monday, 19 may of 2014

AT&T to buy DirecTV for $48.5 billion in move to expand clout


AT&T to buy DirecTV for $48.5 billion in move to expand clout

AT&T agreed on Sunday to buy the satellite television operator DirecTV for $48.5 billion, trying to tilt the balance of power with media companies as the market for broadband Internet and video shifts.

With the acquisition, AT&T becomes the latest telecommunications giant seeking to establish an even greater reach.

Comcast agreed in February to buy Time Warner Cable for $45 billion, a bid to become the country’s dominant provider of cable TV and high-speed Internet access. And Sprint, which is controlled by the Japanese telecom company SoftBank, has made no secret of its desire to merge with T-Mobile USA, creating a serious rival to Verizon and AT&T.

“The media chessboard is moving more this year than it has in the past decade,” said Richard Greenfield, a media analyst with the brokerage firm BTIG. “You’re seeing major shifts. Everyone is jockeying for position.”

The newest round of consolidation may weigh heavily on the minds of government regulators, who have expressed growing concern that the nation’s television and Internet services are increasingly controlled by just a few corporate behemoths.

For consumers, the acquisition may change little, at least at first, since AT&T and DirecTV share little overlap. AT&T said on Sunday that it planned to bundle its new acquisition’s services with existing offerings like broadband Internet and cellphone service.

To some analysts, AT&T’s latest acquisition seems questionable. The pay television business is considered a mature market whose subscriber growth has slowed sharply in recent years.

Still, the company has been trying to compensate for slowing growth in its own core businesses, including by moving into home security offerings and mobile data for cars.
Randall L. Stephenson, AT&T’s chief executive, said in an interview on Sunday that he had discussed the possibility of buying DirecTV with his counterpart at the satellite TV provider, Mike White, for some time.

By acquiring the country’s biggest satellite television operator, AT&T would gain more clout in negotiating with media companies as it increasingly focuses on video offerings. Through the deal, AT&T would become the country’s second-biggest pay TV provider, behind only Comcast. AT&T has about 5.7 million TV customers through its U-verse service, while the satellite TV operator has about 20.3 million customers in the United States.

The acquisition would also bring to AT&T DirecTV’s existing content at a time when AT&T has made video services a priority. DirecTV’s offerings include the National Football League’s “Sunday Ticket,” and it owns minority stakes in the Game Show Network and MLB Network.

It would also help get AT&T into new markets like video and data services inside airplanes.

“If you think about what we’re trying to accomplish, we’re trying to get way down the road to get content across multiple devices,” Mr. Stephenson said. “The more we peeled the onion back, frankly the better we felt about this.”

DirecTV would also bolster AT&T’s financial resources as it continues to invest in wireless-broadband capabilities, an effort that is expected to include bidding at least $9 billion for wireless network spectrum in a forthcoming government auction. The satellite TV company generated about $2.6 billion in free cash flow last year. Buying DirecTV would also expand AT&T’s presence in Latin America, where the satellite company already has more than 18 million customers and expects to grow substantially as more households subscribe to pay TV services.

(Published by The New York Times – May 18, 2014)

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