AT&T nears deal to buy DirecTV

LOS ANGELES – AT&T Inc. is near a deal to acquire satellite broadcasting giant DirecTV.

The two companies, which have flirted in the past, are awaiting board approval on the transaction, valued at close to $50 billion. The deal would make telecommunications giant AT&T a major player in the pay-TV business.

An agreement could be reached as early as today, said one person close to the talks who requested anonymity because of the sensitivity of the matter.

An AT&T spokesman declined to comment. DirecTV spokespeople did not return requests for comment.

With more than 20 million subscribers in America, DirecTV is the second-largest pay-TV provider, behind Comcast Corp. A deal with AT&T would give the El Segundo, California-based company the one thing it is missing: the ability to seamlessly package phone and Internet service the way cable companies do.

For AT&T, acquiring DirecTV would give it the opportunity to shut down its much smaller U-Verse television service that it delivers through its fiber optic lines. Such a move would let AT&T use DirecTV for television service while also freeing up its fiber lines to increase broadband speeds to U-Verse customers.

Another appeal of DirecTV for AT&T is the cash it generates. In 2013 DirecTV had profit of $8 billion on revenue of $32 billion.

The AT&T-DirecTV deal comes just a few months after Comcast reached an agreement to acquire Time Warner Cable Inc. for about $45 billion and will raise further concerns about consolidation in the media and telecommunications space.

The Comcast-Time Warner Cable deal – which must be approved by federal regulators – would give Comcast about 30 million customers and a dominant position in pay TV and broadband in the nation’s largest markets, including New York, Los Angeles, Chicago, Philadelphia and Dallas.

Media watchdogs and consumer activists, already worried about Comcast and Time Warner Cable combining, probably will try to derail an AT&T-DirecTV deal as well.

“The continued centralization of control over our nation’s media and communications industries is nothing more than a recipe for disaster,” Derek Turner, research director of the media reform group Free Press, said in an interview earlier this month.

Some analysts have questioned whether an AT&T-DirecTV pairing makes sense.

“Like any merger born of necessity rather than opportunity, the combination of AT&T and DirecTV calls to mind images of lifeboats and rescues at sea,” telecommunications analyst Craig Moffett of Moffett Nathanson Research recently wrote of the potential pairing.

AT&T, Moffett wrote, is in “dire need of a cash producer to sustain their dividend.” However, Moffett is not sure now is a good time for AT&T to try to be a bigger player in television.