Why Does AT&T Want to Buy DirecTV?

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May 12 (Bloomberg) -- AT&T is in advanced talks to acquire DirecTV, the largest U.S. satellite-TV provider, for about $100 per share, according to people familiar with the matter. Alex Sherman and Cory Johnson report on Bloomberg Television's "Taking Stock." (Source: Bloomberg)


We know these companies have been talking for a few weeks.

At&t is interested in expanding their business and buying direct tv, operating direct tv as a unit of at&t which would be run by direct tv management.

In the long-term, it would not be the current ceo which could -- who would retire in 2015. he has been operating with a long -- without a long-term contract.

The fact that he would leave is not a surprise that we are getting specific details.

Up about $100 a share, valuing directv at about $50 billion in equity value.

What is interesting about that prices that direct tv has shot up in recent weeks about the speculation that this could be happening.

These rumors have been around for a while.

We even wrote a story back in 2010 talking to at&t ceo who said there is industrial logic and buying direct tv.

The price tag he has to pay today than the price tag yet to pay them 20 point -- he would have to pay in 2010. more people want faster internet.

Why at&t, why directv?

They are facing this slowdown in customer growth.

Dish has lost several prescribers -- subscribers.

They have seen the growth rate, off nearly a million a year to hundreds of thousands a year.

That is a big deal, directv has had more success in latin america.

It is this effort of consolidation.

It also suggests that the justice department and the sec seem to be more pro-merger that may have been in the fast, and maybe it is the time to get a deal done.

On the regulatory environment, obviously at&t tried to buy t-mobile, and that did not buyout -- did not work out.

Why does at&t think he can get this deal done now?

It is much different in that they are not taking out a competitor.

At&t -- i guess they are taking out a competitor in the tv industry because they offer universe.

In that sense they are overlapping, but it is not the exact same business like it was with t-mobile.

This would be an expansion of paid tv for at&t. about 5 million plus universe paid to be the subscribers -- tv subscribers today.

They would theoretically getting cost savings in the paid tv world, similar logic to why comcast and time warner cable hooked up.

You want to get as big as possible so you have as much leverage over the content providers that have been charging more and more money for their content.

You get bigger, you get a cost savings in that sense, because you can push back on those programmers a little bit.

The big question that we want to look forward to is why did at&t the side to go this route instead of buying dish?

They have a wireless spectrum.

If they were to take the plunge into satellite-tv, they would not have done it with dish, they like the directv better about possibly because of the line american business.

We want to see if this shakes out if it does get done, what a says about that calculation.

You take a stab at it.

Why directv and not dish?

Directv is growing, dishes not.

Buying a company with growth is an interesting thing.

As far spectrum -- as a spectrum goes, not all spectrum is created equal.

There is talk of heading an end to available bandwidth as early as next year.

Something we will continue to follow.

Thank you so much for that scoop.

This text has been automatically generated. It may not be 100% accurate.


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