The Clinton Herald, Clinton, Iowa

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May 19, 2014

AT&T aims for TV's future with $48.5B DirecTV deal

(Continued)

LOS ANGELES —

"You can't justify AT&T buying DirecTV by pointing at Comcast's grab for Time Warner, because neither one is a good deal for consumers," she said in a statement.

Under the terms announced Sunday, DirecTV shareholders will receive $28.50 per share in cash and $66.50 per share in AT&T stock, bringing the value to $95 a share. The total transaction value is $67.1 billion, including DirecTV's net debt.

Stephenson and White both said the merger would allow the combined company to offer video over multiple screens, but acknowledged that deals with content providers to expand service on multiple platforms still need to be negotiated.

DirecTV's exclusive deal for its signature product, NFL Sunday Ticket, expires at the end of the coming season. White anticipates that it will come to an agreement with the NFL on an extension before the transaction with AT&T closes.

"This positions us well to compete in the 21st century," White said. "I think our future is bright together in ways that make both of our companies stronger."

Analysts have questioned the strategic benefits of a deal, particularly because it would give AT&T a larger presence in a pay TV market that isn't growing. Last year, pay TV subscribers in the U.S. fell for the first time, dipping 0.1 percent to 94.6 million, according to Leichtman Research Group.

While AT&T and DirecTV are doing better than cable companies at attracting TV subscribers, DirecTV's growth in the U.S. has stalled while AT&T is growing the fastest of any TV provider.

But Stephenson said DirecTV's Latin American presence provides a good growth opportunity. He considers Brazil a key region to potentially add customers in.

DirecTV offers neither fixed-line or mobile Internet service, and its rights to airwave frequencies for satellite TV are not the kind that AT&T can use to improve its mobile phone network.

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