NEW YORK (TheStreet) -- This has been a good year for owners of DirecTV (DTV) stock thanks, in part, to AT&T(T) - Get Report. Shares of DTV popped as high as $89.46 on May 13 when rumors of a takeover surfaced. That was a 30% spike since the beginning of 2014.

Yet, after AT&T's $95-a-share cash and stock offer to acquire DirecTV, shares sold off on humongous trading volume. By Tuesday May 20 shares plunged as low as $82.84, down almost 4% from Friday's closing price. DTV shares closed Tuesday at $83, up 20% for the year to date.

Why does AT&T want DirecTV so badly? It might have something to do with competing against Comcast(CMCSA) - Get Report, which wants to buy Time Warner Cable (TWC) . Or it might have something to do with the National Football League's "Sunday Ticket" package, the biggest thing DirecTv has going for it. Without the NFL, why bother?

And why didn't shares of DTV reflect the buyout price on the day the deal was announced? My take on the first question is that AT&T needs more cash flow to sustain its nearly $10 billion annual dividend payout. AT&T shares closed at $35.50, up just about 1% for the year to date.

The behemoth telecom unnerved many analysts and investors during its first-quarter conference call when it estimated its free cash flow at about $11 billion during fiscal 2014. That number was after capital expenditures. That means AT&T would need to use nearly 90% of free cash just to pay its dividend.

As of March 31 DirecTV reported about $2.6 billion in trailing 12-month (TTM) levered free cash flow. Its TTM operating cash flow was $6.45 billion and its total cash was just over $3 billion according to Yahoo! Finance. This acquired cash flow would help AT&T to continue to pay its hefty 5.18% dividend.

Why shares of DirecTV didn't rally near the takeover bid price is the big question. The stock's retreat on heavy volume was a classic "sell the news" reaction. Let's take a closer look at a one-year price chart of DTV to look for clues.

DTV data by YCharts

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The quarterly year-over-year revenue growth (orange line) and the diluted quarterly earnings per share (EPS) metrics fell hard in the first quarter of 2014. Perhaps this intimates DirecTV needs the AT&T acquisition as an exit strategy for its shareholders?

Investors also realize that satellite TV is an arcane technology with an uncertain future when compared to the advantages of cable and Internet TV like the potential Comcast-Time Warner Cable tie-up. But none of this concerns me the most.

As noted, without the NFL the AT&T-DirecTV deal falls flat on its face.

DirecTV's exclusive with the NFL expires at the end of the coming season. DirecTV CEO Michael White said in a call with analysts Monday that he's "highly confident" it will be renewed but he stopped short of promising. White also indicated that he and AT&T CEO Randall Stephenson met with NFL Commissioner Roger Goodell and at least one NFL team owner to assure them the acquisition of DirectTV would be a win-win for the NFL and the combined companies.

If the deal with DTV is approved by regulators AT&T intends to sell its $6 billion, 8.4 % stake in America Movil(AMX) - Get Report plus sell bonds to fund the deal, which may take a year to consummate. But without the extension of the NFL exclusive all these points are moot.

That's why I expect an upcoming NFL announcement that a deal with DirecTV has been inked. Shares of AT&T and DTV should rebound if that happens.

At the time of publication the author had positions in T, CMCSA and TWC.

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


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Marc Courtenay is the founder and owner of Advanced Investor Technologies LLC as well as the publisher and editor of