AT&T (NYSE: T) has been in discussions with DirecTV (NASDAQ: DTV) about purchasing the satellite TV provider, according to a report in The Wall Street Journal citing unnamed sources close to the talks.
If such a merger were to come to fruition, the combined company would become an even bigger video provider threat to Comcast (NASDAQ: CMCSA) if it successfully completes its acquisition of Time Warner Cable (NYSE: TWC).
DirecTV has about 20 million video customers, while AT&T has nearly 5.7 U-verse TV customers. By comparison, Comcast with TWC would provide service to about 30 million subscribers.
An AT&T spokeswoman declined to comment to FierceTelecom on the WSJ report.
Such a deal could provide potential benefits for AT&T.
AT&T, which has seen its video and broadband services become its two major wireline growth areas, would gain a national video footprint. It would be able to offer various bundles of wireless and video services.
U-verse video and broadband continues to be one of AT&T's major wireline revenue drivers. During the first quarter, AT&T reported that it added 634,000 U-verse broadband and 201,000 U-verse TV subscribers, ending the quarter with a total of 11 million and 5.7 million subscribers, respectively.
This is not the first time that AT&T has considered acquiring a satellite provider. According to the WSJ report, the service provider has also spoke to Dish Network Corp. and DirecTV about a possible tie-up.
But to gain approval of such a deal, sources say that it would have to agree to various concessions like divesting DirecTV subscribers in markets where it already offers U-verse video service.
- The Wall Street Journal has this article (sub. req.)
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