That AT&T was preparing to make a move on DirecTV was well known, but I actually thought they might not pull the trigger. I thought wrong, as over the weekend the two went public with the latest telecommunications and media mega merger.
Assuming nothing gets in the way, AT&T will be buying DirecTV for $95 per share. Of that $95 per share, $66.50 will be in AT&T stock with the remainder in cash, with the stock portion collared in the case of volatility. All in all the price tag will be about $48.5B, or if you include DirecTV’s net debt it rises to $67.1B.
What they get is a much bigger stake in the world of video and hopefully the clout with which to compete against the likely Comcast/TWC juggernaut. They’ll be bundling DirecTV’s satellite services more deeply with their own offerings, using it to perhaps free up other bandwidth on its UVerse offerings. That said, AT&T is going to have to work hard to convince me that the combination of satellite TV with its current portfolio won’t give it too many reasons to not invest in fiber when it should.
To sweeten the pot for regulators, they threw in promises to commit to the FCC’s 2010 net neutrality protections for three years, to offer standalone broadband for the next three years for those who want to go OTT, and to build out broadband to 15M new customer locations in rural parts of their footprint.
While there will be much hemming and hawing over how we need more competition and fewer mega mergers, I don’t see this one getting permanently derailed any more than I see Comcast/TWC.
I do wonder if the industry is reaching a point where perspective is getting lost behind the drive for size. What you gain in muscle you often lose in agility, no matter how great the powerpoint presentation says you won’t.
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