We have been laying the track for expanding its pay TV service for the past few years, and that effort will now be turbo-charged with its $67 billion pact to acquire DirecTV.
That was the message sent Monday morning by AT&T chairman-CEO Randall Stephenson (pictured) during a conference call aimed at selling the deal to Wall Streeters, who have been mostly skeptical of the merger’s long-term benefits for both companies. AT&T has been “changing the architecture” of its data networks to be focused on delivering video, Stephenson said.
“The last six years have been about delivering large amounts of data” through these networks, he said. “The next six years will be about delivering video over those networks. That was the key rationale for trying to do something with (DirecTV).”
At the close of trading Monday, investors still seemed to be mostly unimpressed by the deal’s potential. AT&T shares took a big drop early in the day — not unusual for the acquiring entity after a megabucks deal announcement — but recovered some to finish out the day down 36 cents to $36.38. DirecTV shares were down $1.53 to $84.65.
Stephenson emphasized that the union with DirecTV would give the combined company greater ability to innovate and possibly develop over-the-top programming services. As Stephenson and DirecTV CEO Michael White sung the praises of the merger, other details of the blockbuster agreement unveiled Sunday afternoon emerged in a lengthy Securities and Exchange Commission filing.
Notably, the deal includes a clause that allows AT&T to walk away if DirecTV does not renew its lucrative “NFL Sunday Ticket” exclusive football rights deal. Observers were quick to point out what a gift that is to the NFL, which has been in negotiations for months with DirecTV. White said during the call that he and Stephenson have already spoken with NFL execs to explain why the deal is “great for us and great for the NFL.”
Moreover, there is no breakup free in the agreement for AT&T should it decide to nix the deal, but the satcaster would have to fork over $1.45 billion to AT&T if it calls it off or accepts a rival buyout offer.