Light Reading
Boards of both companies approved AT&T's offer to buy DirecTV for about $95 a share Sunday, a deal that would make AT&T the largest pay TV provider on the planet.

AT&T to Acquire DirecTV for $48.5B

Alan Breznick
5/18/2014
50%
50%

Spurred to act by Comcast's pending acquisition of Time Warner Cable, AT&T plans to buy satellite TV leader DirecTV for about $48.5 billon.

The deal between AT&T Inc. (NYSE: T) and DirecTV Group Inc. (NYSE: DTV), first reported two weeks ago by the Wall Street Journal and announced publicly by the two companies late Sunday afternoon, would transform the landscape for video, broadband, cable, telecom, and wireless services in the Americas. That would be particularly true in the US, where the union of the nation's largest telco and satellite TV provider would produce a monolith with nearly 26 million video and 17 million broadband subscribers, as well as 16 million residential phone lines and close to 100 million wireless customers. (See Broadnet Gets 400G-Ready With Huawei and AT&T Eyeing a Bid for DirecTV?)

The combination would also create a far more powerful rival to Comcast Corp. (Nasdaq: CMCSA, CMCSK), which is pursuing its own visions of grandeur by buying Time Warner Cable Inc. (NYSE: TWC) for more than $45 billion. The new Comcast would wind up with about 29 million video, 28 million broadband, and 13 million wireline voice subscribers, assuming that the deal is approved by federal regulators and it follows through on its planned divestitures to and system swaps with Charter Communications Inc. .

Further, AT&T doesn't plan to stop there. In the merger announcement by the two companies, AT&T said it will "expand its plans to build and enhance high-speed broadband service to 15 million customer locations" over the next four years. The new commitment would be above and beyond the company's existing fiber and Project VIP initiatives.

The carrier said it also intends to pursue more wireless spectrum in the upcoming federal auctions this year and next. It stressed that it aims to "bid at least $9 billion in connection with the 2015 incentive auction," as long as there's sufficient spectrum available to provide it "a viable path to at least a 2x10 MHz nationwide spectrum footprint."

Clearly seeking to appease federal regulators who must approve the blockbuster deal, AT&T pledged that it will offer "standalone wireline broadband speeds of at least 6 Mbit/s (where feasible)" in areas where it already offers broadband at "guaranteed prices for three years after closing." In addition, the carrier vowed to maintain its commitment to the Federal Communications Commission (FCC) 's net neutrality policies for three years after closing the deal, even if the Commission fails to re-impose those rules. Moreover, AT&T said it will keep up DirecTV's nationwide package pricing for at least three more years.

If both AT&T and Comcast succeed in completing their proposed acquisitions, the US broadband, telecom, and pay TV landscape would be dominated by two huge national or virtually national companies -- the new AT&T and the new Comcast. Between them, the two giants would easily control more than half of the pay TV and broadband markets, as well as nearly half of the wireline voice market and a sizable chunk of the wireless market.

On its own, the combined AT&T-DirecTV would also maintain DirecTV's status as the largest pay TV provider in Latin America, with more than 18 million satellite TV subscribers in Mexico, Argentina, Brazil, and elsewhere.

Like the Comcast-Time Warner Cable deal, the AT&T-DirecTV pact will be subject to stiff regulatory scrutiny by both the Antitrust Division of the U.S. Department of Justice and the FCC. Both federal agencies are already gearing up to scrutinize the proposed Comcast-TWC union, making for an extremely busy summer and fall.

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

(12)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
DHagar
50%
50%
DHagar,
User Rank: Light Sabre
5/19/2014 | 9:11:56 PM
Re: Why Does This Make Sense
@danielcawrey, It is my understanding that it will include that - which will make their package highly competitive.

It is also my understanding that they have written into the deal the option to withdraw from the offer if DirecTV does not get the NFL renewal contract (which is rumored to be having a hefty rate increase).
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
5/19/2014 | 6:28:29 PM
Re: Why does this make sense?
desi,

My point is this.  For all times t from the start of recorded history until now, Good Content gets paid.  Good Content Never Pays.  JK Rowling gets paid to write books.  Metallica gets paid to put out albums.  The NFL gets paid to televise games.  See how this goes?

Disney will NEVER pay for a fast lane to deliver any content.  Just remember Comcast is already paying Disney a BOATLOAD of money to put in a special fast lane to deliver its content via its pay TV service.  Anybody who thinks Disney is going to pay to do OTT is patently insane.  That is why this fast lane thing matters not in the least.

Note: Netflix outside of House of Cards and Arrested Development is not a content owner but an aggregator.

As to the deal, remember U-verse in its current implementation requires 2500' loop lengths.  Outside of urban/suburban areas this is just not going to be possible (1 VRAD per farm in Kansas).  Not only does AT&T get all the video stuff, it gets to remove broadcast video from the requirement of a rural DSL upgrade.  Right now in those properties AT&T had been deploying ATM based ADSL (in fact they had us turn off ADSL2+ on the DSLAMs so that the line would train in ADSL).  They have wanted to move to IP DSL but probably want to offer a ubiquitous triple play as a way to get a switch done.  Now they can.

seven
desiEngineer
50%
50%
desiEngineer,
User Rank: Light Beer
5/19/2014 | 5:44:17 PM
Re: Why does this make sense?
seven,

I think it means holding on to a subscriber is worth the expense (pays for delivery and the cost of a win-back).  Good content is one way.  NFL Sunday Ticket is to ATT what Barclay's Premier League is to BT (I would have said NBC except they don't really know what they're doing).

-desi
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
5/19/2014 | 5:08:42 PM
Re: Why does this make sense?
It's Comcast versus AT&T in the United States for cable. 

I find it strange that AT&T would buy DirecTV, a satellite company. But there are only so many corporate marriages that can be done when you get to the size of AT&T. We'll see how this shakes out over time.

Does it mean that the NFL Sunday Ticket Package will be available to all AT&T subscribers? That could be a windfall of revenue. 
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
5/19/2014 | 4:46:38 PM
Re: Why does this make sense?
I had read that the buy would add about 20 million new U.S. customers which make the price about $2000 per satellite customer. That should easly pay off over about three years, the time AT&T says subcription prices will remain steady for the new customers. Expect a healthy profit and continuing revenue for AT&T if the deal goes through.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
5/19/2014 | 3:24:05 PM
Re: Why does this make sense?
Phil,

Isn't it interesting that people on these boards think that good content is going to pay for delivery given your note here?

seven

 
Atlantis-dude
50%
50%
Atlantis-dude,
User Rank: Light Sabre
5/19/2014 | 1:45:55 PM
Uverse v/s Direct
TV content. How will it be split ?
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
5/19/2014 | 12:13:11 PM
Re: Why does this make sense?
Dan,

 

FYI, they just discussed on CNBC that AT&T could pull out if DirecTV doesn't get a renewal of the NFL Sunday Ticket deal. This could mean a bidding war for that content.
DOShea
50%
50%
DOShea,
User Rank: Blogger
5/19/2014 | 11:32:27 AM
Re: Why does this make sense?
I don't think it explains the whole deal, but agree that NFL Sunday Ticket and perhaps other DirecTV content are important gamepieces in this deal.

Overall and strategically, I don't completely get it either. AT&T has been rumored for about six or seven years to have desire for a satellite acquisition, so maybe Ma Bell just couldn't put this one out of her mind.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
5/19/2014 | 9:20:59 AM
Re: Why does this make sense?
A big key to this could be NFL Sunday Ticket. This give AT&T some valuable content which is likely to become more important than ever in light of the planned Comcast-Time Warner deal. 

It would likely also help AT&T in non-rural areas where U-verse has only limited availability. For example, I have a daughter who lives in Springfield, Ill. U-verse is not available in her subdivision, though it is available a few blocks away.
Page 1 / 2   >   >>
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
The New Wave of IP + Optical Integration

11|21|14   |   04:29   |   (7) comments


At the Alcatel-Lucent Technology Symposium, Heavy Reading senior analyst Sterling Perrin talks about how SDN has reshaped the discussion around packet and optical integration.
LRTV Huawei Video Resource Center
Huawei Highlights at BBWF 2014

11|20|14   |   3:40   |   (1) comment


Broadband World Forum is one of the world's largest telecoms, media and technology events with over 7,800 senior executives from across the globe converging on Amsterdam every year to identify the Next Big Thing. BBWF is an exciting place to meet the entire industry under one roof and identify the latest in network innovation, service optimization and customer ...
LRTV Huawei Video Resource Center
How Will BCMS Stimulate Margin for Broadband Operators?

11|19|14   |   6:52   |   (0) comments


In BBWF 2014, Liu Shuqing emphasizes the value of FMC 2.0 based full service experience by throwing light on the BCMS solution. The underlying principle of this innovative technique is to create network robustness and driving network from connection oriented to ACE – BAND oriented infrastructure, in which applications, cloud, and user experiences will be an asset ...
LRTV Huawei Video Resource Center
SingleFAN3.0: Better Connected Experience

11|19|14   |   3:06   |   (1) comment


At the BBWF 2014, David Hu, the VP of Huawei Access Network Product Line, talked about the future of access networks – SingleFAN3.0: faster broadband, wider coverage, and smarter connection.
LRTV Interviews
Basil Alwan Interview: The Road to Cloud

11|19|14   |   09:09   |   (0) comments


Alcatel-Lucent's head of IP and Transport talks about the migration towards a web-like networking environment, the impact of the cloud, SDN and NFV, and the yet-to-be-announced FP4 chip.
LRTV Documentaries
FairPoint Makes a Fair Point About Analytics

11|19|14   |   1:56   |   (1) comment


The US-based communication service provider gets to grips with advanced analytics, tackling data and breaking down the silos within its own business.
LRTV Documentaries
Analytics Lets C Spire Get to Know Subs

11|19|14   |   3:01   |   (2) comments


It's all about the data for US operator C Spire as it uses analytics to personalize its customer service down to individual subscribers.
LRTV Interviews
Nuage Branches Out With SDN: CEO Interview

11|17|14   |   9:32   |   (0) comments


Sunil Khandekar, CEO of Alcatel-Lucent's SDN-focused unit Nuage Networks, talks about the opportunities and challenges of breaking out of the data center into wide-area networks.
Light Reedy
Telecom Analytics Grows Up

11|14|14   |   1:15   |   (4) comments


The big data analytics debate has moved on from a year ago, with some experts suggesting it's no longer a technology challenge.
LRTV Huawei Video Resource Center
Huawei Compass

11|14|14   |   3:17   |   (1) comment


At OpenStack Summit 2014, Shuo Yang, Huawei Principal Cloud Infrastructure Architect introduced Huawei Compass, the software tool for solving customers' problems on the journey of OpenStack Cloud.
LRTV Huawei Video Resource Center
Huawei's Cloud Strategy in European Region

11|14|14   |   2:56   |   (1) comment


At OpenStack Summit 2014, Dr. Gotz, CTO of Huawei IT in European Region introduced Huawei's cloud strategy in European region.
LRTV Huawei Video Resource Center
Huawei's Contribution on OpenStack

11|14|14   |   5:58   |   (0) comments


At OpenStack Summit 2014, Dennis Gu, Huawei Chief Architect of Cloud Computing introduced the relationship between OpenStack and cloud computing, and Huawei's contribution on OpenStack.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 12, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
Bell Labs Chief Slams 'Toy' Networks
Robert Clark, 11/19/2014
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
The New Wave of IP + Optical Integration
Ray Le Maistre, Editor-in-chief, 11/21/2014
Google, AT&T, BT Unite on Network Data Models
Carol Wilson, Editor-at-large, 11/20/2014
Like Us on Facebook
Twitter Feed