AT&T Reportedly Nearing Deal To Buy DirectTV For $50 Billion

AT&T may soon add DirecTV into its fold as rumored talks of a $50 billion acquisition look to be more realistic.
Posted at 11:06 PM, May 12, 2014

What began as a rumor earlier this month is turning out to be fact as AT&T is reportedly close to sealing the deal on a takeover of DirecTV. The pricetag? $50 billion. 

The Wall Street Journal writes that the deal would involve a mix of both cash and company stock on AT&T's side. A payment that the author writes "has the benefit of limiting its borrowing and thus helping protect its credit rating."

The talks were first reported on April 30, and USA Today notes that ever since then, DirecTV stocks have risen steadily. They're now at just over $92 after rising 6% Monday during after-hours trading. 

The deal would combine the country's second-largest wireless carrier with the country's largest satellite television provider, something CNN's Brian Stelter noted would put it at number two behind the combined Comcast and Timer Warner Cable.

But why make the deal now? While there's speculation that the Comcast-Time Warner Cable deal may have spurred the talks, Bloomberg reporter Cory Johnson says that AT&T may simply see now as the best opportunity.

"It's this effort of consolidation and also suggests that the Justice Department and the FCC seems to be more pro-merger than they have in the past and that these guys think that maybe this is the time to get a deal done. "

But The Washington Post reported earlier this month that the merger "would trigger a pretty complicated game of regulatory chess" as the FCC and Justice Department will have decide how much of an impact it would have on the Comcast-Time Warner Cable merger.

The New York Times writes that Dish, not DirecTV, would be a more suitable candidate for AT&T, saying that Dish has "has amassed a trove of spectrum that could be valuable to AT&T as it seeks to expand its wireless network."

As to why DirecTV may be interested in the merger, besides the $50 billion, Businessweek quotes an JPMorgan Chase & Co. analyst as saying "If DTV is willing to sell for $100 [per share] then it must be either concerned about its lack of broadband long term, worried about the viability of a Dish merger, or both."