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Deal would fold satcaster into telco's arsenal, amid Comcast's $45 billion pending takeover of Time Warner Cable

AT&T is reportedly close to reaching an agreement to acquire satellite giant DirecTV for about $50 billion — marking another blockbuster merger that would further consolidate U.S. pay-TV services into the hands of a few major players if approved.

The announcement is expected to come today or Monday. The news broke that AT&T and DirecTV were in talks barely three weeks ago, and it follows years of industry speculation that the largest U.S. telco would acquire either DirecTV or its smaller sat-TV rival, Dish Network. BuzzFeed first reported that the AT&T-DirecTV deal could be unveiled as early as Sunday. Reps for DirecTV and AT&T did not respond to requests for comment.

DirecTV stock closed at $86.18 per share Friday. Its shares have risen 11% since April 30 when the talks with AT&T were reported. The deal is expected to value DirecTV in the range of low- to mid-$90s a share. AT&T stock closed at $36.74 on Friday, up 22 cents. The telco’s shares are up 2.3% since rumors of the deal surfaced.

The union of AT&T with the nation’s largest satellite TV provider is a response to Comcast’s $45 billion bid for Time Warner Cable. That deal, which is pending government review, would produce an entity serving about 30 million U.S. TV subscribers.

Analysts have speculated that AT&T could migrate its 5.7 million U-verse TV subscribers to DirecTV’s satellite-delivered service, freeing up bandwidth in its terrestrial data networks. With 26 million pay-TV subscribers, AT&T would also gain leverage in programming negotiations on par with a merged Comcast-TW Cable.

AT&T’s bid for DirecTV could face a high regulatory hurdle, as it would effectively eliminate a pay-TV option in about 25% of the U.S. where the phone company sells U-verse in competition with DirecTV. AT&T in 2011 was forced to scrap efforts to buy T-Mobile for $39 billion, after the Department of Justice sued to stop it on antitrust grounds.

For AT&T, the deal comes 16 years after its last effort to break into the traditional pay TV business. In 1998, AT&T paid $48 billion to acquire John Malone’s Tele-Communications Inc., then the biggest U.S. cable operator with 14 million subscribers. In 2000, AT&T acquired MediaOne for $44 billion — outbidding Comcast.

But only three years after buying TCI, AT&T exited stage left. In 2001, it agreed to sell AT&T Broadband to Comcast for $47 billion plus the assumption of $25 billion in debt.

Teaming with AT&T would help DirecTV overcome in U-verse markets its biggest competitive disadvantage against cable — the inability of its sat-TV system to offer high-speed broadband service. But the U-verse markets only encompass a portion of DirecTV’s U.S. footprint of 20.3 million subscribers. In Latin America, DirecTV has another 18 million subscribers.

AT&T and DirecTV have been business partners for several years. In 2009, the telco began exclusively selling a co-branded version of DirecTV’s satellite TV service — which it markets in non-U-verse areas — and dropped its previous agreement with Dish.

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