AT&T/DirecTV Deal Marks Latest in Mega-Merger Bonanza

AT&T/DirecTV Deal Marks Latest in Mega-Merger Bonanza

Wireless giant targets satellite TV leader with $50 billion buyout

In a move described as the latest "telecommunication mega-merger," wireless giant AT&T, the nation's second-largest carrier, has announced its intention to purchase DirectTV, the nation's single largest satellite television provider, for an estimated $50 billion.

According to Time magazine's Sam Gustin:

The proposed $50-billion merger between the two tech titans--which would be the largest telecom deal in years--is not unexpected, but multiple reports indicate a deal is closer than ever, perhaps just weeks away. AT&T and DirecTV are aiming to reshape the TV business at a time of rapid change in the industry. The deal would be another example of the decades-long consolidation of the telecom and cable industries.

The Wall Street Journal, citing unnamed sources familiar with the matter, reports the two companies are discussing a deal that would involve a mix of cash and AT&T stock. Executives hope to hammer out an agreement in the next few weeks. DirecTV shares shot up nearly 6% in early trading Tuesday on the deal talk.

News of the deal follows on the heals of an already pending mega-merger between cable giants Comcast and Time Warner cable which critics have sited as a deal that would further monopolize the communication's industry into fewer and fewer hands.

The New York Timesreports, "People knowledgeable about both deals said that if AT&T and DirecTV announced a merger, it could complicate the review of Comcast's bid for Time Warner Cable because antitrust regulators might want to consider both deals simultaneously."

And Reutersadds:

A combination of AT&T and DirecTV would create a pay television giant close in size to where Comcast will be if it completes its pending acquisition of Time Warner Cable. For that reason, the proposed merger is likely to face a prolonged battle to convince regulators to allow further consolidation in pay-TV.

"This is not the first time that AT&T and DirecTV have danced around the fire and thought if they could give it a go," said ReconAnalytics analyst Roger Entner.

"They both looked at each other for at least 10 years. Both kind of came to the conclusion that it was in the right environment. It makes a lot of sense to get together, but there was never the right regulatory environment for it."

Though it might make "a lot of sense" for the two corporations, it remains much less clear, however if such mergers are a good deal for consumers who have been increasingly marginalized as their cable and service options dwindle in an ever-concentrating marketplace.


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