May 6, 2014

AT&T may have plans to acquire DirecTV

It was reported recently that AT&T may be considering a merger with DirecTV. According to an article in Time Magazine, AT&T is considering the possibility of acquiring DirecTV, which could mean another major consolidation in the telecom industry, if the Comcast Time Warner deal goes through. Through this type of acquisition strategy, companies like AT&T and Comcast look to strengthen their offerings and become dominant players in the market.

AT&T's interest in satellite broadcaster DirecTV could possibly be a move that changes the industry, because it would "create a pay television giant" that would be close to the size that Comcast will be if the company is permitted to acquire Time Warner Cable, the Wall Street Journal reported.

We recently wrote about the pending acquisition of Time Warner Cable by Comcast, which has drawn regulatory concerns and is waiting to receive approval. Currently, the Justice Department has competition concerns regarding the Comcast Time Warner deal. If the two companies merge, they could pose a potential problem for consumers. They could put consumers at a disadvantage because their options for providers would be limited.

The potential deal between AT&T and DirecTV could be worth more than the company's current market value of $40 billion. Although the companies have been in talks about the possibility of a merger, they could end up facing similar regulatory concerns. The Comcast Time Warner merger would be a $45 billion deal, but there is question over whether the deal would be in the interest of the public, as the companies could take a dominating position in the market if they were to join forces. If both of these deals go through, the companies would be in control of roughly a third of the pay television market in the U.S.