AT&T buys Direct TV

[spuwho]

Like Smith trying to keep up with Neo, AT&T is set to announce they are going to buy out Direct TV.

With Comcast getting bigger by buying out TimeWarner, AT&T has to match by buying DirectTV.

Per BusinessWeek:

AT&T Joins U.S. Pay-TV Overhaul With $48.5 Billion DirecTV Deal

AT&T Inc. (T:US) plans to buy DirecTV for $48.5 billion, gaining more than 38 million video subscribers at home and in Latin America and stepping up an acquisition-fueled overhaul of the $110 billion U.S. pay-TV industry.

AT&T will pay $95 for each share of DirecTV, split between $28.50 in cash and the equivalent of $66.50 in stock, the companies said yesterday in a statement. That's a 10 percent premium to DirecTV's closing price on May 16. Including 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, is embarking on the company's largest takeover in eight years to bulk up after competitors Comcast Corp. (CMCSA:US) and Time Warner Cable Inc. (TWC:US) announced their own merger, accelerating consolidation across the communications industry. The purchase gives AT&T a national satellite-TV provider to combine with its existing packages of wireless, phone and high-speed Internet service.

"Strategically, this makes a lot of sense for AT&T," said Jan Dawson, an analyst with Jackdaw Research in Provo, Utah. Gaining a satellite-TV provider "lets them go national with a video offering that matches their wireless reach."

The agreement was approved by both boards, and the companies expect the deal to close within 12 months, pending regulatory review and approval from DirecTV's shareholders (DTV:US). To help with regulatory approval in Latin America, AT&T said it plans to divest its 8 percent stake in America Movil SAB. (AMXL)

Bolstering Broadband

DirecTV, which doesn't have its own phone service or a competitive Internet offering, was under pressure to find a partner as more viewers go online for video and the pool of traditional pay-TV customers shrinks in the U.S.

With the transaction, AT&T said its high-speed broadband network will cover 70 million customer locations. That was one of the reasons for the deal because it helps customers watch TV on any device, DirecTV CEO Mike White said in a phone interview.

"Randall and I have had a relationship for a number of years," White, 62, said. "Over the last year, things began to change with technologies -- AT&T started to be able to offer more broadband and better broadband. With it comes a continuing evolution for mobile video."

In the joint phone interview, Stephenson, 54, highlighted DirecTV (DTV:US)'s relationships with content providers and head start in setting up a package of Internet-delivered channels similar to a pay-TV bundle, known as over-the-top service.

DirecTV will still be based in El Segundo, California, and its service will be available on a standalone basis for at least three years after the acquisition closes.

Deal Financing

The companies said the deal will add to free cash flow and earnings per share within 12 months of closing, and cost savings will top $1.6 billion on an annual basis.

AT&T plans to finance the cash portion of the deal with cash on hand, the sale of non-core assets, committed financing facilities and opportunistic debt market transactions. AT&T had a market value of about $191 billion as of May 16 and had total debt (T:US) of about $80 billion and cash and equivalents of $3.6 billion at the end of March.

Including debt, the acquisition is AT&T's third-largest deal on record, behind the purchase of BellSouth for $83 billion in 2006 and the deal for Ameritech Corp., which closed in 1999, according to data compiled by Bloomberg.

The deal is also the third-largest for the communications industry in the past year, ranking after Verizon Communication Inc.'s $130 billion deal for the rest of its U.S. wireless venture and the pending $68 billion purchase of Time Warner Cable, the data show.

'Industry Redefining'

At the $67.1 billion deal value, which includes debt, AT&T is paying 8.15 times DirecTV's earnings (DTV:US) before interest, taxes, depreciation and amortization in the 12 months through March, according to data compiled by Bloomberg. That's in line with a median multiple of 8.11 times trailing 12-month Ebitda for cable and satellite companies over $1 billion in the past five years, the data show. Comcast offered about 8.6 times Ebitda for Time Warner Cable, the data show.

Comcast's plan to acquire Time Warner Cable will create an even bigger provider of both TV and Internet in the U.S. In March, AT&T's Stephenson called the Time Warner Cable takeover an "industry-redefining deal."

Regulatory Approval

One of the main questions about the potential deals is whether regulators will allow them. Comcast's takeover of Time Warner Cable hasn't been approved yet. A merger of DirecTV and satellite-TV rival Dish Network Corp. (DISH:US) was blocked more than a decade ago. AT&T, the second-biggest U.S. mobile-phone carrier, had to abandon a purchase of Deutsche Telekom AG's T-Mobile U.S. unit in 2011 in the face of antitrust opposition.

Unlike Comcast's acquisition of Time Warner Cable, AT&T's purchase of DirecTV would eliminate a choice for pay-TV customers in some markets because AT&T's U-verse landline video service competes with DirecTV. DirecTV has 20.3 million U.S. customers, while AT&T's U-verse TV service had about 5.7 million customers at the end of the first quarter.

White and Stephenson confirmed AT&T will offer both U-verse and DirecTV in markets where the products overlap. If this becomes a regulatory issue, AT&T could theoretically stop offering U-verse TV and only offer DirecTV along with U-verse broadband, but no decisions have been made because the companies didn't feel the need to offer this condition yet, according to a person familiar with the matter.

[AuditoreEnterprise]

Like Smith trying to keep up with Neo, AT&T is set to announce they are going to buy out Direct TV.

With Comcast getting bigger by buying out TimeWarner, AT&T has to match by buying DirectTV.

Per BusinessWeek:

AT&T Joins U.S. Pay-TV Overhaul With $48.5 Billion DirecTV Deal

AT&T Inc. (T:US) plans to buy DirecTV for $48.5 billion, gaining more than 38 million video subscribers at home and in Latin America and stepping up an acquisition-fueled overhaul of the $110 billion U.S. pay-TV industry.

AT&T will pay $95 for each share of DirecTV, split between $28.50 in cash and the equivalent of $66.50 in stock, the companies said yesterday in a statement. That's a 10 percent premium to DirecTV's closing price on May 16. Including 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, is embarking on the company's largest takeover in eight years to bulk up after competitors Comcast Corp. (CMCSA:US) and Time Warner Cable Inc. (TWC:US) announced their own merger, accelerating consolidation across the communications industry. The purchase gives AT&T a national satellite-TV provider to combine with its existing packages of wireless, phone and high-speed Internet service.

"Strategically, this makes a lot of sense for AT&T," said Jan Dawson, an analyst with Jackdaw Research in Provo, Utah. Gaining a satellite-TV provider "lets them go national with a video offering that matches their wireless reach."

The agreement was approved by both boards, and the companies expect the deal to close within 12 months, pending regulatory review and approval from DirecTV's shareholders (DTV:US). To help with regulatory approval in Latin America, AT&T said it plans to divest its 8 percent stake in America Movil SAB. (AMXL)

Bolstering Broadband

DirecTV, which doesn't have its own phone service or a competitive Internet offering, was under pressure to find a partner as more viewers go online for video and the pool of traditional pay-TV customers shrinks in the U.S.

With the transaction, AT&T said its high-speed broadband network will cover 70 million customer locations. That was one of the reasons for the deal because it helps customers watch TV on any device, DirecTV CEO Mike White said in a phone interview.

"Randall and I have had a relationship for a number of years," White, 62, said. "Over the last year, things began to change with technologies -- AT&T started to be able to offer more broadband and better broadband. With it comes a continuing evolution for mobile video."

In the joint phone interview, Stephenson, 54, highlighted DirecTV (DTV:US)'s relationships with content providers and head start in setting up a package of Internet-delivered channels similar to a pay-TV bundle, known as over-the-top service.

DirecTV will still be based in El Segundo, California, and its service will be available on a standalone basis for at least three years after the acquisition closes.

Deal Financing

The companies said the deal will add to free cash flow and earnings per share within 12 months of closing, and cost savings will top $1.6 billion on an annual basis.

AT&T plans to finance the cash portion of the deal with cash on hand, the sale of non-core assets, committed financing facilities and opportunistic debt market transactions. AT&T had a market value of about $191 billion as of May 16 and had total debt (T:US) of about $80 billion and cash and equivalents of $3.6 billion at the end of March.

Including debt, the acquisition is AT&T's third-largest deal on record, behind the purchase of BellSouth for $83 billion in 2006 and the deal for Ameritech Corp., which closed in 1999, according to data compiled by Bloomberg.

The deal is also the third-largest for the communications industry in the past year, ranking after Verizon Communication Inc.'s $130 billion deal for the rest of its U.S. wireless venture and the pending $68 billion purchase of Time Warner Cable, the data show.

'Industry Redefining'

At the $67.1 billion deal value, which includes debt, AT&T is paying 8.15 times DirecTV's earnings (DTV:US) before interest, taxes, depreciation and amortization in the 12 months through March, according to data compiled by Bloomberg. That's in line with a median multiple of 8.11 times trailing 12-month Ebitda for cable and satellite companies over $1 billion in the past five years, the data show. Comcast offered about 8.6 times Ebitda for Time Warner Cable, the data show.

Comcast's plan to acquire Time Warner Cable will create an even bigger provider of both TV and Internet in the U.S. In March, AT&T's Stephenson called the Time Warner Cable takeover an "industry-redefining deal."

Regulatory Approval

One of the main questions about the potential deals is whether regulators will allow them. Comcast's takeover of Time Warner Cable hasn't been approved yet. A merger of DirecTV and satellite-TV rival Dish Network Corp. (DISH:US) was blocked more than a decade ago. AT&T, the second-biggest U.S. mobile-phone carrier, had to abandon a purchase of Deutsche Telekom AG's T-Mobile U.S. unit in 2011 in the face of antitrust opposition.

Unlike Comcast's acquisition of Time Warner Cable, AT&T's purchase of DirecTV would eliminate a choice for pay-TV customers in some markets because AT&T's U-verse landline video service competes with DirecTV. DirecTV has 20.3 million U.S. customers, while AT&T's U-verse TV service had about 5.7 million customers at the end of the first quarter.

White and Stephenson confirmed AT&T will offer both U-verse and DirecTV in markets where the products overlap. If this becomes a regulatory issue, AT&T could theoretically stop offering U-verse TV and only offer DirecTV along with U-verse broadband, but no decisions have been made because the companies didn't feel the need to offer this condition yet, according to a person familiar with the matter.

This might actually end up being really great for DirecTV.  I believe their internet package was already provided by att so the move makes sense. Biggest complaints I have seen about DirecTV is customer service so as long as they address that it will end up fine

[ChriswUfGator]

Ironically AT&T already owned a better version of what they're trying to buy through the acquisition of TCI and Mediaone in the 1990s and then inexplicably sold it. Comcast wound up with most of the assets.

[finehoe]

This might actually end up being really great for DirecTV. 

But will it be really great for the consumer.

[AuditoreEnterprise]

This might actually end up being really great for DirecTV. 

But will it be really great for the consumer.

Without a doubt

[finehoe]

This might actually end up being really great for DirecTV. 

But will it be really great for the consumer.

Without a doubt

How so?

[fsquid]

They rejected the AT&T/T-Mobil deal. So, maybe they'll give this the same scrutiny.

[Steve]

Doubt this one gets rejected. How would this violate anti-trust?

Att-Tmobile was two companies that did the exact same thing, which would have removed a company from the market. Att and DirecTV are two complimentary companies. I see both this and the Comcast-TWC deal going through.

[finehoe]

Doubt this one gets rejected. How would this violate anti-trust?

Att-Tmobile was two companies that did the exact same thing, which would have removed a company from the market. Att and DirecTV are two complimentary companies. I see both this and the Comcast-TWC deal going through.

AT&T's U-verse competes directly for TV customers with DirecTV; the combination would reduce the number of possible pay TV providers from four to three.

[BridgeTroll]

http://profootballtalk.nbcsports.com/2014/05/19/report-directv-likely-to-renew-nfl-sunday-ticket/

Report: DirecTV "likely" to renew NFL Sunday Ticket

Posted by Mike Florio on May 19, 2014, 2:31 PM EDT

The sale of DirecTV has sparked plenty of chatter about the future of NFL Sunday Ticket, especially with the acquisition of the company by AT&T potentially hinging on a renewal of the package.

For now, it appears that DirecTV will indeed re-up the arrangement it's now had for 20 years.  According to John Ourand of SportsBusiness Daily, DirecTV's exclusive negotiating window has expired, but the NFL has yet to spark "serious negotiations" with competitors — and it's "likely" DirecTV will renew the popular service that allows fans to watch all (or in some cities most) Sunday afternoon games.

The timing, with the proposed purchase being announced before DirecTV has finalized an extension, could complicate the effort to keep the rights.  It's a fair guess, however, that some winking and/or nodding has occurred between the league and DirecTV regarding the parameters of a new deal.  Otherwise, the deal between AT&T and DirecTV wouldn't have happened yet.

Either way, the regulatory process is expected to delay closing by roughly a year.  That's plenty of time for DirecTV to wrap up its next contract with the NFL.

[BridgeTroll]

http://www.youtube.com/v/2Qm2cWCjez8

[Steve]

Doubt this one gets rejected. How would this violate anti-trust?

Att-Tmobile was two companies that did the exact same thing, which would have removed a company from the market. Att and DirecTV are two complimentary companies. I see both this and the Comcast-TWC deal going through.

AT&T's U-verse competes directly for TV customers with DirecTV; the combination would reduce the number of possible pay TV providers from four to three.

Yes, although they are competitors in a different manner, because they use different means to deliver their product. In addition, both are limited in some ways due to current technology, like internet possibilities through DirecTV is a ways off because of The challenges of providing internet access via satellite (DirecTV and ATT partner on this today).

Also,  many people who live in an apartment complex (including me) can't get DirecTV. However, if I wanted to switch my cell phone from ATT to T-Mobile I can do that in about 30 minutes.

If either of the deals get killed, I think Comcast-TWC does. They are direct competitors, and with the exception of the fact that Comcast has a stake in NBC, they do the same thing.

[spuwho]

Ironically AT&T already owned a better version of what they're trying to buy through the acquisition of TCI and Mediaone in the 1990s and then inexplicably sold it. Comcast wound up with most of the assets.

This was part of a strategy to build a national broadband service layer using @Home as the capital engine and advertising revenue from the search firm Excite.

Once ATTBI, they found @Home to be woefully under debt, and the promised revenues from Excite ad sales to be negligible after Y2K. ATTBI took over the @Home board to try to revive it but it needed so much capital to bring all those acquired municipal broadband services into consistent level of service they decided against it.

So after consternation from their board, shareholders, Wall Street analysts and others, they reversed course. Sold their assets to Comcast, paid out some legal penalties to cover their @Home liabilities. (@Home users are still ticked off).

The fact that owning a local monopoly in many areas when others felt capital spending in wireless was the future ended their aspirations.

With DirectTV they are essentially bypassing all the local rules they were under previously and can now provide video services with no impediments.

Don't forget that DirectTV also owns a range of wireless spectrum (unused) that AT&T just loves to squat on and never use.

The question everyone asks is that they could have spent the same amount of cash paid for DirectTV and invested in upgrading their TV and broadband services. But AT&T refuses to invest anything unless they get exclusive service rights. Why?

Wall Street loves acquisitions which is perceived as "growth". They hate spending money on capital improvements. They want to see that cash used in something that has quicker returns. Capital spending takes to long to see results which reflects our "me first" culture.

[finehoe]

Without a doubt

Sounds like there is indeed some doubt:

From Consumers Union policy counsel Delara Derakhshani:

"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. 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."

[spuwho]

Just remember ATT always makes big promises on providing broadband to people when they want to merge with someone. However their record on following through is really bad.

Per Computerworld:


AT&T's DirecTV deal includes plums to woo regulators
and consumers
15M more homes, mostly rural, would get fast broadband
By Matt Hamblen
May 19, 2014 02:19 PM ET
Computerworld - AT&T's mega-bid to buy DirecTV for $48.5
billion and take on another $18.6 billion of DirecTV debt,
includes several deal sweeteners designed to win over
government regulators and customers.
In a conference call today, AT&T CEO Randall Stephenson called
the offer and its special provisions "very, very good for
consumers.... Together, I' m confident we'll drive innovation.
We have an exciting future ahead of us."
An exhaustive review of the regulatory environment led AT&T to
be "more confident this [deal] will pass regulatory muster,"
Stephenson said. "What allowed us to catch momentum [in
regulatory reviews] was our belief that the deal can be designed
to be consumer friendly and serves the public interest."
However, consumer advocacy groups immediately attacked the
consumer-focused provisions, which include a plan to provide
broadband to 15 million homes -- mostly in rural areas -- once
the closes. That would come atop an existing AT&T high-speed
Project VIP broadband rollout now slated to reach 57 million
customers by the end of 2015.
The 15 million homes would be served within four years after
the deal closes by a combination of technologies, including fiber
optic cable to the home and fixed wireless local loop, AT&T
said. Fixed wireless local loop typically refers to a technology to
provide small routers inside or near homes that take a fast
wireless signal from a carrier and forward it to a user in a home
or business.
"That 15 million sounds like a lot, but AT&T could pass that
same number of homes with gigabit fiber for far less than the
cash they're spending in this deal," said Derek Turner, research
director for Free Press, a consumer lobbying group.
Turner attacked the plan to use fiber and fixed wireless instead
of using AT&T's advanced DSL technology within its U-verse TV
service to the reach the 15 million.
"Translation: this means AT&T is going to be offering the same
expensive fixed 4G wireless in the same areas where it refused
to upgrade its wired networks," Turner said. "This commitment
is not even close to offering real [wired] broadband to 15 million
homes. This deal doesn't value consumers at all."
Even investors aren't really benefiting with the deal, Turner said,
since he estimated it would cost AT&T $1,500 to connect a
single home with gigabit fiber, compared to the cost he
calculated of $3,350 per home that AT&T is essentially paying
for access to 20 million U.S. DirecTV video subscribers.
"It's a head-scratching deal," he said.
Other commitments AT&T has made once the deal closes -- in
possibly a year -- include:
A standalone wired AT&T broadband service of over 6
Mbps at prices guaranteed for three years.
A standalone DirecTV TV service based on nationwide
pricing for at least three years.
A commitment for three years to the Federal
Communications Commission Open Internet protections
created in 2010.
Continued plans by AT&T to participate in two upcoming
FCC spectrum auctions, including a bid of at least $9
billion in a 2015 auction.
Turner called AT&T's promise of standalone wired broadband
service for three years a "sign of market failure." He termed
AT&T's Net Neutrality commitment a "joke" since it is a short-
term commitment to a set of "loophole-ridden rules."

Even amid such attacks, several analysts said AT&T's deal for
DirecTV is likely to win federal regulatory approval, especially if
the Comcast purchase of Time Warner Cable for $45 billion, first
announced in February, wins approval. Regulators are also
reportedly in discussions with Sprint, controlled by SoftBank, to
merge with T-Mobile.
Hugues de la Vergne, an analyst at Gartner, said he couldn't
speculate on whether regulators will approve the various deals.
But he said AT&T's timing in the offer for DirecTV is important,
since most industry observers expect a TimeWarner-Comcast
approval. A combined AT&T-DirecTV would become a direct
competitor to Time Warner-Comcast, analysts said.
"Now, regulators have to consider multiple mergers that would
be coming before them," de la Vergne said.
In his remarks to financial analysts, Stephenson said regulators
"will look at new competition that is generated that frankly
wouldn't exist otherwise" without AT&T's plan to buy DirecTV.
Roger Entner, an analyst at ReCon Analytics, said that against
the backdrop of a likely Comcast/Time Warner merger, AT&T
and DirecTV "should have no problems with any regulatory
approval."
He said AT&T and DirecTV don't generally compete today,
except in some southern cities -- and even there they have
already set up some cross-marketing arrangements.
"There are a lot of upsides for consumers when technology
comes together and different silos for connecting [over satellite,
wired and wireless] are torn down," Entner said. "The combined
entity will be able to give cable companies a lot more
competition and it will strengthen competition in vast parts of
the country."
Entner also agreed with AT&T's view that TV content providers
will have a strong alternative to having to work with Comcast-
Time Warner. "This deal weakens Comcast's bargaining power
for content," he said. That power provides some potential for
keeping content costs in check.
Entner called the plan to offer fixed wireless or fiber to 15 million
more homes a deal "sweetener" that isn't possible because of
any new revolutionary technology from AT&T or DirecTV. The
ability to serve another 15 million homes comes from $1.6
billion in cost savings AT&T expects through the deal with
DirecTV, he said
"The fixed wireless technology does not miraculously work
better because of this deal," he said. "The FCC is always happy
to have more people on fixed wireless broadband."
If opponents block the AT&T-DirecTV deal, Entner said that it
would be a "horrible mistake for the country.... We need to
integrate all telecom, whether it's voice, data, Internet or video."