AT&T Plans to Buy DirecTV for $48.5 Billion

[dgstorm]

Big business news hit the web early this morning. It's not directly Android related, but it has folks in the mobile industry scratching their heads so it is worth sharing. AT&T and DirecTV began the process for a buyout. AT&T plans to pay $95 per share for DirecTV, which amounts to a whopping $48.5 Billion dollars. The resulting amalgamation will amount to the second largest US Pay TV company. The Comcast-Time Warner Cable merger will still be number one, but this will give AT&T a nice fighting edge to compete with that conglomerate.

This deal could get shot down by regulators though. Here's a quote with some of the details,

But the deal could face unique regulatory scrutiny from the Federal Communications Commission and Department of Justice. Unlike the cable company tie-up, the AT&T-DirecTV merger would effectively cut the number of video providers from four to three for about 25 percent of U.S. households. That's a situation that could result in higher prices for consumers and usually gives regulators cause for concern.

Of course, AT&T is going to make their case as to why this deal should proceed. Here's another quote with AT&T's assessment,

- DirecTV would continue to be offered as a standalone service for three years after the deal's closing.

- AT&T would offer standalone broadband service for at least three years after closing, so consumers could consume video from Netflix and other online services, with download speeds of at least 6 megabits per second where feasible.

- AT&T would expand high-speed broadband access to 15 million more homes - beyond the 70 million that could now get AT&T service - within four years.

- AT&T vowed to abide by the open Internet order from 2010 that the Federal Communications Commission is now in the process of revising after a court struck it down.

- AT&T vowed to sell its roughly 9 percent stake in Latin American wireless carrier América Móvil for about $5 billion.

The reason this is indirectly relevant to the mobile sector is because this merger is missing the "mashed potatoes" of the meal. If AT&T wanted to shore up their entire telecommunications infrastructure and marketability, then it makes more sense to buy up DISH Network. This is because DISH has a large swath of wireless spectrum which could be very useful to AT&T's wireless mobile division, but DirecTV doesn't have any wireless spectrum.

Some industry pundits are speculating this is precisely why AT&T chose DirecTV over DISH. They are banking on this fact to help them pass regulatory scrutiny. The question remains though... Why bother spending that much cash to acquire holdings in the satellite industry, when most analysts see it as a dying breed?

Source: Yahoo