LOS ANGELES — AT&T is acquiring satellite broadcaster DirecTV for nearly $49 billion, the latest in a series of big deals that are transforming the media and telecommunications landscape.
The purchase will turn AT&T into a massive player in the pay-television space as DirecTV has more than 20 million subscribers in the U.S. and an additional 18 million in Latin America.
For DirecTV, the deal will allow it to package its TV service with the telecommunication giant’s phone and broadband offerings. AT&T has almost 120 million wireless subscribers and 16.5 million broadband customers across the nation.
“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 said Sunday.
The sale comes just three months after cable giant Comcast Corp. struck a deal to acquire Time Warner Cable for $45.2 billion, which would be the nation’s largest cable operator with about 30 million subscribers. It would also control 40 percent of homes with broadband Internet.
Both AT&T and Comcast still need to clear regulatory hurdles. Media watchdogs and consumer activists have quickly sounded alarm bells about the rapid pace of media consolidation and whether it is good for the public.
“The captains of our communications industry have clearly run out of ideas,” said Craig Aaron, president of the media reform organization Free Press. “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.”
Driving the desire to merge is a combination of fear and opportunity.
Traditional media and telecommunications companies are bulking up not only to compete against the giants of Silicon Valley, including Google, Apple, Netflix and Amazon. But they also hope their new size will give them the leverage to reduce costs such as programming.
The deals by Comcast and AT&T are expected to spark even more consolidation. Other companies seen as potential merger candidates include satellite broadcaster Dish Network, telecom giant Verizon and cable operator Cox Communications.
Pay-TV is not the only sector of media undergoing a seismic shift. There has been tremendous consolidation in the local television industry as well. Broadcasters including Gannett Co., Sinclair Broadcast Group and Los Angeles Times parent Tribune Co. have been aggressively buying local TV stations, believing bigger is better.
Programmers are also starting to team up. Last week, Rupert Murdoch’s 21st Century Fox and private equity firm Apollo Global Management reached a preliminary agreement to create a joint venture that would include TV production juggernaut Endemol and Shine Group.
Under the terms of the deal, AT&T is paying $95 a share for DirecTV in cash and stock. Of that, $66.50 will be in the form of AT&T shares and the remaining $28.50 will be cash.
DirecTV, which is based in El Segundo, Calif., and employs 3,000 people, will stay put after the deal closes. Both companies expect necessary approvals will take about a year.
On a conference call with reporters, AT&T’s Stephenson said although he expected a thorough review from the Federal Communications Commission and Department of Justice, he didn’t anticipate major hurdles.
“This is I think going to be a pro-competitive, pro-consumer transaction,” he said, adding that the combination of a nationwide video, wireless and broadband platform will create “a whole different competitive dynamic.”
