May 19 - A confirmed deal between AT&T and DirecTV, if completed, creates the second largest pay TV provider, but some analysts question the strategy behind the merger. Fred Katayama reports.
A huge bet on mobile video: AT&T is paying nearly $49 billion to buy the largest U.S. satellite TV provider, DirecTV. The marriage would create the U.S.' second largest pay TV company behind the other engaged couple, Comcast and Time Warner Cable. Here's what each gets: AT&T gets DirecTV's content like NFL Sunday Ticket, Latin American pay TV subscribers, and cash flow that could help it pay dividends. DirecTV gets to offer its customers a bundled package that includes broadband for the first time. Hudson Square Research analyst Todd Rethemeier says the deal makes sense. "This immediately makes AT&T a major player in the pay TV business with 26 million customers (second to Comcast/Time Warner Cable at 30 million) and provides an introduction to the growth of Latin America." But some analysts question the strategy that would unite two businesses that show signs of slowing: satellite TV and wireless subscriptions. And the deal faces regulatory scrutiny. AT&T runs a TV service, U-verse, that competes with DirecTV. AT&T's stock fell at the start of trade. The merger also turns the spotlight on number two satellite provider Dish Network. Unlike DirecTV, it owns lots of spectrum that could make it attractive to a telecom provider like Verizon or Sprint.