AT&T Seeks to Offer National Video with Purchase of DirecTV

Chris Waits, CC-BY-2.0

AT&T Seeks to Offer National Video with Purchase of DirecTV (Bloomberg)

AT&T Inc. (NYSE: T) plans to buy DirecTV for $48.5 billion to gain more than 38 million video subscribers in the United States and in Latin America. AT&T announced it will pay $95 for each share of DirecTV, with $28.50 coming in cash and the equivalent of $66.50 in stock. That valuation is 10 percent more than DirecTV’s closing price on May 16. When factoring in net debt, the deal values the largest U.S. satellite-TV company at $67.1 billion. Randall Stephenson, chief executive officer of AT&T since 2007, agreed to buy DirecTV after competitors Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) announced a merger of their own to spur communications industry consolidation. The purchase, once approved by U.S. regulators, would give AT&T a national satellite-TV provider to combine with its existing packages of wireless, phone and high-speed Internet service. Without DirecTV, AT&T’s home video offering would have remained regional. The acquisition also gives AT&T a chance to lure additional subscribers if it is able to retain DirecTV’s exclusive NFL Sunday Ticket, which gave the satellite TV provider the exclusive rights to sell a supplemental subscription to its customers. For football-loving fans, the chance to watch all of the NFL games was a key differentiator to subscribe to DirecTV rather than a rival pay-TV service.

Paul Dykewicz

Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain." He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school's Finance Club. In addition, Paul has a bachelor's degree from the University of Michigan and a master's degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.