DALLAS (CBSMiami/AP) —AT&T is slated to buy DirecTV for $48.5 billion.
Company officials agreed on the purchase Sunday, May 18th. The move gives the telecommunications company a larger base of video subscribers and increases its ability to compete against Comcast and Time Warner Cable, which agreed to a merger in February.
AT&T’s proposed combination, which is subject to government review, could improve its Internet service by pushing its existing U-verse TV subscribers into video-over-satellite service, and thereby free up bandwidth on its telecommunications network.
AT&T currently offers a high-speed Internet plan in a bundle with DirecTV television service. The acquisition would help it further reap the benefits of that alliance.
With 5.7 million U-verse TV customers and 20.3 million DirecTV customers in the U.S., the combined entity would serve 26 million. That would make it the second-largest pay TV operator behind a combined Comcast-Time Warner Cable, which would serve 30 million.
The companies expect the deal to close within 12 months. Under the terms agreed to Sunday, DirecTV shareholders will receive $28.50 per share in cash and $66.50 per share in AT&T stock. The total transaction value is $67.1 billion, including DirecTV’s net debt.
The deal could face tough scrutiny from the Federal Communications Commission and antitrust regulators at the Department of Justice.
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