AT&T buys DirecTV for $48.5 billion

AT&T agreed Sunday to buy DirecTV for about $48.5 billion in yet another mammoth deal in the pay-TV space this year that would immediately boost the telecom giant’s customer base at a time of confounding industry challenges.

The merger, which both boards approved Sunday, is the latest evidence of TV-industry consolidation, one born of telecommunications companies’ desire to amass customers and control content and delivery. With streaming and wireless technology upending the industry, cable and satellite service providers are rushing to add product options while boosting revenue per customer to please shareholders.

In the deal, AT&T would pay DirecTV shareholders $95 per share. Including DirecTV’s debt, the total transaction’s value is about $67.1 billion.

“Customers will be able to get wireless, voice, data, TV and home security from the same company nationwide,” says Roger Entner, an analyst at Recon Analytics. “It allows (AT&T) to grow the share of consumers’ spending on telecom.”

DirecTV shareholders will get $28.50 per share in cash and $66.50 per share worth in AT&T stock. In the stock portion of the deal, they will receive 1.905 AT&T shares if AT&T stock price is below $34.90 at closing or 1.724 AT&T shares if its stock price is above $38.58. If AT&T’s stock price at closing is between $34.90 and $38.58, DirecTV shareholders will receive between 1.724 and 1.905 shares of AT&T stock, equal to $66.50 in value.

In anticipation of the deal — their talks were first leaked on April 30 — DirecTV shares have risen 12%.

“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,” said Randall Stephenson, AT&T’s chairman and CEO, in a statement Sunday.

AT&T offers pay-TV service through its U-Verse brand, but its market reach is limited. The acquisition broadens AT&T’s footprint nationally and creates a pay-TV giant that can offer video through both fiber-optics lines and satellites. It would also give AT&T more flexibility in bundling services by leveraging its wireless networks and satellite-delivered TV-Internet service.

If approved by regulators, DirecTV will operate as an AT&T subsidiary and continue to be based in its current headquarters in El Segundo, Calif.

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