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AT&T Announces Plans for Monumental Purchase of DirecTV for $48.5 Billion

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AT&T Announces Plans for Monumental Purchase of DirecTV for $48.5 Billion

Postby sunnyd » Mon May 19, 2014 9:56 am

On Sunday, AT&T officially announced its deal to buy DirecTV for $48.5 billion. The deal confirms AT&T’s desire to expand beyond existing services currently offered and become more competitive in the markets of cellular, broadband, TV and landline phone services. DirecTV is the number one US satellite TV provider with about 20 million customers.

The deal will allow DirecTV for the first time to offer broadband Internet to its US customers. Previously the company faced competition without being able to provide that service.

AT&T currently offers video service through U-verse which it plans to continue after the deal goes through. AT&T said it expected to be able to add 15 million broadband customers, mostly in the rural areas, within a time period of four years following the closing of the deal. That would add 15 million customers to its existing base of 11 million current Internet customers.

Critics are already questioning the deal and pushing for regulators to reject it, just as they are with the Comcast–Time Warner merger. The reasons are the same, mergers such as these tend to create monopolies and present unfair competition for the smaller companies. Consumers are also affected by the mergers, although to which extent remains to be seen if the deals are approved.

With AT&T’s growth being somewhat slow in recent months, this deal raises many questions as to why the company would choose to buy DirecTV now, during a time when subscriptions for satellite TV are also slow as a result of competition from service providers such as Netflix and Hulu which continue to show rapid growth.

As the WSJ points out, the announcement on Sunday puts new pressure on the U.S. government to act as a watchdog for the interests of the American public. Added to that is an element of drama which is being thrown into the concerns. Will the deal go through? And should it? Or is it simply going to be a case of the rich getting richer, at the expense of the public?

The agreement was approved by the board of directors for both companies, and the deal is expected to close within 12 months, pending a regulatory review and full approval from DirecTV’s shareholders. AT&T is paying $95 a share, with $66.50 represented by its own shares and $28.50 in cash. Including net debt, the transaction values DirectTV, the biggest satellite-TV provider in the US, at $67.1 billion.

Now we face the decision waiting game again from federal regulators, for yet another proposed service provider monopoly.

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Re: AT&T Announces Plans for Monumental Purchase of DirecTV

Postby zbeast » Wed May 28, 2014 8:26 pm

this is one of those buyouts I really can't worry about.
I have not used DirectTV for years, well after they killed card hacks. :)

but I don't get my tv that way anyway.. it's internet or the highway.
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