cushions of the AT&T marketing department in Dallas.  It's the couch next to the three-story GOLD STATUE.  (Fact:  "Golden Boy" actually exists; look it up). 

That statue really helps AT&T's service quality.
KBode
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KBode,
User Rank: Light Sabre
5/13/2014 | 11:34:31 AM
Deal benefits?
I'm really trying to understand the  benefits of the deal. AT&T's spent a ton on IP video delivery in U-Verse markets, so tacking on satellite TV to U-Verse seems counter-intuitive. They're backing away from DSL in tens of millions of rural DSL markets where bundling satellite with slower DSL makes the most sense. That leaves shelling out this kind of cash primarily to eliminate a pay TV competitor. What other benefits does this deal actually provide AT&T outside of competition elimination and keeping the stock jocks happy?
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