AT&T Inc. (NYSE:T) may be planning to acquire DIRECTV (NASDAQ:DTV), a satellite TV company, and has approached them for the same, as per the reports from the Wall Street Journal. The market cap of DirecTV is $40 million and it has 20 million viewers.
Curiosity surrounding DirecTV
The deal between AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) would prove beneficial helping the internet company to come at par with their rival Comcast, as far as presence on TV is concerned. TV business by AT&T has 5.7 million customers while 30 million customers are jointly served by Comcast and Time Warner Cable. Almost 26 million customers will fall under one brand after the successful completion of the AT&T and DirecTV deal.
There have been rumors that the DirecTV and Dish Network’s possible attempt of merger once again after an unsuccessful attempt in 2002. Now, amid a possible AT&T and DirecTV, the timing of such rumors is creating curiosity.
Falling subscriber growth for satellite TV industry
The satellite TV industry since its inception has been adding large number of customers. However, the present scenario is not as good as it used to be in the initial years. The subscriber growth is declining as the satellite TV industry is on a slowdown. As many as 90% of the U.S. households are subscribers of paid television, which can be any of the various available forms like cable, satellite or television delivered by phone company. A major drawback of the satellite TV firm’s is that they have not been able to provide internet services to their customers while the other competitors like cable and phone companies have been able to do that. The rate of subscriber growth of DirecTV in the U.S. has been falling every year on a year over year basis for the past 4 years.
AT&T Inc. (NYSE:T) has been seeing video delivery as one of its core function, in the coming future. This acquisition will help AT&T to acquire a national footprint in the pay television. Offering the bundles of wireless and TV services would become easy for AT&T provided the acquisition is completed. The deal would, also, enable them in finding new ways of video delivery to the broadband and mobile customers.
