AT&T Buys DirecTV for $48.5 Billion

On Sunday, AT&T purchased satellite service provider DirecTV for $48.5 billion in stock and cash. The deal marks the latest event in the transformation of the media and telecommunications industry.

The merger allows AT&T to greatly increase its customer base since DirecTV has over 20 million subscribers in the U.S., in addition to18 million in Latin America. In return, DirecTV will benefit from AT&T’s 120 million wireless subscribers and 16.5 million broadband users throughout the U.S. Together the companies will be able to offer phone, high-speed Internet, and pay-TV subscription packages to more customers.

“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,” AT&T Chairman and Chief Executive Randall Stephenson stated. DirecTV CEO Mike White and Stephenson noted that they are picturing various scenarios where customers can watch live-TV on their tablets in their backyard or on road trips.

The customers of AT&T and DirecTV can expect to have bundling options of DirecTV’s TV channels with AT&T wireless and Internet services. On their mobile devices, subscribers will most likely be able to get or stream DirecTV content. For those who only want broadband Internet service, they can choose to have a stand-alone broadband service at guaranteed prices for three years.

These new changes will not take place immediately, as the deal is expected to close within the next 12 months. In addition, the merger must also be approved by federal regulators to make sure it does not violate anti-trust laws, nor harm the public interest.

Three months ago, Comcast purchased Time Warner Cable, bringing together the two largest cable companies in the country. These latest major mergers have caused many to criticize the actions of telecommunication companies, as these changes could negatively affect customers.

“The captains of our communications industry have clearly run out of ideas,” said Craig Aaron, president of Free Press, an organization geared towards changing media and technology policies. “Instead of innovating and investing in their networks, companies like AT&T and Comcast are simply buying up the competition. These takeovers are expensive, and consumers end up footing the bill for merger mania.”

“AT&T’s takeover of DirecTV is just the latest attempt at consolidation in a marketplace where consumers are already saddled with lousy service and price hikes,” Delara Derakhshani, policy counsel for Consumers Union, said in an emailed statement. “The rush is on for some of the biggest industry players to get even bigger, with consumers left on the losing end.”