AT&T to buy Direct TV for $48.5 billion

[WaTaGuMp]

http://finance.yahoo.com/news/t-agrees-buy-directv-48-5-billion-cash-214127852--sector.html

 

[Phynaz]

Not gonna happen with a 10% premium.

 

[Karl Agathon]

Glad I bundled with FIOS

 

[Newell Steamer]

I thought AT&T was strapped for cash - and it was the main reason why they could not support the 'heavy' data usage from the customers, to upgrade the network and what not?

And, now, they buy DirectTV.

 

[Londo_Jowo]

Hmmmm I wonder why AT&T has recently been upgrading the infrastructure/network in the Houston area is they're so strapped for cash.

 

[Jaskalas]

This is Direct TV throwing out the lifeboats before the impending 4k ice berg.

Internet >>> Satellite.

Satellite providers are going the way of disk media.

 

[PokerGuy]

Seems like a rather odd fit. AT&T is facing saturation in the cell phone market and pressure from competitors like tmobile, and now they're adding DTV, wich doesn't look to be growing at all, and doesn't look like it's going to be growing any time soon since more and more people are getting entertainment over the internet rather than from satellite TV.

Regardless, 10% premium ain't gonna work. They're going to have to pony up more than that.

 

[PokerGuy]

Internet >>> Satellite.

Satellite providers are going the way of disk media.

In the long run I'd agree, but it's going to be decades before everyone (especially in more rural areas) has cable broadband available. In the meantime, that's about 40 million customers that will continue to use satellite for a long time.

 

[OutHouse]

This is Direct TV throwing out the lifeboats before the impending 4k ice berg.

Internet >>> Satellite.

Satellite providers are going the way of disk media.

lol you is funny today!

 

[Newell Steamer]

Satellite providers are going the way of disk media.

Satellite will be around, until Google Fiber wires the entire USA.

Current ISPs won't do jack until then, and therefore leave satellite pretty much untouched.

 

[Fern]

I thought AT&T was strapped for cash - and it was the main reason why they could not support the 'heavy' data usage from the customers, to upgrade the network and what not?

And, now, they buy DirectTV.

Hmmmm I wonder why AT&T has recently been upgrading the infrastructure/network in the Houston area is they're so strapped for cash.

The article explains this.

For one thing the acquisitions is 70% funded by ATT's stock.

The rest, the cash portion, comes from a variety of sources. The article also says ATT's cash flow will be improved/enhanced:

"This is financial engineering," said Kevin Smithen, an analyst at Macquarie. "It is a transaction that secures the dividend for many years, taking advantage of AT&T's relatively high valuation and low interest rates to do an accredited acquisition that will bolster its free cash flow."

To facilitate regulatory approval, AT&T will sell its roughly 8 percent stake in Carlos Slim's America Movil. DirecTV has some 18 million customers throughout Latin America, in addition to its 20 million U.S. subscribers.

AT&T said it expects the takeover to deliver cost savings at an annual rate of $1.6 billion by the third year after closing.

Aside from the "financial engineering" benefits I believe ATT's real objective is acquiring content. First, however, they are increasing their distribution channels which will give them leverage when they move to acquire content.

(There is a content aspect here. DirectTV has rights to NFL games. If they lose that this deal with ATT is probably off.)

Fern

 

[Jaskalas]

Satellite will be around, until Google Fiber wires the entire USA.

Current ISPs won't do jack until then, and therefore leave satellite pretty much untouched.

Netflix thinks it can stream 4k at 15mbs. Charter cable here offers 100mbs. 15-20mb barrier to entry actually seems rather low, and widely accessible. Am I mistaken?

Not only do I think the internet is ready for 4k, but younger generations are dropping traditional TV. Satellite providers can see the writing on the wall. I do not expect them to survive the transition to 4k.

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