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AT&T-DirecTV Deal Rumored

7 May, 2014 By: Doug McPherson

NEW YORK – The Wall Street Journal reports AT&T is in talks to buy DirecTV – a deal that could be worth roughly $40 billion.

DirecTV currently has about 20 million subscribers while AT&T’s U-verse – which delivers a cable television package over phone lines – has nearly 6 million customers.

A Leichtman Research Group study of broadband subscriptions in third-quarter 2013 found that AT&T had more than 16 million subscribers while Comcast topped 20 million, and Time Warner Cable had more than 11 million.

AT&T and DirecTV already have a deal through which the companies offer a co-branded version of DirecTV’s television service across the 22 states where AT&T offers residential broadband and voice.

Daniel Kline, a writer with Motley Fool, says the deal isn’t about cable but access. “Whoever controls the pipeline, or satellite, that brings data, entertainment and whatever else into people’s homes essentially has first dibs on selling a variety of services,” he writes.

And Vertere Group Founder Tim Hanlon told CNN Money, “This isn’t about TV anymore – it’s about controlling a fatter, more intelligent pipe for multiple services that emanate from it, including broadband Internet, phone, and home security monitoring.”

Some analysts say the merger would have a solid chance at approval because offering video or voice service alone is viewed as a dying business, and the combined company would be in a position to compete with Comcast, the leading cable and broadband provider.

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