AT&T to acquire DirecTV. Here's what's next:
AT&T agreed to buy DirecTV for $48.5 billion on Sunday, changing the pay-TV landscape even further after the Comcast-Time Warner merger pact that was struck in February.
Why the deal makes sense for AT&T:
- It gives the company a larger base of video subscribers — 38 million in the US and Latin America — and grows its clout with media companies at a time when consumer consumption habits are going online.
- The deal will also help both companies get ahead of industry trends, namely rising content costs, the increasing consumption of video on mobile devices, and the growing importance of broadband.
- The pact will also let the combined company deliver content to multiple screens across TV, mobile phones, PCs, and tablets.
Here’s what happens next:
- Although the business models of AT&T and DirecTV are mostly noncompetitive, the deal is bound to raise concerns about a lack of options for consumers and less competition in the market.
- The companies will hold an investor call on Monday to explain the agreement to analysts and the press. Re/code predicts their leaders will emphasize that the deal means more broadband and a greater range of choices for consumers.
- AT&T is also planning to sell its $6 billion stake in Latin American company America Movil SAB to avoid conflicts.
- The pressure is on AT&T rivals Verizon and Sprint, the latter of which is moving ahead with a bid for T-Mobile, as well as DirecTV competitor Dish Network.
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