The rumors surfaced last week, and AT&T made it official yesterday evening. The telecom company has agreed to pay nearly $50 billion in cash and stock for satellite TV provider DirecTV. If approved by regulators, the new AT&T would have control of about 26 million TV subscribers.
AT&T already has a small cable TV footprint with its U-verse service, but bundling DirecTV with its other products would be very "synergistic," as they say. AT&T must really want this – it's also picking up $19 billion in debt with the acquisition. Satellite companies haven't had a lot of luck in recent years as people cut back on TV and stream more internet video. With DirecTV, AT&T could cut its small U-verse cable TV footprint and transition everyone to satellite TV, giving it more capacity for broadband. It says broadband could be rolled out to as many as 15 million additional homes if the deal goes through.
As the companies seek to convince regulators to approve the deal, they will no doubt point to the possible merger of Comcast and Time Warner. They will likely argue a larger AT&T could offer more competition to Comcast. AT&T has also gone out of its way to promise that it will stick to the FCC's now-defunct 2010 net neutrality rules for three years after the deal closes. Yeah... thanks for that. Three whole years of net neutrality. At any rate, the companies will be holding a press conference this morning to talk about the deal. There might be more info then.