The deal, which had been in the works for some time, will put AT&T back in the business front and center as a major U.S. player in the pay TV provider business.
AT&T’s U-verse 5.7 million subscriber-based IPTV-delivered TV service and the 20.3 million subscriber satellite-delivered DirecTV business would total 26 million subscribers -- making it the second-largest pay TV operator behind a combined Comcast-Time Warner Cable. That deal, proposed in February and valued at $45 billion, would have 30 million subscribers.
The AT&T-DirecTV deal would be worth $95 per share to DirecTV shareholders -- $28.50 per share in cash, along with $66.50 per share in AT&T stock. Including the assumption of DirecTV’s debt, the deal is worth about $67.1 billion. On Friday, DirecTV’s stock closed at $86.07 a share.
Some observers are unsure how U-verse and DirecTV -- two different TV delivered protocols -- can mesh operations. Still, analysts say the likelihood is that the deal will be easier to pass through federal regulators now that the Comcast-Time Warner deal appears to be headed for approval.
Randall Stephenson, chairman/chief executive of AT&T, in a statement on the agreement said: “This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens -- mobile devices, TVs, laptops, cars and even airplanes."
AT&T also noted: “The transaction enables the combined company to offer consumers bundles that include video, high-speed broadband and mobile services using all of its sales channels -- AT&T’s 2,300 retail stores and thousands of authorized dealers and agents of both companies nationwide.”
DirecTV also has 18 million subscribers in Latin America. AT&T says its mobile network and a high-speed broadband network will cover 70 million customer locations, with the broadband expansion enabled by the DirecTV transaction.
In 1999, AT&T purchased the assets of then-biggest U.S. cable TV operator Tele-Communications, which had some 13 million subscribers. The deal went for $43.5 billion, and AT&T renamed the business AT&T Broadband. It was then sold to Comcast in 2003.