The telephone titan will pay $95 a share for the satellite TV company
AT&T and DirecTV have reached an agreement for the telephone company to acquire the satellite TV firm, the telecom giant said Sunday.
In the deal, AT&T will pay DirecTV shareholders $95 per share, valuing the satellite TV service provider at $48.5 billion. Including DirecTV's debt, the total transaction's value is about $67 billion.
The merger was approved by both companies’ boards Sunday, and is the latest example of consolidation in the TV-telecommunications sector. With steaming and wireless technology spreading and redrawing traditional service arrangements, telecoms are looking to gain customers and control content, while cable and satellite providers are looking to add product options and boost revenues.
The acquisition gives AT&T an infusion of customers while creating a pay-TV giant that can offer video through both fiber-optics lines and satellites. The deal is subject to approval by federal regulators. If it goes through, El Segundo, Calif.-based DirecTV will operate as AT&T's subsidiary.
In anticipation of the deal — their talks were first leaked in late April — DirecTV shares have risen 12 percent leading up to the announcement. DirecTV shareholders will get $28.50 per share in cash and $66.50 per share worth in AT&T stock.
The AT&T-DirecTV agreement follows a deal struck earlier this year by the nation's two largest cable companies, in which Comcast would buy Time Warner Cable for about $45 billion. That deal is awaiting regulatory approval as well.
DirecTV has roughly 20 million customers nationwide and is the biggest satellite TV company in the U.S. and the second-largest pay-TV provider behind Comcast.
The deal removes a major player in the Internet market and will not be seen as good new for proponents of “net neutrality,” in that it gives more power to Internet service providers.
That means AT&T could gain leverage if – as the FCC has initially proposed – Internet providers are allowed to offer faster service for customers willing to pay.
It didn't take long for opposition to the deal to surface Sunday.
“On the heels of Comcast's bid for Time Warner Cable, AT&T is going to try to pull off a mega-merger of its own. These could be the start of a wave of mergers that should put federal regulators on high alert,” said Delara Derakhshani, policy counsel for Consumers Union, the advocacy arm of Consumer Reports.
“AT&T's takeover of DirecTV is just the latest attempt at consolidation in a marketplace where consumers are already saddled with lousy service and price hikes. The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end. 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.”