AT&T Counters Comcast With DirecTV

May 19th, 2014 by · 3 Comments

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.

directvAssuming 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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Categories: ILECs, PTTs · Mergers and Acquisitions · satellite

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3 Comments So Far


  • mhammett says:

    *sigh*

    Now I have no video offering. If only IPTV wasn’t so expensive and such a PITA. DirecTV is as good as dead to me and Charlie isn’t getting my money nor am I going to earn money for him.

  • andrew says:

    Freeing bandwidth on Uverse? You think AT&T will move away from IPTV in favor of a dish in established markets? That customers will accept a dish being installed on their house?

    This is about getting clout against content producers that would increasingly stick smaller distributors (AT&T Uverse TV segment ~5M vs combined ~25 subs) with larger programming cost increases or otherwise dictate terms. Directv’s victory over the Weather Channel shows the power of more subscribers in those battles.

    And not letting Directv fall into the hands of another competitor.

  • Anonymous says:

    DOJ will actually have a dog in the hunt this time. Unlike CMCSA/TWC, this deal actually has monopoly implications and actually does reduce consumer choice.

    (In addition to monopsony implications similar to CMCSA/TWC, that is.)

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