Any AT&T/DirecTV Called No Slam Dunk to Get Regulatory OK
Any AT&T buy of DirecTV could pass muster with federal regulators, though there are no guarantees, analysts said Thursday. AT&T is talking to DirecTV about a possible deal, for the carrier to buy the satellite TV company for $40 billion, or $1 billion more than AT&T was prepared to pay for T-Mobile three years ago, reported The Wall Street Journal Wednesday (http://on.wsj.com/1miSJct). Neither AT&T nor DirecTV would confirm or comment on the report.
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"It’s hard not to view this as strategy by process of elimination -- first Vodafone, then Dish, now DirecTV -- rather than strategy as a disciplined process of assembling the right set of assets to compete,” Craig Moffett of MoffettNathanson said of AT&T. “As a place to start, that is usually a terrible way to build a company. Regulatorily, it could probably be approved, but it isn’t the slam dunk that many people believe it would be.” Some have said AT&T might seek to buy Dish Network, while that carrier also is said to be interested in Vodafone.
The deal is “no slam dunk,” especially since the FCC and Department of Justice are likely to be increasingly tough on mergers, said Paul Gallant of Guggenheim Partners in a note to investors. “In the end, we suspect: (1) The FCC/DOJ would be attracted to the idea that AT&T/DirecTV could more effectively challenge cable operators via better programming costs and novel wireless/video integration offerings; and (2) AT&T might be able to accelerate wireline broadband speeds if it could actually move U-Verse video off landline and onto satellite dishes.”
Others said how federal regulators react to a possible new round of consolidations is hard to predict. “We are approaching chaos in our industry with all of these major deals,” said a broadcast industry lawyer. “If they go through, the telecommunications industry will look nothing like it did when Chairman [Tom] Wheeler took office. It’s anyone’s guess what he will do with this flood of seismic deals.”
"We're in a new world,” said a lawyer who represents carriers. “The commission’s approach to and treatment of Comcast-Time Warner Cable will be especially instructive.” BTIG still thinks AT&T/DirecTV “would have a good shot at approval given the changing dynamics of the industry,” said analyst Walter Piecyk.