AT&T has approached satellite provider DirecTV about a possible acquisition, in a bid to more closely integrate TV and broadband services, according to the Wall Street Journal.
The deal is expected to be worth more than $40 billion, and would combine DirecTV’s approximately 20 million TV subscribers with AT&T’s already existing U-verse TV offering, which added 201,000 subscribers in the first quarter to reach 5.7 million.
The possible deal comes as the U.S. TV sector is in a state of flux, after cable giant Comcast announced a $45.2 billion deal to purchase competing cable television and broadband provider Time Warner Cable in February. That still has to win regulatory approval in the face of considerable opposition.
In Europe, Vodafone has acquired Germany’s largest cable operator, Kabel Deutschland, and Spanish cable operator Ono. In France, cable operator Numéricable is buying mobile and fixed-line operator SFR.
Telecom operators and pay-TV providers around the world are under pressure from Internet-based voice and video services, respectively. Shrinking revenues from voice and messaging thanks to competition from the likes of WhatsApp and Skype are forcing operators to look for new revenue streams. At the same time the battle for viewers is growing more intense thanks to content becoming available from a growing number of companies as well as products such as Amazon’s new Fire TV.
In 2013, DirecTV’s U.S. revenues increased 6 percent to $24.68 billion compared to the prior year thanks to an increasing average revenue per user. However, net subscriber additions decreased from 199,000 to 169,000 in the prior year. The decline in gross additions was in part due to a more challenging competitive environment and mature industry, DirecTV said earlier this year.
AT&T and DirecTV both declined to comment on the possibility of an acquisition.