DirecTV to Be Sold for $49 Billion to AT&T

DirecTV

DirecTV will soon be sold to AT&T for $49 billion. DirecTV is the number one satellite operator in the US. AT&T seeks to gear their business beyond the competitive mobile market. At a $95 per share offer, AT&T will also include cash and a premium of 10 percent above the May 16 closing $86.18 price after a unanimous decision by the board of both DirecTV and AT&T. The news of the sale comes on the heels of the Comcast/Time Warner $45 billion bid which will become one of the most powerful cable and Internet companies to date.

DirecTV could be considered the world leader in digital TV entertainment services. The company provides digital television service to more than 20 million customers in the U.S.A and over 15 million customers in Latin America.

So how will the number two largest satellite company, Dish Network, respond to the news? The Dish Network has 14 million subscribers and has toyed with the idea of wireless business, making a bid for Sprint in 2013. The company does not have the cash to counter bid DirecTV’s offer. Dish made a bid for DirecTV in 2001, but the transaction was turned down by regulators.

Web-based television services are on the rise. The biggest names in web TV distributors are Netflix, YouTube, Blip.tv and Crackle, to name a few. Netflix was the first web-based TV distributor nominated at the Emmy’s for ‘Original Web Series’; House of Cards, Hemlock Grove and Arrested Development. Some AT&T investors are questioning the acquisition when satellite TV subscriptions are waning while web television is gaining in popularity. The demand for web television could make satellite TV slow down even more over the next few years.

AT&T claims the $49 billion deal for DirecTV will greatly benefit the company despite the fading interest in satellite TV subscriptions. AT&T executives project the broadband customer growth will increase by 15 million in four years, in mostly rural communities. The company will offer wireless and broadband bundles and deliver content in a variety of ways such as; mobile devices, TVs, laptops, cars and planes. AT&T feels DirecTV is a stronger competitive alternative to cable TV and is committed to offering their customers quality service as well as state of the art innovation.

DirecTV has premier content – the majority being in programming for live sports. The satellite TV company has exclusive rights to NFL Sunday Ticket, a program that airs professional football on all viewing devices including; TV, mobile devices, and laptops. DirecTV holds a stake in a variety of programming such as; ROOT SPORTS Networks, the Game Show Network, the Sundance Channel, MLB Network, and the NHL Network.

The sale of DirecTV to AT&T for a mere $49 billion could be a hit or miss for the company, but leading up to the announcement DirecTV experienced a 25 percent gain in stock prices due to the AT&T takeover rumors. The satellite company sought advice on the deal from Bank of America Merrill Lynch Goldman, Sachs while Weil, Gotshal & Manges, Wiltshire & Grannis LLP and Jones Day acted as legal advisers. AT&T was advised by their in-house Mergers and Assets team with the help from the asset management from the Lazard group. DirecTV is legally obligated to pay out $1.4 billion ‘kill’ fee to AT&T if the company goes with a better bid.

By Christina Thompson

Sources:

Gizmodo.com
FreeNewsPos.com
CNN

 

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