May 20, 2014

AT&T plans to acquire DirecTV

We previously discussed on this blog the possibility that AT&T would acquire DirecTV. It was recently reported that this acquisition deal is moving ahead. AT&T plans to acquire DirecTV in a $48.5 billion deal. 

When major players in an industry combine in a merger or acquisition deal, the consolidation can create concerns when a few large companies come to dominate a significant part of their industry. For this reason, these types of major acquisitions may have to be approved by federal regulators.

Through this acquisition strategy, the companies will combine to "create a unique new competitor with unprecedented capabilities in mobility, video and broadband services," according to an AT&T press release

According to the release, the acquisition will allow the companies to offer bundles featuring mobile, broadband and high-speed Internet services, allowing for the distribution of content across all of these platforms. 

"U.S. consumers will have access to a more competitive bundle; shareholders will benefit from the enhanced value of the combined company; and employees will have the advantage of being part of a stronger, more competitive company, well positioned to meet the evolving video and broadband needs of the 21st century marketplace," said Mike White, president and CEO of DirecTV in the press release.  

The deal has yet to be approved by regulators. According to a CNNMoney article, the two companies combined would put them in second place, with Time Warner Cable and Comcast as the number one provider in the country, should the deals be approved. 

Comcast, which has been planning to acquire Time Warner Cable, must provide evidence that the deal is in the best interest of the public before receiving regulatory approval. AT&T and DirecTV will have to do the same.