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AT&T to Buy DirecTV for $48.5 Billion

235 points| k-mcgrady | 12 years ago |dealbook.nytimes.com | reply

164 comments

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[+] suprgeek|12 years ago|reply
The race is officially on! Can the Telecoms retain their terrible monopolies by becoming streaming providers Faster than the Streaming providers (Netflix, Youtube, Amazon Prime et al) trying to become Content creators?

AT&T is running out of customers to squeeze in the cell phone plans market. This is the next frontier for terrible service, exorbitant prices and regulated monopolies...

[+] georgemcbay|12 years ago|reply
This race is rigged. Even if the streaming providers win the telecoms will just jack up the prices on their bandwidth when net neutrality is killed completely, which I don't think is an avoidable situation at this point.
[+] npinguy|12 years ago|reply
Use this as a perfect example to explain to people why Net Neutrality matters.

"What incentive does AT&T have to bring you good streaming experience for Netflix, Hulu, or heck even Youtube when they'd much much MUCH rather you were buying DirecTV from them?"

[+] rm999|12 years ago|reply
AT&T - and most major ISPs in the USA - already offer TV service. It's true that these consolidations will only give the big players more power, but the conflict of interest already exists.
[+] jusben1369|12 years ago|reply
Because I'll switch to Comcast or Verizon if I'm an ATT customer and their internet service is bad?
[+] raarts|12 years ago|reply
Think. How would the content providers - any of them, from Disney to Facebook - get their content at the consumer without the data-distributors, from Comcast to AT&T ? The saying is internet kills the middleman, but this is the real middleman that needs to be killed, and just as our roads are free and open to everyone, so should the digital roads be.
[+] rayiner|12 years ago|reply
Comcast and AT&T aren't the middle-man. They build a necessary part of the infrastructure necessary to get content to the consumer. They're no more the middle-man than FedEx or UPS. Companies like Netflix, etc, are the middle-men: selling other peoples' content over other peoples' wires.

Vis-a-vis roads: the public pays for the roads, while the cable networks have been almost entirely built with private money. Transportation is also a good example of why you probably don't want publicly-funded telecom networks. Older suburbanites vote, younger people don't. That means we have tons of highways out to the suburbs, and decrepit public transportation.

My parents switched from FIOS back to DISH because they missed their low-res Indian channels. They'll be the people voting to decide how much public money to allocate to broadband. Will you be happy with their decision? Especially now that states and cities are out of money? When push comes to shove and it's shoring-up public pensions versus building broadband, where will the money go?

[+] sukuriant|12 years ago|reply
Roads aren't free, we pay for them in taxes and tolls.
[+] sillysaurus3|12 years ago|reply
Do many young people watch TV anymore? It seems like netflix + youtube scratches that itch.
[+] krschultz|12 years ago|reply
Sports. ESPN + NFL Redzone + TNT + Local channels in HD have no good alternative on the internet. If they did I wouldn't pay for TV.
[+] __david__|12 years ago|reply
Do you mean live TV, or just having cable at all? I don't think I've watched live TV in 10 years.

I'm looking to cut my cord, but the problem is that nothing legit is as convenient as the cable+DVR setup. With those 2 things I have access to practically every TV show on the air (minus Netflix exclusive stuff).

To have access to that wide of a library without cable I need Netflix, Hulu, Amazon Prime, iTunes (and Pirate Bay for the stuff that's just impossible to get). There is not a single (non-computer) device that can play those all on my TV. So it's a bit of a hassle, screwing around to find what service on what device has what show and then remembering when the new ones come out.

Compare that to the stupid, but venerable, DVR where every show I want from whatever random channel just shows up when it comes out in one clean interface.

I want to kill it so bad but from a UX perspective, it's just so much better.

Really, the only thing that gets close to that experience at all is flexget[1] + a private torrent tracker. How sad is that? It really should be a huge kick in the nuts to all the legit streaming services, but I doubt that they even care... DRM just ruins everything. Sigh.

[1] https://github.com/Flexget/Flexget

[+] jds375|12 years ago|reply
I think it's really shifting away from TV. As a college student, my friends and I have been completely satisfied with Netflix and the like. I can confidently say that there is nearly a 0% chance I'll be getting cable/directv/whatever when I can just get Netflix/Hulu/etc instead.
[+] nickpresta|12 years ago|reply
Between YouTube, Twitch.TV (and related, like Azubu, Speedruns, etc), Crunchyroll, and occasional piracy (GoT), I never turn on my TV unless it's the Chromecast the aforementioned content.
[+] alaskamiller|12 years ago|reply
Yes. Except now the shows are timeshifted and streamed online.
[+] tn13|12 years ago|reply
I dont watch TV at all. The Set top box is lying around without being switched on for last 1 year.
[+] netcan|12 years ago|reply
You mean Netflix + Youtube + (the thing we are not mentioning)
[+] wil421|12 years ago|reply
You cant get the same content in the same quality from places like Netflix or Youtube.

I like to watch new shows not reruns of shows/movies I have already seen, most of the time I have seen them multiple times. I am looking at you netflix.

[+] chc|12 years ago|reply
Are you really questioning whether Game of Thrones is popular? Of course people still watch TV. A lot of them just pirate it.
[+] onedev|12 years ago|reply
No. I have not paid for TV since I move out of my parents house 4 years ago. I have 0 plans to purchase TV ever in my life.

Even for sports, there are numerous online streams (though illegal) that I will make use of to keep up with critical games like the NBA playoffs.

Other than that the content on TV is garbage, and all the good content I can pirate easily or watch on Hulu/Netflix.

Cable companies are fucked.

[+] k-mcgrady|12 years ago|reply
There's no way this can pass, especially with the Comcast/Time Warner deal still in process. Maybe this will scare regulators into denying both deals.
[+] eastdakota|12 years ago|reply
Doubt there will be any regulatory grumbling since it actually increases competition in the "triple play" space (Internet+Television+Phone). My hunch is that AT&T waited until they thought the Comcast + Time Warner deal was a virtual certainty before pulling the trigger on this. Who this will put more of a squeeze on is content providers (e.g., Disney/ESPN) as they now have to deal with two juggernauts.
[+] dublinben|12 years ago|reply
Why not? AT&T has a fraction of the video subscribers that DirecTV has. They're not a major player at all.

If you really want to avoid AT&T, then Dish still exists as a robust competitor.

[+] us0r|12 years ago|reply
Unlikely considering Tom Wheeler was both companies Chief Lobbyist.
[+] spacemanmatt|12 years ago|reply
Maybe it will scare another 10 or 100k out of a lobbyist.
[+] logicallee|12 years ago|reply
wow, I thought you meant "million"? You don't just buy a company for $48.5 billion, and have a tiny matter-of-fact headline like this.

What's the last company that got bought for even $30 billion!

This is a mind-boggling sum of money.

Check out the largest mergers and acquisitions of all time:

http://www.bloomberg.com/visual-data/best-and-worst/largest-...

(Do bear in mind inflation - add 45% since 1998 according to http://www.usinflationcalculator.com/)

This deal must still be way up there. I wonder if someone can find the largest acquisitions of the past 2-3 years.

[+] parasubvert|12 years ago|reply
Net Neutrality is a ruse: providers "promise" to maintain an SLA against their competitors when they still own the last mile, and the service, and the core network. In practice, SLAs are weak sauce.

The more viable competitive model to me would be to a mandatory Open Access Network.

http://www.opennetworkforum.org/what-is-an-open-network

1. Spinoff of existing Big telcos own the core physical fibre or RF infrastructure

2. Various network providers own and operate active equipment & billing on the network - no one owns the last mile

3. Various service providers provide content & applications on the network.

4. No company performing one role can compete in another role, so as to avoid monopoly

This of course will never happen in the USA because the inmates are running the asylum.

So we'll have to rely on countries like Sweden to prove it out:

https://www.acreo.se/sites/default/files/pub/acreo.se/EXPERT...

[+] icpmacdo|12 years ago|reply
Is this acquisition from cash that AT&T hand or would they go to a bank and work with them for capital?
[+] cshenoy|12 years ago|reply
$28.50 of the $95/share is cash while the rest is AT&T stock. From the PR release[0], "AT&T intends to finance the cash portion of the transaction through a combination of cash on hand, sale of non-core assets, committed financing facilities and opportunistic debt market transactions."

[0]: http://about.att.com/story/att_to_acquire_directv.html

[+] josephlord|12 years ago|reply
The graphs in the article are really good and clear, matched scale across the different graphs, enough years for context. I hadn't realised that US cable really was declining on such a scale rather than cable cutting being something more talked about than really happening.
[+] shiift|12 years ago|reply
Next up AT&T + Comcast merger... 'Cause why not?
[+] eastdakota|12 years ago|reply
That won't happen. Comcast + Verizon, perhaps.
[+] jmccree|12 years ago|reply
This is interesting. My building has tv/phone/internet via DirecPath, a fiber based isp now owned by DirecTV. The only alternative is via the local telco, AT&T. Will be interesting to see how this plays out.
[+] capkutay|12 years ago|reply
I'm surprised Apple didn't get into this recent movement of communications company acquisitions. For 1/3 of their cash pile, they could have streamlined control of not only the devices (tablets, phones, tv's) and the content market place (itunes), but also the infrastructure to provide media and telecom services through possible acquisitions of time warner, directv, and/or tmobile.
[+] mkal_tsr|12 years ago|reply
There are rumors of partnership with Comcast (which is looking to merge w/ Time Warner)
[+] sliverstorm|12 years ago|reply
It's almost like the industry wants the government to step in on anti-trust grounds.

Wait a minute...

[+] kmfrk|12 years ago|reply
Put that WhatsApp acquisition in your pipe and smoke it, Zuckerberg.
[+] mahyarm|12 years ago|reply
A 30 engineer + 20 support staff company, I still bet they have a higher $/employee ratio.
[+] ulfw|12 years ago|reply
Ridiculous that these things are allowed in the US. So for all your media needs there'll basically be only two providers some day - at&t or Comcast. Pathetic
[+] blantonl|12 years ago|reply
You have to wonder how much the NFL Sunday Ticket was worth as part of this transaction.
[+] marincounty|12 years ago|reply
If they can compete against the devil--Comcast; I'm all for this merger.
[+] edoceo|12 years ago|reply
According to them lack of competition is good for the market. Maybe Zuckerburg can start a bandwidth company and bring another (desperately needed) player to the game.