The rumor mill has been churning for a couple weeks about a tie-up of AT&T and DirecTV. As of Sunday afternoon, it’s no longer a rumor. The deal would create a giant that over Wireless phone service, DSL and fiber landline internet, and nationwide TV service through both satellite and U-Verse. Let’s take a peak at the details of this new internet and Cable TV Supplier.
In all, the deal is worth 67.1 billion with AT&T paying $48.5 billion to share holder and the company also taking responsibility for DirecTV’s debt. For DirecTV shareholders that equates to $95 a share, roughly 1/3rd cash, 2/3rds stock. The deal will include rights to DirecTV’s NFL Sunday Ticket, thought it is unknown if that will expand to U-Verse customers. AT&T will also take possession of DirecTV’s Root Sports Network and its minority stake in other networks.
AT&T is also planning a coinciding rural broadband push bringing internet access of at least 6mbps to 15 million new customers, bringing its eventual broadband customer base up to 70 million. After the buyout closes, former DirecTV services will be available via AT&T’s 2300 stores and its authorized providers. According to the release, DirecTV customers will enjoy consistent pricing throughout the US at least 3 years after the merger. Since the deal is subject to regulatory and board approvals, the deal is expected to close by this time 2015.
In anticipation of the deal — their talks were first leaked on April 30 — DirecTV shares have risen 12%.
“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,” said Randall Stephenson, AT&T’s chairman and CEO, in a statement Sunday.
AT&T offers pay-TV service through its U-Verse brand, but its market reach is limited. The acquisition broadens AT&T’s footprint nationally and creates a pay-TV giant that can offer video through both fiber-optics lines and satellites. It would also give AT&T more flexibility in bundling services by leveraging its wireless networks and satellite-delivered TV-Internet service.
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