AT&T Agrees to Purchase DirecTV (Was: ATT looking to buy Direct TV)

Discussion in 'DIRECTV General Discussion' started by puri, Apr 30, 2014.

Thread Status:
Not open for further replies.
  1. harsh

    harsh Beware the Attack Basset

    22,920
    453
    Jun 14, 2003
    Salem, OR
    I disagree with these particular media experts.

    In the Comcast-TWC merger, they're trying to combine the top two companies in the cable space (TV, broadband and phone). In contrast, the AT&T-DIRECTV merger seeks to combine two giants in mostly different (but complementary) disciplines. Not that AT&T's Uverse doesn't represent a significant operation, but the main concern seems to be the broadband side of things where DIRECTV doesn't bring a dish to that table of the potluck.
     
  2. Diana C

    Diana C Hall Of Fame DBSTalk Club

    2,119
    296
    Mar 30, 2007
    New Jersey
    Yes, harsh is correct about the difference. The Comcast/TWC is specifically in trouble because of broadband. If these were "just" cable TV operations there would be no issues. But given the scrutiny that broadband service has been under the past few months, the Justice Dept is questioning whether a single company should control access to the Internet for roughly a third of the country.

    The only reason to block AT&T/DirecTV is because it does remove one competitor in places where AT&T sells UVerse. However, that is in only a few markets, and is just a TV service issue (which is a declining business anyway).

    IMHO, the fate of Comcast/TWC has no bearing on AT&T/DirecTV.
     
  3. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

    52,300
    2,661
    Apr 17, 2003
    Michiana
    "Leanings" ... more fear, uncertainty and doubt. A few weeks ago the "rumor" was that the merger would be approved within a few weeks. Too many media types writing stories based on their gut and not on actual outcomes.

    When the DOJ or another government agency actually rules we will have something to work with. But now, it is just FUD.
     
  4. harsh

    harsh Beware the Attack Basset

    22,920
    453
    Jun 14, 2003
    Salem, OR
    And so it goes with those who are addicted to either producing or consuming "the news". Bloggers are the new weathercasters.
     
  5. SomeRandomIdiot

    SomeRandomIdiot Godfather

    1,348
    37
    Jan 6, 2009
    Totally incorrect.

    TWC and Comcast do not compete against each other.....

    DirecTV and AT&T compete against each other in every market AT&T is in.

    Furthermore, DirecTV/AT&T would become the largest MVPD in the Country if approved and Comcast/TWC was not.
     
  6. inkahauts

    inkahauts Well-Known Member

    25,187
    1,606
    Nov 13, 2006
    Eh, I think controlling all the internet is huge deal. Look from the back end what they have done to Netflix already.and that's what they are talking about. They compete over that kind of thing now albeit indirectly.
     
  7. Diana C

    Diana C Hall Of Fame DBSTalk Club

    2,119
    296
    Mar 30, 2007
    New Jersey
    So what? That's not the point. Sure, there is no single place in the country where Comcast and TWC are both available (of course not, they have cable monopolies in most places). This isn't about geographical competition. The Comcast/TW deal is in trouble because of size. Comcast is already the largest TV and Broadband provider in the country. The DOJ is concerned that making it even bigger would give them too much power in the marketplace when dealing with providers and customers.

    For example, a Comcast that serves broadband to half of all households can extract whatever peering or interconnect fees they want from content providers like Netflix, Amazon, Vudu, Crackle, etc. since failing to pay up means they lose half the market. This would give Comcast the ability to control customer access to competitive services.

    Edited to add:

    ATT/DirecTV, on the other hand, combines a much smaller cable TV operator and moderate size broadband provider with the 2nd largest TV provider. DirecTV has 20 million TV customers, and ATT has 6 million UVerse customers, only 4 million of which are TV subscribers (and non-UVerse broadband is in the 10s of thousands). So ATT/DirecTV will have 24 million TV customers and 6 million broadband customers. That's pretty much the size of Comcast today for TV and less than 1/7 as many broadband customers (counting residential and business users). TWC has over 12.5 million TV subscribers and 11 million broadband customers. If they have to divest 10% of them, that would still leave a combined Comcast/TW with roughly 34 million TV customers and 60 million broadband customers - a third larger than ATT/DirecTV for TV and 10 times larger for broadband (and ATT/DirecTV would be the #2 provider in the country).

    Even if ATT/DirecTV is approved and Comcast/TW is blocked, Comcast would still be the #1 broadband provider (by a WIDE margin) and less than 10% smaller than ATT/DirecTV as a MVPD (assuming Comcast/TW divest of at least 2 million TV customers - without divestiture they would be the same size).

    Source for subscriber counts: http://www.multichannel.com/news/cable-operators/top-20-multichannel-providers/326351 (2 year old data, but the relative margins are still about the same).
     
    1 person likes this.
  8. Diana C

    Diana C Hall Of Fame DBSTalk Club

    2,119
    296
    Mar 30, 2007
    New Jersey
    There was an article in the NY Times Business Section yesterday about how Comcast's failure to abide by conditions placed upon them in the NBC-Universal acquisition is also a contributing factor. Basically, no one thinks they will pay any more attention to any restrictions that allow the deal to go forward than they have in the past. They also pointed out what I discuss above, namely that a combined Comcast/Time Warner Cable would control broadband access for half the country.
     
  9. harsh

    harsh Beware the Attack Basset

    22,920
    453
    Jun 14, 2003
    Salem, OR
    A paper in Philly or Boston noted this last week and I've been on this since the first noise about the merger. If Comcast decides to run off and do their own thing as they did with NBC Universal (especially the CSN Philly fair market value clause), any protections sought are summarily defenestrated.
     
  10. Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

    15,541
    617
    Dec 2, 2010
    Monterey...
    Now there's a word I wouldn't chuck out of a window!
     
  11. Drucifer

    Drucifer Well-Known Member

    9,492
    248
    Feb 12, 2009
    NY Hudson...
    Yes they do, but it is extremely rare for a locale to change their cable provider.
     
  12. inkahauts

    inkahauts Well-Known Member

    25,187
    1,606
    Nov 13, 2006
    Yeah they both can bid on territories directly to cities any time a contract is up.
     
  13. SomeRandomIdiot

    SomeRandomIdiot Godfather

    1,348
    37
    Jan 6, 2009
    So you say AT&T should have no issue purchasing DirecTV?

    Interesting in a statement today they had to acknowledge it:

    The bonds are contingent on AT&T's ability to acquire DirecTV. Company leaders told analysts during a first-quarter earnings call that they are confident the deal would go through, but that was before Comcast (NASDAQ: CMCSA), facing government pressure, backed away from its Time Warner Cable (NYSE: TWC) acquisition. If the DirecTV deal falls through, AT&T said it would redeem some of the bonds at a premium.

    Not everyone was enthused about the deal, according to a Barron's Blog Post.

    "Given the low growth mix of AT&T's businesses, challenging competitive environment and declining margins and cash flow in its existing operations, we believe that the company may be hard-pressed to achieve the leverage reduction goal," Bruce Falbaum, portfolio manager of Cohanzick Managements' Nexus Fund, told Barron's in an email. "With respect to DTV, they are paying a very high price for cash flow to replace declines in cash flow in their other businesses."

    Leverage Reduction Goals - you know what that means for the end user....
     
  14. Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

    15,541
    617
    Dec 2, 2010
    Monterey...
    Leverage Reduction Goals - you know what that means for the end user....

    By itself, it means absolutely nothing to an end user; it's a corporate strategy for managing finances.
     
    1 person likes this.
  15. hdtvfan0001

    hdtvfan0001 Well-Known Member

    32,456
    258
    Jul 28, 2004
    Yup.
     
  16. harsh

    harsh Beware the Attack Basset

    22,920
    453
    Jun 14, 2003
    Salem, OR
  17. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Gold Club DBSTalk Club

    52,300
    2,661
    Apr 17, 2003
    Michiana
    You are misreading it: "DirecTV has agreed to pay a $1.4 billion break-up fee to AT&T, or roughly 3 percent of the deal value, if it ends the deal to accept a higher bid."

    The fee would be due if DirecTV calls off the deal to accept a higher bid. The merger documents linked earlier in the thread confirm this penalty. Regulators nixing the deal is not DirecTV ending the deal to accept a higher bid.
     
  18. Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

    15,541
    617
    Dec 2, 2010
    Monterey...
    Right on. There were also contingent penalties if DIRECTV® didn't come through with Sunday Ticket, but I think those conditions were all met (ones beyond just extending it, which we know about.)

    A One-point-four billion dollar mistake—by attributing a penalty to DIRECTV® for actions by a regulatory body when it is contingent on an action by DIRECTV® reminds me of a good rule to follow: To not enjoy the comfort of opinion without the discomfort of thought. YMMV......
     
  19. slice1900

    slice1900 Well-Known Member

    11,087
    1,684
    Feb 14, 2013
    Iowa
    If Directv had agreed to pay a $1.4 billion breakup fee for a merger it didn't initiate based on regulatory factors it couldn't control, there would be a shareholder lawsuit against Mike White for breach of fiduciary duty. The target of a buyout would never agree to such terms, only a fool would consider that a possibility.
     
Thread Status:
Not open for further replies.

Share This Page

spam firewall

Advertisements