Reasons for AT&T Inc. (T)’s Plans to Acquire DIRECTV (DTV)


Earlier today, it was reported that AT&T Inc. (NYSE:T) plans to acquire satelite TV provider DIRECTV (NASDAQ:DTV), in a deal that could amount to as much as $50 billion. While the deal looks promising for both companies and could create one of the largest conglomerates in the Telecommunication sector, the market remained cold to the news, with shares of both companies edging down.


In a recent intervention, CNBC’s Morgan Brennan looked into the merger between the two companies and the possible reasons behind AT&T’s possible decision to acquire DIRECTV (NASDAQ:DTV). According to Brennan, the deal could bring AT&T around 27 million subscribers for pay tv. AT&T currently has U-Verse packet, which combines Internet access, digital TV, and telephone services, but it has only 5 million subscribers.

In this way, the merger, would allow AT&T Inc. (NYSE:T)  to compete better with Comcast Corporation (NASDAQ:CMCSA), which would have around 30 million subscribers in case of a successful acquisition of Time Warner Cable Inc (NYSE:TWC). Moreover, DirecTV currently owns exclusive rights for NFL Sunday Ticket throughout the 2014, but Brennan says that DirecTV is currently looking to renewing the deal.

However, an important thing that the consolidation in the telecommunications industry will bring, either from the Comcast-Time Warner merger, or AT&T Inc. (NYSE:T)’s acquisition of DIRECTV (NASDAQ:DTV), is the possibility of the companies to compete better against each other. These deals will remove the number of competitors, which would affect pricing, Brennan concludes.

The full video can be watched below:

One of the largest shareholders of DIRECTV (NASDAQ:DTV) is Warren Buffet’s Berkshire Hathaway. Berkshire held around 36.51 million shares of the company at the end of last year. Mason Hawkins’ Southeastern Asset Management is another one, owning 21.71 million shares. At the same time, Gamco Investors, led by Mario Gabelli, owns almost 4.54 million shares of DirecTV.