The two sides are discussing a deal that would involve a mix of cash and AT&T stock. Dallas-based AT&T would likely pay a premium to DirecTV's share price Monday, one of the people said. An agreement could be reached in two weeks if not sooner.
AT&T is expected to pay for any deal mainly with stock, one of the people said. For AT&T, using stock to help pay for such a transaction has the benefit of limiting its borrowings and thus helping protect its credit rating. But the more stock it issues, the greater its dividend obligations, which is another consideration the company is grappling with, some of the people said.
A deal could boost the flow of cash that AT&T could use to pay its dividend and fund a build out of its broadband Internet infrastructure, analysts have said. It also comes as AT&T increasingly views video—whether via pay TV service or delivered over the Web or its wireless network—as central to its future.
For DirecTV, a deal comes as its subscriber growth has slowed sharply in recent quarters, reflecting a broader stagnation in the U.S. pay TV market. While cable companies have been able to offset declines in video subscribers by selling broadband, satellite operators can't offer Internet access services at speeds that are competitive with cable and phone companies, due to technological constraints. A tie-up with AT&T would give DirecTV a way out of the broadband dilemma.
Read More Now (Paywall)
No comments:
Post a Comment