3 Reasons AT&T Is Buying DirecTV

Breaking down the most important reasons telecom powerhouse AT&T is snapping up DirecTV.

May 22, 2014 at 8:05PM

Apparently, mergers and acquisitions are en vogue among companies in the telecom and media space this spring, as a wave of deal-making has swept through the sector in the past several weeks such as AT&T's (NYSE:T) recently approved buyout of DirecTV (NASDAQ:DTV).

The AT&T acquisition of DirecTV comes on the heels of other mega deals including the Comcast-Time Warner buyout. Word also has it that Sprint is preparing a deal for the resurgent T-Mobile as well, although DISH Network is also waiting in the wings if Sprint's bid fails. 

Some of these deals stand a better chance of gaining the requisite regulatory approval, although it appears few believe the AT&T bid for DirecTV will face undue scrutiny. So with that in mind, let's look at why AT&T wanted to buy DirecTV altogether.

We bundle, you save?
There are plenty of reasons that AT&T will be in a fundamentally stronger competitive position once it acquires DirecTV.

For starters, DirecTV helps AT&T remedy one of its most glaring product shortcomings: the lack of a sizable pay-TV offering that AT&T can help bundle with other services. Beyond that, DirecTV's higher growth Latin American TV business will provide AT&T with a valuable new growth driver. And lastly, the combined synergies between the two will enable AT&T to roll out additional savings-fueled services to other parts of the country.

In the video below, tech and telecom specialist Andrew Tonner looks at these three key reasons behind AT&T's bid for DirecTV in greater detail.

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Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends DirecTV. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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