directv logo

Shares of DirecTV rose more than 5% in early trading Thursday, one day after reports surfaced that telecommunications giant AT&T is interested in buying the satellite broadcaster in a deal that could potentially create a large rival to the merger of Comcast Corp. and Time Warner Cable currently trying to move forward.

While a marriage of AT&T and DirecTV would certainly require approval by federal regulators, a tie-up would add heft to AT&T’s efforts to broaden its scope beyond telecommunications and broadband services to providing video. AT&T already operates its U-verse  video service that reaches about 6 million homes. DirecTV reaches approximately 20 million homes.

Both companies declined to comment. The Wall Street Journal previously reported AT&T ‘s interest in purchasing DirecTV.

In early trading, shares of DirecTV rose $4.62, or nearly 6% on volume of 4.55 million. Average volume for the stock is 3.8 million shares.

AT&T has already expressed a yen for video distribution. Last month, the company announced plans with the Chernin Group to invest $500 million to create a venture that will acquire, invest in and launch over-the-top video services.

One Wall Street analyst sounded less than impressed by the prospect of the two companies under one umbrella. In a research note issued Thursday, MoffettNathanson analyst Craig Moffett described the idea of a combined AT&T and DirecTV as “the latest spectacle in the freak show circus of TMT [technology/media/telecommunications] let’s-make-a-deal.”

Moffett also suggested rationale for the deal was thin, and would really only help AT&T gain more leverage against paying programming costs to content companies or gain some cash flow from DirecTV. “Perhaps that’s enough,” he wrote.  “But it isn’t strategy; if simply buying cash flows is sufficient, AT&T could just as easily buy a pharmaceutical firm.  Or a dog racing track.”

 

Filed Under:

Want Entertainment News First? Sign up for Variety Alerts and Newsletters!
Post A Comment 0