First Comcast and Time Warner proposed a merger, which is still going through the regulatory rounds. Now, according to The Wall Street Journal, AT&T is considering acquiring DirecTV in a deal it says would be worth at least $40 billion.
The report cites people familiar with the situation. WSJ’s Shalini Ramachandran and Thomas Gryta report:
The approach has come since Comcast struck its Time Warner Cable deal in February, one of the people said. It is unclear whether the companies are in detailed talks, but another person familiar with the situation said that DirecTV would be open to a deal. The satellite TV industry is facing a slowdown in subscriber growth after years of adding customers. The pay television market in the U.S. is now mature, with about 90% of U.S. households with TV now subscribing to either cable, satellite or phone company-delivered television.
If DirecTV loses NFL Sunday Ticket, that could hurt its subscriber growth even more. The provider struck a deal with the NFL in 2009 with an exclusive contract to last until 2014. The service gives customers access to every game, and is a popular package with fans. The offering alone has no doubt brought many subscribers DirecTV’s way as it’s not been available with any other service.
AdAge reported in February that DirecTV was close to a contract renewal, but a deal wasn’t yet finalized. The original deal expires at the end of the 2014 season.
Either way, it seems more likely that a deal between AT&T and DirecTV would be approved if the Comcast and Time Warner deal is, as the two entities would then be on a similar playing field. According to the Journal, AT&T+DirecTV would combine for roughly 26 million subscribers compared to Comcast+Time Warner Cable, which would serve about 30 million.
Neither company is commenting.
Image Wikimedia Commons