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Business/Finance See other Business/Finance Articles Title: AT&T to buy DirecTV for $48.5 billion as cellular growth eases (Reuters) - AT&T plans to pay $48.5 billion to buy DirecTV, the top U.S. satellite TV operator, in a bid for growth beyond an increasingly competitive cellular market. The deal, announced on Sunday, comes as Comcast Corp awaits regulatory approval of its $45 billion bid for Time Warner Cable Inc, a transaction that has the potential to transform the television landscape by creating a new cable and broadband Internet powerhouse. AT&T said it is offering $95 per DirecTV share in a combination of stock and cash, a 10 percent premium over Friday's closing price of $86.18. The cash portion, $28.50 per share, will be financed by cash, asset sales, financing already lined up and other "opportunistic debt market transactions." Analysts said the deal would help support AT&T's dividend even as it confronts tougher competition from upstart T-Mobile USA and other cellular operators that have pressured its average revenue per user. "This is financial engineering," said Kevin Smithen, an analyst at Macquarie. "It is a transaction that secures the dividend for many years, taking advantage of AT&T's relatively high valuation and low interest rates to do an accredited acquisition that will bolster its free cash flow." To facilitate regulatory approval, AT&T will sell its roughly 8 percent stake in Carlos Slim's America Movil. DirecTV has some 18 million customers throughout Latin America, in addition to its 20 million U.S. subscribers. AT&T said it expects the takeover to deliver cost savings at an annual rate of $1.6 billion by the third year after closing. COMPETITIVE CONCERNS "This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens - mobile devices, TVs, laptops, cars and even airplanes," AT&T Chief Executive Randall Stephenson said in a statement. "At the same time, it creates immediate and long-term value for our shareholders." Still, some analysts and investors have questioned why AT&T, which is facing slowing growth, would buy DirecTV at a time when U.S. satellite TV subscriptions have flattened. The growth of web-based television services could mean that demand for satellite TV will slow further in the coming years. AT&T, which is likely to face some questions from regulators about the deal's impact on competition in those areas where its U-verse service now competes with DirecTV in offering television, said it expected to be able to add 15 million broadband customers, mostly in rural areas, within four years after the takeover closes. DirecTV's deal with Dallas-based AT&T, which has some TV and broadband services, is the latest in a string of big takeovers the wireless operator has considered. Those include an abortive bid for T-Mobile USA in 2011, as well as a potential takeover of Vodafone Plc that receded as a possibility after The transaction has a total value of $67.1 billion, including DirecTV's net debt. The deal, which comes after a 25 percent gain in DirecTV's stock price this year fueled by growing speculation about an AT&T takeover, represents a win for Warren Buffett's Berkshire Hathaway, the satellite provider's top shareholder. Unlike many parts of Buffett's handpicked portfolio, the DirecTV holding is one of a series of bets by Todd Combs or Ted Weschler, brought on to help him with stock selection. Goldman, Sachs and Bank of America Merrill Lynch acted as financial advisers to DirecTV, and Weil, Gotshal & Manges LLP, Jones Day and Wiltshire & Grannis LLP served as legal advisers. AT&T, which has an extensive internal M&A team, was also advised by Lazard. DirecTV has agreed to pay a $1.4 billion breakup fee to AT&T in the event that it pursues another transaction with a higher bidder, a source familiar with the deal said. The transaction raises questions about what DirecTV's biggest rival, No. 2 satellite TV operator Dish Network, might do. With 14 million subscribers, Dish trails DirecTV and has been exploring the wireless business, making bids for AT&T's smaller rival Sprint last year before SoftBank ended up winning it. Dish's chief, Charles Ergen, has said that he does not have the cash to outbid AT&T for DirecTV. Dish tried to buy DirecTV in 2001 in a deal that was blocked by regulators. AT&T will not have to pay a penalty if regulators veto the deal, the source said. (Reporting By Mike Stone; Editing by Steve Orlofsky) Poster Comment: Just me I've had DirecTV for about 10 years now. Other than their contract practices, I really have no issue with them and the service is dependable. I used to have Dish, which is why I now have DirecTV. I used to have AT&T for my phone and Internet. Over $100/mo. for their "high speed" Internet service, which was "up to" 6 mbps. Notice they say, "up to." That's key, because there is no guarantee of that, or any other, speed. I called AT&T about every two months because my service would slow down. At one point, I was downloading at .06 mbps. 1/100th of their 6 mbps service. The customer service rep reminded me that it was "up to" 6 mbps and there was no guaranteed speed. And, they could "see" nothing wrong on their end. I offered to pay them 1/100th of my bill until it was fixed. They sent someone out on a Saturday who arrived and proceeded to tell me it was my computer BEFORE he looked at anything. After looking, he found nothing wrong at my end and said he would check the large AT&T substation by the entrance to our subdivision, but was sure nothing was amiss. About an hour later, my Internet was working at 5 mbps. At least it did for a month or so. Then I got cable Internet from Comcast for less money than AT&T and I surf now at 25 mbps. AT&T is horrid and will drag DirecTV down soon enough. Prices will be going up by the end of this year. My guess is about $7 per month average. +28-2 Coco We have had the same experience with AT&T internet..horrid. Stressful experience talking to the so called customer service in India. But we are trapped...no other way to get Internet in our house because we are just outside the suburbs. Price goes up every month or two for slow sluggish internet. All neighbors the same here. There is something wrong with the wiring coming back to the homes in our area..two AT&T techs have reported it ..I was there while one made the report...but everytime we call India to find out when it's going to be repaired there is no record of a problem. GRRR hate AT&T and now they will screw up our TV, too.+3 [jack] Until last week I had direct TV, and a good friend who is a Computer genius, told me to look into RUKU! I did and bought the unit and antenna for a total of 140 dollars, and now get more of everything that Direct gave me, for eight dollars a month, and the picture quality is at least as good, if not better! My last bill from direct was 148 dollars for one month, and it is the last one I will ever give them. I think Direct TV saw this coming and sold before the public became aware of this new Company, and what they can do. All you need is a computer with WIFI, and start to save big money friends! +2-1 http://news.yahoo.com/t-agrees-buy-directv-48-5-billion-cash-214127852--sector.html?soc_src=copy Post Comment Private Reply Ignore Thread
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