AT&T and DirecTV to Tie the Cord
I mean, who isn't mega-merging these days? Comcast and Time Warner Cable, potentially Sprint and T-Mobile—and now AT&T is buying DirecTV for $48.5 billion smackers.
Spring is in the air and so, it seems, are multibillion-dollar mergers. The latest mega-merger to hit the literal airwaves is that of AT&T and satellite television provider DirecTV. The former is reportedly in proceedings to acquire the latter for nearly $50 billion dollars.
Considering cord cutting has recently become a national pastime (personally, I don't own a television—let alone pay for cable—and I know fewer and fewer people who do and are), it's an interesting move on AT&T's part. Why would the telecom want to buy into a seemingly dying—or if not dying, at least stagnant—industry? DirecTV's subscriber base grew less than 1% last year. Netflix's global streaming subscriber base? That went up more than 33% year-over-year in the first quarter of 2013.
One reason is definitely reactionary: The space is converging. Comcast joining with Time Warner Cable is no doubt weighing heavily on the minds of both AT&T and DirecTV execs. A second motivation could be a bid to pump up the user base of AT&T's triple play offering U-verse with exclusive content like the NFL Sunday Ticket, which DirecTV currently holds the sole rights to. Some analysts are going so far as to say that the entire deal could hinge on the NFL access.
But is the deal in the consumer's best interests? Sen. Al Franken (MN—D) for one is skeptical, noting in an open letter that, “We're moving toward an industry with fewer competitors—where corporations are getting bigger and bigger and gaining more and more control over the distribution of information.”
Despite some concerns, the deal apparently has a good chance of getting the FCC's stamp of approval because 1) it'll help bolster a fading sector, and 2) it'll create a viable competitor for whatever Frankenstein's monster Comcast and Time Warner becomes.
AT&T & DirecTV's $48.5B merger is contingent on… NFL Sunday Ticket? Yup. - http://t.co/7iRVFXxA8E— Anil Pammidimukkala (@bestSEObet) May 19, 2014
Key A.M. Question- What add'l benefits does AT&T get from buying DIRECTV that couldn't be obtained thru less costly joint marketing deal?— Ross Lieberman (@ROSSatACA) May 19, 2014
AT&T buying DirecTV for $48.5 billion is mainly about gaining scale in video & acquiring the bargaining power for licensing premium content.— Gezim Berisha (@Gezim718) May 19, 2014
AT&T is Already Making Misleading Promises to Get DirecTV Deal Approved http://t.co/HHq4EQ9Ah2— Reddit News (@RedditComNews) May 19, 2014
Dunno, maybe AT&Tv?
I have always said that content will be key to future profitability and expansion. Comcast/NBC and AT&T/NFL http://t.co/vCD1CJ1yvR— Andrew McSherry (@telcomguyATL) May 19, 2014