Boston, MA 05/08/2014 (wallstreetpr) – As per reports from the Wall Street Journal, DIRECTV (NASDAQ:DTV) has engaged Goldman Sachs (GS) to explore its sale proposition to AT&T Inc. (NYSE:T). At present, DirecTV’s market valuation is nearly $45 billion post a 43% growth recorded last year.
Goldman Roped In; Buckingham Downgrades
Since the time Comcast Corporation (NASDAQ:CMCSA) floated the bid to acquire Time Warner Cable (TWC) Inc., so as to position itself as a formidable rival in both TV and Internet segments in the U.S., there has been a growing consolidation in the rest of the industry. At the same time, the number of pay-TV customers is increasing as viewers are rapidly shifting towards watching video online, thereby, making speedy broadband availability a key requisite.
Amit the possible talks, comes a rating downgrade from Buckingham, which has downgraded DirecTV from ‘buy’ to ‘hold’ over valuation.
Little Scope For Regulatory Clearance
DIRECTV (NASDAQ:DTV) and Dish had struggled nearly a decade ago for their merger, but failed to get past the regulator. While it is true that DirecTV and Dish need this deal to happen more than AT&T does, due to their dependence on satellite TV operations, but the question remains as which of the combination would get regulatory nod.The merger between DirecTV, AT&T Inc. (NYSE:T) and Dish would draw regulatory scrutiny as all of them compete for video consumers in parts of the country and their merger would impact the customers in those areas. Hence, there is a little hope that the merger deal will get through regulatory approval.
The buzz about AT&T Inc. (NYSE:T) and DIRECTV (NASDAQ:DTV) merger is not new as AT&T’s CEO, Randall Stephenson had already indicated back in 2010 that there would be an “industrial logic” to buy DirecTV. Stephenson had doubts though whether it will get regulatory clearance. AT&T’s bid for DirecTV comes at a time when it is restricted by the U.K. takeover regulations to proceed with acquisition talks for Vodafone Group PLC (ADR) (NASDAQ:VOD).
