AT&T and DirecTV Deal (Essay Sample)

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AT&T and DirecTV Deal
AT&T recently made an announcement on its agreement to buy DirecTV. DirecTV is the America's biggest satellite provider of television networks. AT&T will buy it at a cost of $50 billion. When the deal gets approval from the regulators, it will give AT&T an upper hand in determining and shaping the future of television consumption and distribution. The hybrid AT&T-DirecTV will be at position two in provision of television subscription behind Comcast-Time Warner Cable. AT&T and Comcast will, therefore, control more than half of the country's pay television market (stelter n.d.).
The deal will give AT&T an opportunity to reorganize the video entertainment industry. It will have the capacity to offer new data bundles and provide content to customers using different screens such as laptops, mobile devices, and TVs. The company's preference on DirecTV is because of its premier brand in television subscription, content relationships, and its fast growth rate. DirecTV has more than 20 million subscribers compared to the 5 million subscribers of AT&T's U-verse television service. The satellite provider owns the NFL Sunday Ticket package for out of market football games that will also add value to AT&T.
AT&T is eager in experimenting new methods of video distribution. It will satisfy the customers who want to enjoy television on big screens, have TV on their smartphones on a Netflix style, or any other way possible. The approval of the deal will provide AT&T with growth opportunities due to the increased television revenues.
Upon the deal's approval by the regulators, it will be part of the continued wave consolidation in the telecommunication and television industries. Comcast, the country's largest cable provider, also awaits a regulatory approval to merge with TWC. The parent wireless company provider Sprint Softbank is in efforts to acquire T-Mobile. Paul Gallant, a Guggenheim Partners analyst describes the situation as an arms race (Stelter n.d.).
The acquisition will create a content distribution leader in video, mobile, and broadband platforms. The companies would have to face competitive disadvantages and to merge them as a single entity will increase their competitiveness. To demonstrate the acquisition advantage, DirecTV satellites cannot provide the high internet speed connections that many customers prefer, of which AT&T can. In an attempt to lure the Washington regulators to approve the deal, the...