US telecom giant AT&T nearing deal to buy satellite broadcaster DirecTV

Written by New York Times | New York | Updated: May 19 2014, 20:22pm hrs
DirecTVAT&T's expected acquisition of DirecTV could provide the company with a pathway to expand its services into Latin America. (Reuters)
AT&T is poised to announce a takeover of DirecTV Inc. within days, people briefed on the matter said on Saturday, ushering in another sweeping transformation of the telecommunications industry.

Though both sides are putting the finishing touches on an agreement, talks may still fall apart, these people cautioned. The proposed agreement still requires final approval from the boards of both companies.

If completed, the acquisition would be worth more than $50 billion, people briefed on the matter had said previously. AT&T has anticipated paying between $92 and $94 a share in stock and cash.

Representatives for AT&T and DirecTV declined to comment or were not immediately available for comment.

AT&T DirecTV deal

BuzzFeed had earlier reported that a deal could be announced as soon as Sunday.

By buying DirecTV, the countrys biggest satellite TV operator, AT&T will make its biggest move in years to grow at home since its failed $39 billion takeover bid for T-Mobile three years ago.

But such a deal is likely to invite scrutiny from regulators at a time when they are already weighing Comcasts $45 billion bid for Time Warner Cable, another blockbuster transaction aimed at reshaping the telecommunications industry.

And SoftBank, the Japanese telecom company that controls Sprint, has made no secret of its desire to buy T-Mobile USA, further consolidating the sector.

Several officials at the Federal Communications Commission have already signalled that they would oppose such a transaction, fearing that it would concentrate too much of the wireless industry in three companies.

Acquiring DirecTV would bolster AT&Ts relatively small television offerings while potentially freeing up bandwidth for high-speed Internet access. 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.

AT&T would also gain a valuable position in Latin America, where DirecTV has about 18 million subscribers.

Meanwhile, DirecTV would solve one of its most pressing problems: slowing growth of paid TV subscribers in the United States.

While cable companies can make up for that issue by expanding their broadband Internet offerings, DirecTV has no such alternative.

Though AT&T had weighed an international expansion campaign over the past year one that likely would have been anchored by an acquisition of Vodafone, the European telecom giant it has since trained its sights on growth in the United States.

AT&T had grown interested in DirecTV in recent months, with talks becoming more serious after Comcast unveiled its deal for Time Warner Cable.

A tie-up of the two

companies had been in the works before. AT&T had closed in on a deal for DirecTV years ago, only to back away after hearing negative reactions from several big shareholders.

THE US CABLE TV INDUSTRY

* There are 660 cable television providers in the United States, according to the National Cable & Telecommunications Association (NCTA), the representative body of the industry

* The US broadband marketplace has various types of access methods to get online: mobile wireless with a share of 43%, cable modem at 34%, digital subscriber line at 11% and fibre-to-home at 6%

* Over the past 20 years, the market share of cable TV providers has decreased significantly from 98% to around 54%

* The market share of satellite TV providers is 34% and telecom video providers stands at 11%

* Given the potential, telecom companies and satellite video providers are looking towards consolidation

* One of the largest deals in this space is the $45 billion acquisition of Time Warner Cable by Comcast. The deal is currently under regulatory review

* SoftBank, the Japanese telecom company that controls Sprint, has made no secret of its desire to buy T-Mobile USA

- MICHAEL J. DE LA MERCED