Slim’s Old Friend AT&T Now Allied With Mexican Rival TelevisaCrayton Harrison and Patricia Laya
AT&T Inc., a longtime ally of billionaire Carlos Slim, is now headed toward a partnership in Mexico with one of his fiercest rivals, Grupo Televisa SAB, as a result of its $48.5 billion acquisition of DirecTV.
DirecTV, the U.S. satellite-TV carrier, has a 41 percent stake in Sky Mexico, which is majority-owned by Mexican television giant Televisa. AT&T, which is selling its 8 percent holdings in Slim’s America Movil SAB after a 24-year relationship, would take over the minority stake in Sky Mexico as part of the DirecTV deal.
The transaction gives Dallas-based AT&T a piece of Mexico’s largest TV provider, with about 6 million subscribers, in a market that’s still growing, since fewer than half of Mexican households pay for television. Sky’s sales climbed 11 percent last year to 16 billion pesos ($1.2 billion).
Slim competes with Televisa for Mexican phone and Internet customers, and he stopped advertising on the broadcaster’s TV channels in 2011. AT&T has held a stake in Slim’s phone company since he acquired it in a government privatization sale in 1990. Despite that history, Televisa isn’t seeking to alter its Sky Mexico stake with AT&T coming aboard.
“We’ve always had an excellent relationship with our partners in Sky, and we expect it to stay that way.” Televisa Executive Vice President Alfonso de Angoitia said in a statement. “In this new stage, we have no plans to acquire a bigger stake in Sky.”
For Mexico City-based Televisa, AT&T will be the latest in a series of partners since entering the satellite business in 1996. Billionaires Rupert Murdoch and John Malone held stakes in Sky Mexico through their companies until 2004, when DirecTV acquired their interests.
“Televisa built Sky from zero,” de Angoitia said. “In the past we’ve had various partners. We began with Rupert Murdoch and John Malone. After that came DirecTV.”
Brad Burns, a spokesman at AT&T, declined to comment. An America Movil press official had no immediate comment.
America Movil, the biggest provider of phone and Internet services in Mexico, has been unable to get government permission to offer its own TV package. Slim’s company does have a marketing partnership with Dish Mexico, a satellite provider co-owned by Mexican company MVS Comunicaciones SA and by EchoStar Corp., the sister company of DirecTV rival Dish Network Corp.
AT&T’s acquisition of DirecTV, announced earlier this week, still requires regulatory approval, and the companies expect the transaction to close in 12 months. In addition to giving AT&T, the second-biggest U.S. wireless carrier, access to DirecTV’s 20 million U.S. TV subscribers, the deal includes the satellite carrier’s Latin American holdings, which also include services in Brazil and Colombia.
“Carlos and I have spoken and he is a very dear friend, but now he’s going to be a competitor,” AT&T Chief Executive Officer Randall Stephenson said this week on a conference call. “And we recognize that and off we go.”
With its 50 percent stake in mobile-phone provider Grupo Iusacell SA, Televisa may seek to combine wireless broadband Internet with satellite TV, said Jose Otero, an analyst at Signals Telecom Consulting. That’s a business model that DirecTV has been developing elsewhere in Latin America and that AT&T has said it will pursue with DirecTV in rural parts in the U.S.
“It’s a market with a ton of potential,” Otero said yesterday in an interview in Mexico City. “You don’t have the same level of competition as you do in urban areas.”