This morning AT&T and DirecTV hosted a webcast to discuss the acquisition of DirecTV by AT&T for a purchase price of $48.5 billion. The total transaction value was $67.1 billion including DIRECTV’s net debt. Yesterday AT&T (NYSE:T) and DirecTV (NASDAQ:DTV) announced AT&T Inc (NYSE:T) will acquire DirecTV. This will be a stock and cash transaction based on Friday’s closing price of AT&T stock. DirecTV shareholders will receive $95 per share comprised of $28.50 per share in cash and $66.50 per share in AT&T stock.
Earlier this year AT&T’s competitor Comcast Cable (NASDAQ:CMCSA) acquired 100% of Time Warner Cable Inc (NYSE:TWC) in a stock for stock transaction of $45.2 billion. Competition among companies is increasing as American television watching habits change transfer from cable and satellite to video over broadband and wireless networks. DirecTV’s competitor Dish Network Corp (NYSE:DISH) reached an agreement with Walt Disney Co for rights to Internet distributed video. DIRECTV’s deal with Disney is up for renewal at the end of this year.
The opportunities and threats for these companies are new mobile products, Wi-Fi hotspots, video streaming, industry competition and strategic advantages. AT&T has broadband to almost 70 million homes while the merger between Comcast and Time Warner in February was to prepare and form a defense from satellite and phone companies.
DISH is prepared for an internet video streaming platform and newer services such as Hulu LLC and Aereo Inc. The merger of the cable companies was an attempt to provide a strategic advantage to negotiate terms with content providers. Charter Communications made a deal with Comcast for some of their providers when they withdrew as a competing company to acquire Time Warner. Speculation of a merger between Sprint and T-Mobile exists, and if the FCC blocks the merger DISH has responded with interest.
AT&T’s advantages from the acquisition of DIRECTV are 15 Million Customer Locations Get More High Speed Broadband Competition, Stand-Alone Broadband, Nationwide Package Pricing on DIRECTV, Net Neutrality Commitment and Spectrum Auction. DIRECTV Latin America is the largest pay TV provider with a growing middle class. To ensure regulatory approval in Latin America, AT&T removed their divested its interest and provided their immediate resignations to the América Móvil Board of Directors.