Deals

AT&T plans to acquire DirecTV for $48.5B — with a net neutrality promise

Above: AT&T hopes to acquire satellite TV provider DirecTV.

Image Credit: Corporate logos

AT&T agreed today to acquire satellite television provider DirecTV for about $48.5 billion.

The acquisition, announced via a press release, will close only if approved by regulators. Both companies approved the transaction Sunday.

It’s the second major TV and cable internet provider consolidation in the works: Comcast announced plans in February to acquire Time Warner Cable for $45 billion, although that acquisition is also pending regulatory approval.

According to the Times, AT&T ($T) will pay $95 per share ($28.50 in cash and $66.50 in AT&T stock), a 10 percent premium to DirecTV’s current stock price of $86.18 ($DTV). Including assumed debt, the transaction is valued at $67.1 billion.

As a point of reference, AT&T’s current market cap is about $190.7 billion.

The release describes DirecTV as “the premier pay TV provider in the United States and Latin America.” The combined company will be able to deliver high-speed broadband (wired) services to a total of 70 million customer locations, the companies say.

In order to encourage regulatory approval, AT&T is making several promises:

  • Expanding wired broadband coverage to 15 million new locations, “mostly in rural areas.”
  • Offering a stand-alone wireline broadband package that doesn’t require a TV or phone subscription, at speeds of at least 6Mbps.
  • Unchanged pricing on DirecTV packages for at least three years.
  • A commitment to the FCC’s Open Internet provisions as established in 2010 (see: FCC Open Internet Order PDF, and the agency’s Open Internet website).
  • Divesting itself of its interest in América Móvil.

Additionally, AT&T has no intention of changing its plans to participate in the FCC’s planned spectrum auctions this year and next, in which the company plans to bid at least $9 billion for new spectrum licenses that will allow it to deliver fast wireless connections.

DirecTV will continue to be headquarted in El Segundo, California.

Here’s a look at the last 6 months of each stock’s price.

DTV Chart

DTV data by YCharts

And here’s the relative change in each stock, compared to the S&P 500, for the past six months. AT&T has underperformed the market slightly, while DirecTV has returned a booming 32.83% over six months, or about 8 times the S&P 500.

DTV Chart

DTV data by YCharts

Hat tip: New York Times

More information:

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36 comments
Jerome China
Jerome China

Appears you won't be "directing" tv afterall.

John Hetlage
John Hetlage

At&t We promise not to extort money from website owners. I call bs.

Majid Ahwazi
Majid Ahwazi

They can promise everything, but when it comes to delivery we know it goes nowhere, except for higher prices, more monopoly and crappy service.

Ed Hardebeck
Ed Hardebeck

"We don't care; we don't have to. We're the phone company."

Xenfomation
Xenfomation

@pigram86 yeah - i just read that on cnn. two mediocre companies into one... cruddy one.

Nicholas Russell
Nicholas Russell

Still, this is a smart play. The company that survives in the future will be the one who purposely doesn't mess with anyone's bandwidth.

William Dexter
William Dexter

'AT&T' and 'promise' never go together in a sentence.

SSC1974
SSC1974

@FrankLuntz Well there goes the great service we DirecTV subscribers have enjoyed! I've had DirecTV since 1996!

Richard Kerr
Richard Kerr

so much for customer care. Directv was great, AT&T....ah not so good. So do we get the DTV version of the AT&T version?

Mike Saller
Mike Saller

It's about time we give AT&T common carrier status.

Jeff Williams
Jeff Williams

*Until we are going to miss this quarters guidence then we'll change our policy.

Yannick Boucher
Yannick Boucher

well, that at&t breakup a few decades ago sure was useful, eh!

Joseph Griffith
Joseph Griffith

Package deal....the 2 worst entertainment providers now in one .... THEY BOTH SUCK...GOOD RIDDINS

Kate Gallagher
Kate Gallagher

I feel like regulators may not let this pass. Cable companies still have a monopoly and unless they let go of streaming rights by networks then there really isn't that much competition left on the market. It would basically mean you could have DirectTV, Comcast/TimeWarner or Charter right? I may be missing one but that is the case in SoCal.

Frederic Guarino
Frederic Guarino

Right, like a French politician once said "promises only oblige the ones on the receiving end..."

Charlie Cowan
Charlie Cowan

And they will begin selling bridges in Brooklyn next year. I dumped DirecTV two years ago and just last week dumped AT&T wireless. I feel so good!

Will Smith
Will Smith

Why would they acquire such a garbage television provider?

pigram86
pigram86

@Xenfomation directly affects me as a DirecTV customer. I left ATT Uverse for them. Now full circle.

Xenfomation
Xenfomation

@pigram86 i am so sorry to hear that, todd. there is a reason i left the telco industry...