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Rumor on the Street: Verizon to Make Bid for DirecTV

Discussion in 'DIRECTV General Discussion' started by Ken S, Sep 25, 2009.

  1. Sep 28, 2009 #81 of 108
    jpl

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    The FCC? Nothing. The FTC may have something to say about it, though. Given the size of DirecTV and Verizon, it wouldn't surprise me to have the FTC require some divestiture of some piece of either company before allowing any such deal to go through. Although, really, you're not creating a monopoly, so such a deal would likely be approved... assuming it happens... which I still contend that it won't.
     
  2. Sep 28, 2009 #82 of 108
    bb37

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    Those ignorant of history are doomed to repeat it. ;) I find it ironic that what seemed like such a great idea in 1982, breaking up AT&T, is now not a good idea. Granted, the marketplace has changed dramatically and we have consumer-based communications services that few even dreamed of 25 years ago.

    It's interesting that GTE, and now Verizon, is the telephone company in Fort Wayne, Logansport, Lafayette, and Terre Haute, Indiana. It's as if someone drew a line down the Wabash River and said "we'll serve these towns even though they are in the middle of Indiana Bell/Ameritech territory."

    Seems like I see Sprint serving lots of small towns in northern Indiana and Ohio. How did they end up with these isolated markets? Who did Sprint buy to get them?

    While most of the former Indiana Bell, now AT&T, is CWA, there is a pocket in northwestern Indiana that is, I believe, IBEW. Doing work inside a CO in that area is very different from the rest of the state.
     
  3. Sep 28, 2009 #83 of 108
    jpl

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    Some of the geography listed in that post is wrong. For example, FL and TX are both big Verizon territories too - yeah, AT&T is there as well, but those markets are split. And they're currently also in IN, WA, and OR - three markets that include FiOS, which are being divested to Frontier.

    I do have one nit with the notion that Ma Bell is reforming like the T1000 in Terminator 2. Not only is there a wide diversity of communication media that didn't exist in 1982, the market-place has changed dramatically for these companies. Calling Verizon 'the phone company' makes as much sense as calling Comcast 'the cable company.' Yeah, those are their legacy businesses, but the business models have dramatically changed. For example, Verizon is divesting a huge chunk of its legacy system - between their sale to Fairpoint and now to Frontier. They're also looking to move away from traditional land-line phone service. That's not what they're gearing up for anymore. They're quickly moving away from that market.

    Yes, the phone companies have moved into new areas, but so have other companies - Comcast adds voice customers at an impressive clip, e.g. The business models are changing. No one company will have monopoly status over telecommunications like AT&T used to have. It just won't happen. Even if Verizon bought up all the former baby bells, and created a new Ma Bell, they would get slammed with competition from other sources.
     
  4. Sep 28, 2009 #84 of 108
    Ken S

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    I didn't say there was insider trading. There are several other regulations dealing with the improper disclosure of information that don't require the person making the disclosure to profit directly. This is not the place for that type of discussion. I would suggest, however, that it is unlikely that information on a forthcoming transaction of this nature would be given out by anyone that really is involved at an executive level and then posted on a public forum. I would hope it's just baseless rumor.
     
  5. Sep 28, 2009 #85 of 108
    jpl

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    Legal trouble? No... you can't. You or your family/friends have to benefit from the transaction for you to be in trouble with the law. Disclosing some piece of information that's held close to the vest may get you fired, but you're not violating the law with doing that. At least not from a criminal perspective. I guess you can be sued - if you sign a non-disclosure agreement about something and you open your mouth, you're now in violation of your contract, which means that your employer can sue you in court, but that's not the same as someone going to jail.

    That being said, there are laws on the books governing 'export' of technical information, and I guess such a disclosure COULD be construed as such an export. But in this case we're talking strictly about a business transaction - the purchase of one company by another.
     
  6. Sep 28, 2009 #86 of 108
    Doug Brott

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    Let's just leave this "disclosure" as a bad idea and perhaps move back to the discussion about the rumor .. Thanks all.
     
  7. Sep 28, 2009 #87 of 108
    SamC

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    Sprint traces it history back to two companies. One was United Telephone, which was another of those "non-Bell" telephone companies that had random territories here and there across the country. The other was Sprint, which was originally "US SPrint" which provided long distance competition to AT&T prior to the Bell breakup using the infastructure of the Southern Pacific and other railroads (which is where the SP came from).

    After a complex series of buyouts and breakups, Sprint-Nextel sold off its POTS business to Embarq. If you see Sprint branded POTS, its just some signage that Embarq has not replaced yet.

    Well, no. Yes, there are no mainland states, except Delaware, where the original AT&T owned every single exchange. The exchanges that AT&T did not own passed around, and many ended up with GTE, and then Verizon, and thus are being spun off to Frontier, or with United Telephone, and thus are now Embarq, or others. These do include significant parts of many states, however FL's incumbent Bell company was Southern Bell, which became BellSouth, which is now AT&T and Texas was Southwestern Bell, which became SBC and thus also AT&T.

    While it is a common perception that AT&T (the original) owned all the big cities, there were lots of reasonabably sized towns that were non-Bell.
     
  8. Sep 28, 2009 #88 of 108
    fl panthers

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    on a side note about verizon.a few years back when nextels push to talk was expireing and verizon was pushing for that market they agreed and opened kiosk's in home depot right by the front door first endcap.they were not there long,maybe a month or two because they never paid the rent and one morning it came down(from corperate hd) to roll their kiosk out back and if they don't pick it up by monday destroy it and dipose of it.My two cents about verizon,they are a poor business partner and probably run that way unless they have the better deal.
     
  9. Sep 29, 2009 #89 of 108
  10. Sep 29, 2009 #90 of 108
    jpl

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    Holy cow... not only is that a great article... it actually encapsulates everything I've said in my other posts as to why I think the rumor is nonsense. The cost for DirecTV is too high... FiOS is not only rolling out strongly, but it's still costing Verizon alot of money to roll out, and they're focus has been to pull in a bit. Meaning they've slowed down the roll-outs in some more rural markets and are focusing alot more heavily in heavy-population areas - pushing for agreements with cities and surrounding suburbs, and ditching their more rural systems. They've been focusing, in other words, on increasing penetration rate... and per the article, it's been paying off. I also mentioned that, especially given the state of the economy, there are cheaper targets out there if their goal is simply to expand their TV empire.

    And buying DirecTV would be nothing more than them expanding that empire. It really doesn't fit in with their core strategy for FiOS - it's an addition that would allow them to get into markets that they currently don't serve. Which means that buying some alternate service is just meant as a way to expand purchasing power. If that's the case, there are MUCH cheaper ways to do that. I can see paying to buy DirecTV if it fit in with their long-term strategy for getting into video. But it doesn't. The deal simply makes no sense to me.
     
  11. Sep 29, 2009 #91 of 108
    gully_foyle

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    It has never made sense that companies who exist solely because they have a monopoly on wires would be interested in a company that exists to bypass those wires. At least as far as synergy is concerned. AT&T or Verizon's main interest would be to cripple their most dangerous competitor.

    I really cannot see this passing antitrust muster.
     
  12. Sep 29, 2009 #92 of 108
    jpl

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    I don't think it's an anti-trust issue, to be honest. There would be no monopoly created from such a deal. This doesn't make sense to me because the numbers don't add up. Think of it this way - the original articl (in the first post) talked about Verizon doing this to increase their TV footprint so they can get better carriage deals for their TV channels. Yes, they would save some money on their carriage deals... and yes, they would have revenue from their DirecTV subscribers... but such a deal would cost, what? $30Billion? $40Billion? What's the break-even point on that? Five years? Ten?

    So... they're going to go $40Billion into hock so they can save a couple dollars on their carriage agreements? I just don't think so. Plus FiOS is still costing them alot of money. Take that $40Billion to buy DirecTV and FiOS suffers. FiOS is so expensive because it IS their strategic vision - where they want to go. Buying up another TV provider (whether DBS or cable) doesn't fit into that vision at all. Why would you sacrifice investment in your strategic plan in buying up something that doesn't fit into it? It would just be a naked move for market expansion, in a way that doesn't fall in line with your vision for the company.

    In short, it's a very short-sighted move. And one thing that impresses me about Verizon's investment in FiOS is that it's anything but short-sighted. They're spending gobs of money to do FiOS right. I mean if they wanted to go the short-sighted route they could have just emulated AT&T with their roll-out of U-Verse.

    If buying up a DBS provider DID fit into their long-range plan for getting into video, then I would say absolutely... buying up DirecTV makes sense. But it doesn't fit. It would just be a move to expand their TV empire. And if you're going to do that... then why DirecTV? There are MUCH cheaper ways to go about that - Dish is hard up for cash (no offense to the Dish subscribers out there) - they would make a much nicer buy-out target for Verizon.
     
  13. Sep 29, 2009 #93 of 108
    Ken S

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    I believe that DirecTV makes more sense as a purchase for AT&T. Verizon though would be forced to do something as the FIOS rollout may take longer than they have time for competitively.
     
  14. Sep 29, 2009 #94 of 108
    jpl

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    I'll agree with that. IF AT&T makes a move on DirecTV, then Verizon would be compelled to do something. I don't think this makes sense for AT&T either, though. Again, U-Verse is exceeding expectations on their roll-out. They should save the money they would be spending on buying another company and instead work on migrating their architecture to FTTP.
     
  15. Sep 29, 2009 #95 of 108
    breevesdc

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    I have mixed feelings about this if it happens. I plan on switching from RCN to FiOS for phone/internet when it is available in DC in a few months. But I know several people that have FiOS in Northern Virginia and they tell me that their customer service is HORRIBLE. While I can see the advantages to dealing with one company for all of my communication/TV needs (I am a Verizon Wireless subscriber), I'm not sure I want them touching my DirecTV service.

    Brian
     
  16. Sep 30, 2009 #96 of 108
    Scott in FL

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    Agreed!!! After terminating my Verizon high speed internet service last month, I will never deal with them again. All due to HORRIBLE customer service.
     
  17. Sep 30, 2009 #97 of 108
    pouterson

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    You need to read up on your Insider Trading law. Knowingly releasing any "inside information" to anyone, including to a complete stranger, is violation of the law. You could be speaking to someone in an elevator about something you know and if they go out and act on that information, that's a violation of the law. Even if they don't benefit, that's a violation of the law.

    My employer goes to extraordinary lengths to make sure the employees fully understand inside trader practices. They use an example similar to yours as a test question for us. The correct answer is that it does violate US insider trading laws. :nono:
     
  18. Oct 3, 2009 #98 of 108
    dreadlk

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    You can bet on one thing, if the rumor has started then that means that D* has become a ripe buy out target and most likely it will get sold in the next year or two.

    This would be what the third or fourth time that D* has been sold!! I was once told that D* looks good on the books as far as cash flow but there long term problems such as satellite upgrades and receiver changes etc have always made them a bad long term investment. Not sure how true that is but I know they do spend a lot of cash to keep the system running.
     
  19. Oct 3, 2009 #99 of 108
    dreadlk

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    Can you show us one case ever where someone was succesfuly prosecuted for doing this?
     
  20. Oct 3, 2009 #100 of 108
    Drew2k

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    Laws can exist that are not enforced or for which no one has ever been prosecuted, but they are still laws.
     

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