This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why AT&T's Deal for DirecTV Makes No Sense

NEW YORK (TheStreet) -- Telecom giant AT&T's (T - Get Report) $48.5 billion deal for satellite TV provider DirecTV (DTV) has raised plenty of questions within the telecom and media space.

Some believe AT&T is making a strategic error and is overspending for the DirecTV, given its new valuation at about $95 per share. Others are applauding the potential costs savings and long-term accretive benefits.

When rumors of the deal, which will be financed in cash and stock first emerged, I didn't like it. It considered AT&T's entry into the realm of mobile and online video streaming. But now that it has become official, it still doesn't make sense. In this brief video, I explain why.

Good for DirecTV and customers. But something's still missing.

It's a great deal for DirecTV and its shareholders. And customers are certain to enjoy the benefits of bundling and the added convenience of having their Internet service, pay TV and mobile phone arrive on a single bill.

But unless this is part of a bigger plan, which involves more acquisitions, I don't see the logic. Not when it fails to address Internet services, which, the combined entity of Comcast (CMCSA) and Time Warner Cable (TWC) is poised to dominate. With AT&T stock trading at around $36 per share, investors should hope federal regulators protect the company from itself by blocking this deal. With AT&T stock trading down 1.42% Tuesday morning, the Street seems tuned out.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
T $34.53 0.00%
AAPL $128.70 0.00%
FB $78.81 0.00%
GOOG $540.78 0.00%
TSLA $230.51 0.00%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs