Acquisition Of DirecTV By AT&T Hinted

Acquisition Of DirecTV By AT&T Hinted

Discussions are reportedly ongoing for the acquisition of DirecTV by AT&T for around $50 billion. The acquisition will expand the video offerings of the mobile service provider and prevent it from being left behind wih the consolidations happening within the pay-TV industry.

The price in the discussions has been with the $90 to $95 price range for each share of DirecTV. However, no official announcement is expected anytime soon, according to an unidentified source. The source has some knowledge about the discussions.

Share prices of DirecTV have increased by 6 percent during after-hours trading as it went up to $92.35. This gave biggest provider of satellite TV a total value of around $47 billion. Share prices of the company have increased gradually following initial reports of the discussions on April 30.

The discussions of the possible acquisition of DirecTV by AT&T follow an earlier deal that led to the acquisition of Time Warner Cable by Comcast for around $45 billion. The deal merged the two biggest cable companies in the United States.

Although the U-Verse brand of AT&T offers pay-TV services to its subscribers, it has a limited reach in the market and the acquisition of DirecTV will increase its reach across the United States. Revenues of the California-based DirecTV reached $8.6 billion last year and it offers satellite-TV services to around 20 million US-based subscribers along with 17 million Latin American subscribers.

The U-Verse brand of AT&T had around 11.3 million subscribers during the first quarter and revenues for residential consumers increased to $5.7 billion during the first quarter.

SNL Kagan analyst Michael Paxton said AT&T incurred huge expenses when it rolled out fiber optics for U-Verse. The company is not expected to increase its fiber optic coverage and the merger between DirecTV and AT&T will increase the market of the mobile service provider, Paxton added.

The two companies are expected to deal with similar opposition from consumer groups opposed to the consolidation within the media industry. However, it may have to deal with lesser opposition than the deal between Time Warner Cable and Comcas, The Carmel Group analyst Jimmy Schaeffler said.

Schaeffler added the opposition to the possible acquisition of DirecTV by AT&T is not logical since consumers will pay for two different infrastructures and technologies.

Posted by James Fried on Wednesday May 14 2014, 4:46 AM EST. Ref: USA Today. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0