Could AT&T buy DIRECTV? Here’s our take

The web is abuzz this morning with news, first reported in The Wall Street Journal and The Los Angeles Times that AT&T has shown some interest in buying DIRECTV. The combined company would have roughly 26 million subscribers, still less than the projected 34 million that a Comcast-Time Warner Cable deal would create, and this has given credibility that DIRECTV, long rumored to be seeking merger partners, may finally have found one.

You probably know all that, you’ve probably seen it in a dozen places. That’s not why you come to The Solid Signal Blog. We’ll give you the real story.

A merger (or acquisition deal) between AT&T and DIRECTV is more credible than ever before. The two companies already have business deals in place for bundling services, and while they do compete directly, it’s hardly a level playing field with DIRECTV having three times the customer base and a considerably better level of technology. If the FCC approves a merger between Comcast and Time Warner Cable, then DIRECTV executives could easily argue that a merger with AT&T should be approved as well.

We’re a long way from seeing that happen. The internet’s jumping about with rumors that representatives of AT&T and DIRECTV have talked, and even if it’s true, there’s no deal, not even a proposal. At best what we have here is a conversation that might have happened between two people who might have something else in store. That’s it. We have our own theory:

What if this story was leaked on purpose?

DIRECTV and AT&T can’t be happy about the idea of Comcast and Time Warner Cable merging. Both DIRECTV and AT&T compete with cable and a single company with 34 million subscribers has to be a threat to them. Imagine if you will, DIRECTV and AT&T executives sitting down trying to figure out how to stop the merger of two of its competitors. Briefs filed to the FCC probably wouldn’t do it. Lawsuits would probably seem desperate. But, what if it looked like approving a DIRECTV/AT&T merger would set off round after round of mergers that couldn’t be stopped? That might stop the ball from rolling in the first place, right?

Recent actions (and inactions) from the FCC have shown that they can’t be trusted to have the public’s best interests at heart, so what if this is a ploy to derail the Comcast merger without going straight to the FCC? If that’s the case it would be a smart move for DIRECTV and AT&T to make sure that national news sources had the story, not just specialty sites like The Hollywood Reporter. It might even be best if more than one source had an original story. OK, so it’s a wild conspiracy theory, but it does fit the situation.

Let’s consider, for a minute, what a combined DIRECTV/AT&T would bring to the table. DIRECTV has superior technology and a very large customer base, while AT&T has both a wireless and wired infrastructure that covers large portions of the country. This would give the new company a strong advantage in both satellite and internet-delivered content, and might help them successfully steal Time Warner Cable customers who are nervous about the future.

DIRECTV would have the internet infrastructure it needed to compete with other companies’ cloud DVRs, and AT&T would gain a national footprint in TV, which has been impossible for them up to this point. The two companies are also pretty compatible in their management styles, both conservative and cash-heavy. It would give AT&T a key to expansion in South America, where demand for TV and wireless services is huge. We think it would be a good match.

So, this is a win-win for the companies — if news of a DIRECTV-AT&T merge scares regulators out of approving Comcast-Time Warner Cable, that’s a win. If it does actually happen, that’s another win.

Probably worth mentioning again that Signal Group, parent of this blog, is a DIRECTV Authorized Dealer but does not speak for DIRECTV.

About the Author

Stuart Sweet
Stuart Sweet is the editor-in-chief of The Solid Signal Blog and a "master plumber" at Signal Group, LLC. He is the author of over 8,000 articles and longform tutorials including many posted here. Reach him by clicking on "Contact the Editor" at the bottom of this page.