AT&T to Acquire DirecTV for Nearly $50 Billion18 May, 2014 By: Erik Gruenwedel
AT&T and DirecTV May 18 confirmed the two companies are merging, with the telecom acquiring the No. 1 satellite TV operator in a cash/stock offer around $50 billion. DirecTV shareholders will receive $95 per share as a result of the merger, comprised of $28.50 per share in cash and $66.50 per share in AT&T stock.
“DirecTV is the best option for us because they have the premier brand in pay-TV, the best content relationships and a fast-growing Latin American business,” AT&T CEO Randall Stephenson said in a statement. “Together we’ll be able to enhance innovation and provide customers new competitive choices for what they want in mobile, video and broadband services.”
If approved by regulators, the union would create a nationwide mobile and video network with broadband access covering 70 million customer locations, according to AT&T. Indeed, AT&T said it would now be able to offer 15 million new (DirecTV) subs high-speed broadband service with a minimum 6 Mbps streaming speed.
“For customers who only want a broadband service and may choose to consume video through an over-the-top (OTT) service like Netflix or Hulu, the combined company will offer stand-alone wireline broadband service at speeds of at least 6 Mbps (where feasible) in areas where AT&T offers wireline IP broadband service today at guaranteed prices for three years after closing,” AT&T said in a statement.
DirecTV has the exclusive pay-TV rights to “NFL Sunday Ticket,” which provides every out-of-market game, every Sunday afternoon, on TV, laptops and mobile devices. The new AT&T will be better positioned to develop unique content offerings for consumers through, among other initiatives, AT&T’s joint venture with The Chernin Group. DirecTV’s content ownership includes Root Sports Networks and minority stakes in the Game Show Network, MLB Network, NHL Network and the Sundance Channel.
“U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace,” said DirecTV CEO Mike White.
The acquisition ups AT&T’s reach in Latin America, where DirecTV has 18 million pay-TV subscribers. To facilitate the regulatory approval process in Latin America, AT&T intends to divest its interest in América Móvil. This includes 73 million publicly listed L shares and all of its AA shares.
DirecTV will remain headquartered in El Segundo, Calif.