Today on Investor Beat, Chris Hill and Motley Fool analyst Mike Olsen talk about the biggest proposed deal of the day. In the wake of the news, both AT&T and DIRECTV stocks were down Tuesday. While many investors may feel like hanging up on the deal, Olsen sees some unappreciated nuances to it. Dow Jones Industrials component AT&T is best known for telecommunications, but many may be surprised to learn the company is also in the video business, with 5.5 million subscribers to its U-verse service. By acquiring DIRECTV, AT&T can become a meaningful provider in the converged-media space, which includes telephone, computer, Internet, and television consumption.
Hill and Olsen then discuss the influence of content providers and how Comcast (NASDAQ: CMCSA ) should feel about the possible deal. Olsen notes that while the deal isn't good for consumers, the acquisition will maintain the cable oligopoly. With Comcast's acquisition deal with Time Warner Cable (NYSE: TWC ) soon to exert its influence on content providers, AT&T continues the trend.
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