AT&T (NYSE: T) is in talks to buy DirecTV (NASDAQ: DTV) for at least $50 billion--and if the two companies can come to terms, it would create a 26 million subscriber video powerhouse which would rival Comcast's (NASDAQ: CMCSA) proposed $45 billion takeover of Time Warner Cable (NYSE: TWC).
If successful in its bid to buy the satcaster, AT&T could bolster its small television operations and gain a valuable foothold in Latin America, where DirecTV has about 18 million subscribers.
DirecTV's shares surged almost 6 percent in after-hours trading after the merger talks were first reported by The Wall Street Journal on Monday. For AT&T, the deal would signal the company's renewed expansion efforts in the U.S. following the wireless carrier's failed bid to buy T-Mobile in 2011.
Talks between AT&T and DirecTV reportedly began in earnest after Comcast announced its plan to acquire Time Warner Cable. Some industry players believe that if DirecTV and AT&T come to terms and announce a formal deal, it could complicate regulators' lives because antitrust regulators may want to consider both deals simultaneously.
For DirecTV, the deal is well-timed. It comes as customer growth is slowing. Cable companies have been able to offset the decline in video customers with more broadband subscribers, but DirecTV doesn't have that option. A merger between DirecTV would give the phone company another way to access video customers ,and it would give DirecTV a broadband delivery partner.
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