AT&T To Acquire DirecTV

Dave Zatz —  May 19, 2014

As widely rumored, AT&T has formally announced their intention to purchase DirecTV for $95/share.

This purchase price implies a total equity value of $48.5 billion and a total transaction value of $67.1 billion, including DIRECTV’s net debt.

While this transaction, should it be approved, would result in one of the largest pay television providers, I see it largely as a defensive maneuver on AT&T’s part in an industry where they should be on the offensive with more forward thinking plays as linear television looks to contract. Further, it’ll be interesting to see how DirecTV’s negotiations with the NFL evolve given new ownership, with deeper pockets and potentially broader distribution potential … and if they are granted exclusive rights.

12 responses to AT&T To Acquire DirecTV

  1. According to CNBC this morning, who cited the 8K filing by AT&T, the NFL deal is a major component of this transaction. Should DirecTV not renew NFL:ST, AT&T can walk away from the deal without penalty.

  2. NFL’s bargaining position just got a whole lot stronger. I pasted the relevant 8k excerpt below. Wonder if “substantially” and “terms discussed” include exclusivity of some sort?

    The parties also have agreed that in the event that DIRECTV’s agreement for the “NFL Sunday Ticket” service is not renewed substantially on the terms discussed between the parties, the Company may elect not to consummate the Merger, but the Company will not have a damages claim arising out of such failure so long as DIRECTV used its reasonable best efforts to obtain such renewal.

  3. There’s so many moving parts, it’s going to be interesting to see how it works out. Legally, DirecTV has to operate as if the merger isn’t happening, AT&T cannot be involved in the NFL negotiations at all, and DirecTV can’t count on their money. The NFL will of course know this so they can’t necessarily put the screws to DirecTV (though it does bump the price up a bit I’m sure)

    Also, I wonder how the NFL’s deal with Verizon will factor into it. It will be very awkward for Verizon to be the “official wireless partner” of the NFL, with all the apps and whatnot, and then all of a sudden AT&T owns the rights to the premier content agreement for the League.

  4. Okay wait, do we all hate AT&T or not. I forget.

  5. “Okay wait, do we all hate AT&T or not. I forget.”

    All the essentially unregulated MSO’s are pretty hatable.

    MSO consolidation is immensely hatable.

  6. More bad news for the consumer.

  7. Technically neither AT&T nor DirecTV are MSOs.

  8. And neither support CableCARD.

  9. “Technically neither AT&T nor DirecTV are MSOs.”

    Wikipedia disagrees with you, for whatever that’s worth.

    But we’re deep in genuinely arguable semantic territory here. As most folks currently use the term, it applies to any teevee+internet provider, though that is not faithful to the origins of the acronym. (Started as ‘multi-system’, evolved to ‘multi-service’…)

    “And neither support CableCARD.”

    An inexplicable regulatory crime, which should be rectified.

  10. Actually “MSO” vs. something else means something. MSO = Multiple system operator, and generally refers to the cable companies. Everyone else in the TV market (including the MSOs) are “MVPDs” or multi-channel video programming distributors. The ISP side is completely different, and is just that…ISP. Those distinctions are exactly why AT&T and DirecTV don’t have to support CableCard (which, I agree, is something that should be rectified)

  11. Well, if we’re determined to get deep into the weeds on semantics:

    “MSO = Multiple system operator”

    As noted upthread, I fully agree with you that that is the origin of the acronym.

    “Everyone else in the TV market (including the MSOs) are “MVPDs” or multi-channel video programming distributors. The ISP side is completely different, and is just that…ISP.”

    Again, as noted upthread, Wikipedia disagrees with you, conflating MVPDs and MSOs on their MSO page, and thus listing the sat providers on their MSO page.

    More broadly, again, most folks these days use MSOs to refer to combo teevee-internet providers, no matter the form of delivery. While, again, this is not correct via the origin of the MSO acronym, usage is a living process, and given the lack of a “proper” term for teevee-internet providers, most folks have settled into referring to them as MSOs despite the genuine semantic objections you raise.

    And at the end of the day in semantics, common usage rules the roost, even if it’s not derived in a particularly logical manner.

  12. Continuing on semantics:

    Joseph, (or anyone else), can you give me a better term than “MSO” for a combo teevee-internet last mile provider, whether wired or sat? If so, I’ll happily use it…