Report: DirecTV might have new suitor in AT&T

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Dec 3, 2003
Report: DirecTV might have new suitor in AT&T: Financial News - Yahoo! Finance

AT&T is looking to make a bid on either DirecTV Group Inc. or EchoStar Communications Corp., the parent company of Dish Network, according to a report in Wednesday's Wall Street Journal.
According to the report, AT&T is talking with lawyers in Washington to get an idea of how long it would take to get such a purchase approved by the federal government. AT&T would possibly unveil the offer by year's end in order to get antitrust approval before a new administration takes over.

Such a purchase might give AT&T a better foothold in competing with cable companies by offering bundled phone, Internet and television services. Currently, AT&T is rolling out its U-Verse television service, which uses fiber optics and Internet-based technologies, but installing the necessary fiber-optic cables has proven costly.

Currently, AT&T's plan to roll out U-Verse in 18 million homes by the end of next year will cost the company about $6.5 billion.

A buy of one of the two companies would cost between $30 and $40 billion, according to the report.

Currently, the controlling stake in El Segundo's DirecTV (NYSE: DTV - News) is held by News Corp. (NYSE: NWS - News), but is in the process of being sold to Liberty Media Corp.

The deal is still under review by federal regulators.

The Journal report says that should the deal with Liberty go through and AT&T purchases all of DirecTV, Liberty would have to keep a 25 percent stake in the company, for tax reasons. The controlling stake currently being sold is 38.5 percent.

A purchase of EchoStar might be less complicated, as AT&T would deal with company founder, chief executive and controlling shareholder Charlie Ergen.

The report also notes that AT&T is a previous investor in Colorado-based EchoStar (NASDAQ: DISH), as it invested $500 million in the firm in 2003.

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