NEW YORK (TheStreet) - Telecom giant AT&T (T) is reportedly in advanced talks to buy DirecTV (DTV) for around $50 billion. This is not the first time AT&T, which has always had global ambitions, has pursued growth via M&A.
Last year there was the rumored deal for Telefonica (TEF), which was ultimately rebuffed by the Spanish government. Telefonica had the sort of business from which AT&T could create incremental value. It just wasn't meant to be. Then AT&T turned its attention to Leap Wireless (LEAP), which it bought for $4 billion.
Despite its efforts, shares are down 7% over the past 12 months. Tuesday, the the stock closed down 1% to $36.20. Shares are up 5.6% year to date.
Management has come under severe scrutiny. Questions have been raised about AT&T's growth prospects. And there are those who doubt that this company has what it takes to deliver the sort of market-beating performances seen from rival Verizon (VZ). And some analysts are not ready to dial in to any potential benefits of a DirecTV acquisition.
Michael McCormack, analyst at Jefferies, was blunt, stating that both DirecTV and rival Dish Network (DISH) "would probably like to be merged with or acquired by just about anybody." While discussing the future of TV watching, McCormack added that "they would be at a significant disadvantage." And aside from boosting AT&T's cash flow to facilitate dividend payments, he doesn't see much strategic upside to picking off DirecTV.