AT&T's $49B DirecTV buy heads into final innings
Apr 7 2015, 11:49 ET | About: AT&T Inc. (T) | By: Jason Aycock, SA News Editor
As expected, AT&T's (NYSE:T) $49B purchase of DirecTV (NASDAQ
TV) is headed for an easier approval than Comcast's takeover of Time Warner Cable -- and the AT&T deal may wrap before April is through, with a few "action packed" weeks ahead, says Morgan Stanley's Simon Flannery.
Flannery sees limited opposition to the deal, though he does warn about risks including AT&T's leverage in the deal and its recent $18B purchase of wireless spectrum.
But the purchase may have taken too long -- way too long in coming, says analyst Craig Moffett, since the deal is "oh so 2005."
"There was a certain logic to it at the time," Moffett says, pointing out that buying a satellite distribution arm would have been better 10 years ago, when Verizon was building a future-proof fiber network and AT&T's network limitations were clear even then.
"Don't get us wrong. DirecTV is a well-run asset," Moffett writes, "with a sterling brand and strong management, and the company's free cash flow will clearly help sustain AT&T's dividend. But it is hard to make the case for genuine strategic fit between the two companies."
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