US telecommunications company AT&T has agreed a $48.5bn (€34.9bn) deal to acquire satellite television provider DirecTV.
Under the terms of the deal, announced on Sunday, AT&T is offering $95 per DirecTV share in a combination of stock and cash, a 10 per cent premium over Friday’s closing price of $86.18. The transaction has a total value of $67.1bn, which includes taking on DirecTV’s net debt.
The agreement has been approved unanimously by the boards of directors of both companies and will now seek regulatory approval. To assist its case, AT&T will sell its roughly eight per cent stake in Carlos Slim’s telecommunications company America Movil, worth in the region of $5bn. DirecTV has around 18 million customers throughout Latin America.
AT&T currently offers a pay-television service through its U-Verse brand, but its market reach is limited and DirecTV would broaden its footprint on a national basis in the US. DirecTV is currently engaged in talks with the NFL to renew its exclusive rights to the American football league’s Sunday Ticket package of programming – a key product for the company.
The out-of-market subscription package was first launched by DirecTV in 1994, allowing subscribers to access Sunday afternoon games broadcast by US networks CBS and Fox. DirecTV’s exclusive deal for Sunday Ticket programming will expire at the end of the 2014-15 NFL season.
The Sunday Ticket package costs subscribers up to $300 a year and is an important part in DirecTV’s customer acquisition strategy. Around two million people currently receive the service. DirecTV’s content ownership also includes minority stakes in the MLB Network and NHL Network – the pay-television services of Major League Baseball and the National Hockey League respectively.
The two parties said the transaction combines complementary strengths to create a “unique new competitor” with “unprecedented capabilities” in mobility, video and broadband services. “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 – mobile devices, TVs, laptops, cars and even airplanes,” Randall Stephenson, AT&T chairman and chief executive, said.
“At the same time, it creates immediate and long-term value for our shareholders. DirecTV is the best option for us because they have the premier brand in pay TV, the best content relationships, and a fast-growing Latin American business.”