Initially, in 2014, one of the largest deals in the pay-TV sector was signed – DirecTV was bought by AT&T for $48. 5 billion. This merger made one of the largest video providers in the United States having subscribers in the range of 26 million at that time. However, the question which has to be asked here is how did this deal come about and what has happened to DirecTV since it was purchased by AT&T? This work focuses on AT&T’s acquisition of DirecTV and the experiences of the two companies.
The business relationship between AT&T and DirecTV
In May 2014, AT&T Inc. declared the plans to buy DirecTV in a stock and cash deal of $48. 5 billion. This would place AT&T in direct control of DirecTV and their 20 million subscribers of Satellite television in the United States. The reason for the deal in AT&T's case was to expand its offering of bundled services that include video, broadband internet access, and mobile phone services. The acquisition of DirecTV and its high-quality television content would provide AT&T with strategic assets in the pay-TV market against traditional cable operators such as Comcast and Time Warner Cable Holding. To DirecTV, the advantage of being owned by AT&T means having adequate capital resources and access to bundle packages that would ensure it gets and keeps subscribers. In the past, even the analysts were expecting that the association of the two companies would be beneficial in terms of integrating the two businesses.
Regulatory Approval Process
As much as it was for AT&T to assume the ownership of DirecTV, the transaction needed approval from the U. S. Department of Justice and the Federal Communications Commission (FCC). One of the primary issues that emerged during the review process was about domination of the merged entity in controlling the choices of certain consumers, such as residents in the rural parts of the United States having limited choice of pay-TV beyond the satellite service. Nonetheless, after heavy evaluation, the regulators gave the green light to the deal in July 2015 but with conditions, which made it clear that the acquisition was legal but under some restrictions. These conditions entailed the establishment of obligatory requirements to extend the fiber optic network to new customer premises and provide an affordable fixed broadband internet connection to eligible low-income consumers. Once the approval from the regulators had been received, the acquisition of DirecTV by AT&T was effected in the same year 2015.
Changes Under AT&T Ownership
As soon as the acquisition was complete DirecTV became a subsidiary that is 100% controlled by AT&T. At the time of the deal, DirecTV’s CEO, Mike White, stated that he would retire after July 2015 when the deal would close, White served in this position since 2010. He was replaced by Paul Raines, an AT&T executive, who became the CEO of DirecTV for a couple of years after taking over by AT&T. With AT&T, customers could now make use of packaged offerings that combined DirecTV services with AT&T connectivity and wireless offerings. First of all, AT&T had not been actively integrating DirecTV with its brands; it had mainly managed the company as its own separate business. However, through the years, the video provider has been integrated more with its parent company such as the use of the AT&T model for the implementation of changes in prices and the use of more shared customer service for the companies. Consumers select programs that are associated with packages labeled as DirecTV although the firm has become a proxy through which AT&T can realize its mission in the dynamic video distribution industry.
The Impact Moving Forward
Approximately 7. 5 years after AT&T assumed control of the leading satellite provider which is DirecTV, it still occupies one of the most significant TV provider companies in America but is now facing a growing competition threat affecting its subscribers. The need to minimize cord-cutting in the streaming age increases the difficulty of operating a conventional paid TV service. Nevertheless, it goes on reshaping its services such as streaming-based TV bundles under AT&T ownership – in hopes of transforming its business model to sustain for the long term despite the shrinking sub-base. Most of AT&T’s money is invested in acquiring DirecTV and this makes it use satellite TV to counter market influentials such as Netflix and other streaming firms. The next few years will define if AT&T’s decision to go all in and acquire DirecTV will be worth it given the rising trend of consumers who are cutting the cord.
Conclusion
In summary, AT&T bought DirecTV in 2014 to have more service offerings in that area and to be able to further challenge cable providers that offer video, internet, and telephone services. This $48 billion merger joined one of the biggest satellite TV companies with one of the largest Mobile and Internet service providers in the country. Even though government regulators had laid down some conditions for the approval of the takeover, the deal was finally approved in 2015 and thus AT&T got control of DirecTV through its more than 20 million subscribers. During AT&T’s ownership, DirecTV implemented pricing initiatives and customer care structures that are more in line with the company’s acquirer. It remains to be seen where DirecTV stands in the next several years under AT&T’s ownership – although it is clear that the satellite TV service provider is struggling to compete with streaming entertainment – however, the company’s video service offering expands to try to hold on to as many customers as possible even amidst these struggles. Therefore, even though DirecTV is no longer oriented as an independent company, it has continued to be a significant pay-TV provider that sets its sights on new viewer-watching habits.
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