AT&T can walk away from DirecTV if Sunday Ticket not renewed

If DirecTV's (DTV -2.2%) NFL Sunday Ticket deal isn't renewed on terms similar to the ones discussed, AT&T (T -2.1%) can walk away from the deal, AT&T discloses in an 8-K. DirecTV CEO Mike White says he's confident Sunday Ticket will be renewed by year's end.

"The last six years for AT&T have been about data, the future is about delivering video at scale," declares AT&T CEO Randall Stephenson. He states AT&T is only paying for 30% of the deal in cash to keep its powder dry. Among other things, Ma Bell plans to spend up to $9B at next year's huge low-frequency spectrum auction, and will also participate in an auction for higher-frequency AWS spectrum.

Also: 1) AT&T plans to grow its grow its broadband footprint by 15M homes (largely in rural areas), in part by offering fixed wireless services. 2) White says DirecTV is looking for M&A opportunities in Latin America. 3) AT&T promises DirecTV's services "will continue to be available on a stand-alone basis at nationwide package prices that are the same for all customers" for 3 years. 4) Cost synergies are expected to total $1.6B/year.

AT&T and DirecTV are both lower. DirecTV shareholders get 1.905 AT&T shares for each DirecTV share if AT&T trades below $34.90 at closing time, and 1.724 shares if it trades above $38.58. They get an equity payoff equal to $66.50/share if AT&T trades between those two figures.

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Comments (7)
  • The Deep Value Investor
    , contributor
    Comments (299) | Send Message
    On Bloomberg they said AT&T mentioned they are planning on selling position in AMX, and on bullet point 3 the second mention is . 2) White says DirecTV is looking for M&A opportunities in Latin America. Sounds like NIHD may be in the cross hairs for a buyout by DTV / AT&T
    19 May 2014, 10:14 AM Reply Like
  • TCG,llc
    , contributor
    Comments (470) | Send Message
    What, if anything (other than a dramatic shift in profits driven by subscriber demand) would prevent the renewal? Look, the only way either party will not see this deal finalized is via FCC denial. Both parties appear to be satisfied with the salient qualities of the deal.
    19 May 2014, 10:30 AM Reply Like
    , contributor
    Comments (12) | Send Message
    Aside from the T-Mobile debacle and costly $3B negative result for T, it would only be reasonable to conclude that the lessons from "mpulsive, over-confident exposures" have been well-learned by ATandT Management. It is comforting to know that ATandT can walk from this proposed acquisition "withouy penalty". Good luck to all players, as the project appears to be beneficial to both sides.
    I have a small position in T, fueled by its dividend history as a part of my portfolio.
    19 May 2014, 10:37 AM Reply Like
  • sdamico28
    , contributor
    Comment (1) | Send Message
    let the good times role. att is a winner long term
    19 May 2014, 12:00 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1828) | Send Message
    If DirectV loses NFL Sunday ticket, millions of subscribers like me, who really dislike DirectV will bolt for the exits in joy. Now that the NFL knows it, expect them to hold up DirecTV. Poor acquisition strategy by At&T. Why not wait for the renewal before the acquisition?
    19 May 2014, 03:02 PM Reply Like
  • jarco
    , contributor
    Comments (2298) | Send Message
    With such a combination of AT&T and DirectTV, the NFL would be foolish not to extend the current agreement. This combination has huge upside potential. The owners are no dummies. They can't afford not to see where this goes at least for another cycle. That aside, as a Sunday Ticket (and MLB) subscriber, I'd cringe big time if the NFL package went to Dish as their line-up is less robust. But I suppose it all boils down to customer preferences.
    19 May 2014, 03:27 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (4448) | Send Message
    The NFL is stupid for locking it up with satellite. They'd make a heckuva lot more $$ if they opened it up to cable subscribers.


    A lot of the European streams are in HD now, anyways.
    19 May 2014, 09:43 PM Reply Like
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