Post by The Ultimate Nullifier on May 18, 2014 16:04:31 GMT -6
variety.com/2014/biz/news/att-to-acquire-directv-1201185350/
AT&T has reached an agreement to acquire DirecTV for $95 per share in a deal valued at $67 billion.
The proposed union of the telco giant and the nation’s largest satellite TV provider continues the torrid pace of consolidation in the pay TV marketplace. Traditional players are looking to diversify operations and bulk up against the subscriber erosion fueled by alternatives offered by Netflix and other upstart digital services.
Deal will allow AT&T to vastly expand its footprint in the video biz, while AT&T’s pipeline into the home will help DirecTV overcome its disadvantage of not being able to provide high-speed Internet access to subscribers. DirecTV at present has 20.2 million subscribers in the U.S. and another 18 million in Latin America. AT&T has about 5.7 million subscribers to its U-Verse pay TV platform, which has been faced geographical limitations on the rollout of service.
Sunday’s announcement comes three months after the nation’s largest cable operator, Comcast Corp., set a $45.2 billion deal to swallow up its closest rival, Time Warner Cable. That merger is in the midst of an extensive regulatory review that has drawn fierce fire from opponents. The proposed combo of AT&T and DirecTV will only add fuel to the fire for detractors of consolidation and is sure to heighten political and regulatory scrutiny of both transactions.
In the announcement, in an unabashed olive branch to regulators, AT&T vowed to adhere to the FCC’s net neutrality rules established in 2010, even as the commission is in the midst of overhauling the rules that govern access for business and consumers to the Internet.
AT&T also vowed to invest in new infrastructure to expand the availability of broadband service to 15 million households, mostly in rural areas where it does not currently offer service. And it said it would offer a stand-alone broadband package for consumers who only want to access over the top services like Netlfix and Hulu, at a price guaranteed for three years after the closing of the deal.
AT&T chairman Randall Stephenson called the deal “a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes.”
Stephenson emphasized that the deal was attractive to AT&T because of DirecTV’s reach, its content relationships and fast-growing Latin American footprint. “DirecTV is a great fit with AT&T and together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services,” he said.
DirecTV CEO Mike White said the deal will make the sat-TV provider more competitive in more markets.
“This compelling and complementary combination will bring significant benefits to all consumers, shareholders and DirecTV employees,” said White. “U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace.”
Deal calls for AT&T to acquire DirecTV for a combination of cash and stock that works out to $95 a share, or $28.50 in cash and $65.50 in AT&T stock. That’s a premium to DirecTV’s recent trading race. The satcasters shares closed at $86.18 on Friday, after rising 11% since April 30 when the talks with AT&T were first reported. AT&T stock closed at $36.74 on Friday, up 22 cents. The telco’s shares are up 2.3% since rumors of the deal surfaced.
The union of AT&T with the nation’s largest satellite TV provider is a response to Comcast’s $45 billion bid for Time Warner Cable. That deal, which is pending government review, would produce an entity serving about 30 million U.S. TV subscribers.
Analysts have speculated that AT&T could migrate its 5.7 million U-verse TV subscribers to DirecTV’s satellite-delivered service, freeing up bandwidth in its terrestrial data networks. With 26 million pay-TV subscribers, AT&T would also gain leverage in programming negotiations on par with a merged Comcast-TW Cable.
AT&T’s bid for DirecTV could face higher regulatory hurdles than Comcast-TW Cable as it would effectively eliminate a pay-TV option in about 25% of the U.S. where the phone company sells U-verse in competition with DirecTV. AT&T in 2011 was forced to scrap efforts to buy T-Mobile for $39 billion, after the Department of Justice sued to stop it on antitrust grounds.
For AT&T, the deal comes 16 years after its last effort to break into the traditional pay TV business. In 1998, AT&T paid $48 billion to acquire John Malone’s Tele-Communications Inc., then the biggest U.S. cable operator with 14 million subscribers. In 2000, AT&T acquired MediaOne for $44 billion — outbidding Comcast.
But only three years after buying TCI, AT&T exited stage left. In 2001, it agreed to sell AT&T Broadband to Comcast for $47 billion plus the assumption of $25 billion in debt.
AT&T and DirecTV have been business partners for several years. In 2009, the telco began exclusively selling a co-branded version of DirecTV’s satellite TV service — which it markets in non-U-verse areas — and dropped its previous agreement with Dish.
AT&T has reached an agreement to acquire DirecTV for $95 per share in a deal valued at $67 billion.
The proposed union of the telco giant and the nation’s largest satellite TV provider continues the torrid pace of consolidation in the pay TV marketplace. Traditional players are looking to diversify operations and bulk up against the subscriber erosion fueled by alternatives offered by Netflix and other upstart digital services.
Deal will allow AT&T to vastly expand its footprint in the video biz, while AT&T’s pipeline into the home will help DirecTV overcome its disadvantage of not being able to provide high-speed Internet access to subscribers. DirecTV at present has 20.2 million subscribers in the U.S. and another 18 million in Latin America. AT&T has about 5.7 million subscribers to its U-Verse pay TV platform, which has been faced geographical limitations on the rollout of service.
Sunday’s announcement comes three months after the nation’s largest cable operator, Comcast Corp., set a $45.2 billion deal to swallow up its closest rival, Time Warner Cable. That merger is in the midst of an extensive regulatory review that has drawn fierce fire from opponents. The proposed combo of AT&T and DirecTV will only add fuel to the fire for detractors of consolidation and is sure to heighten political and regulatory scrutiny of both transactions.
In the announcement, in an unabashed olive branch to regulators, AT&T vowed to adhere to the FCC’s net neutrality rules established in 2010, even as the commission is in the midst of overhauling the rules that govern access for business and consumers to the Internet.
AT&T also vowed to invest in new infrastructure to expand the availability of broadband service to 15 million households, mostly in rural areas where it does not currently offer service. And it said it would offer a stand-alone broadband package for consumers who only want to access over the top services like Netlfix and Hulu, at a price guaranteed for three years after the closing of the deal.
AT&T chairman Randall Stephenson called the deal “a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes.”
Stephenson emphasized that the deal was attractive to AT&T because of DirecTV’s reach, its content relationships and fast-growing Latin American footprint. “DirecTV is a great fit with AT&T and together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services,” he said.
DirecTV CEO Mike White said the deal will make the sat-TV provider more competitive in more markets.
“This compelling and complementary combination will bring significant benefits to all consumers, shareholders and DirecTV employees,” said White. “U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace.”
Deal calls for AT&T to acquire DirecTV for a combination of cash and stock that works out to $95 a share, or $28.50 in cash and $65.50 in AT&T stock. That’s a premium to DirecTV’s recent trading race. The satcasters shares closed at $86.18 on Friday, after rising 11% since April 30 when the talks with AT&T were first reported. AT&T stock closed at $36.74 on Friday, up 22 cents. The telco’s shares are up 2.3% since rumors of the deal surfaced.
The union of AT&T with the nation’s largest satellite TV provider is a response to Comcast’s $45 billion bid for Time Warner Cable. That deal, which is pending government review, would produce an entity serving about 30 million U.S. TV subscribers.
Analysts have speculated that AT&T could migrate its 5.7 million U-verse TV subscribers to DirecTV’s satellite-delivered service, freeing up bandwidth in its terrestrial data networks. With 26 million pay-TV subscribers, AT&T would also gain leverage in programming negotiations on par with a merged Comcast-TW Cable.
AT&T’s bid for DirecTV could face higher regulatory hurdles than Comcast-TW Cable as it would effectively eliminate a pay-TV option in about 25% of the U.S. where the phone company sells U-verse in competition with DirecTV. AT&T in 2011 was forced to scrap efforts to buy T-Mobile for $39 billion, after the Department of Justice sued to stop it on antitrust grounds.
For AT&T, the deal comes 16 years after its last effort to break into the traditional pay TV business. In 1998, AT&T paid $48 billion to acquire John Malone’s Tele-Communications Inc., then the biggest U.S. cable operator with 14 million subscribers. In 2000, AT&T acquired MediaOne for $44 billion — outbidding Comcast.
But only three years after buying TCI, AT&T exited stage left. In 2001, it agreed to sell AT&T Broadband to Comcast for $47 billion plus the assumption of $25 billion in debt.
AT&T and DirecTV have been business partners for several years. In 2009, the telco began exclusively selling a co-branded version of DirecTV’s satellite TV service — which it markets in non-U-verse areas — and dropped its previous agreement with Dish.