DOW + 20 = 16511
SPX + 7 = 1885
NAS + 35 = 4125
10 YR YLD + .02 = 2.54%
OIL + .58 = 102.16
GOLD – .10 = 1293.60
SILV – .01 = 19.44
Merger Mania Monday. Late yesterday, AT&T announced an offer to buy DirecTV for $48 billion, or $95 per share. The combined AT&T-DirecTV would serve 26 million customers; that would make it the second-largest pay TV operator behind a combined Comcast-Time Warner Cable, which would serve 30 million under a $45 billion merger proposed in February. The Comcast deal still faces regulatory hurdles.
AT&T and DirecTV promised consumer benefits like more economical bundles that tie mobile phone, pay TV and Internet service together on a single bill. The deal could face regulatory scrutiny from the Federal Communications Commission and Department of Justice. Unlike the cable company tie-up, the AT&T-DirecTV merger would effectively cut the number of video providers from four to three for about 25% of US households. That’s a situation that could result in higher prices for consumers and usually gives regulators cause for concern.
The value that DirecTV offers that no other national TV provider offers is a special deal for football fans; for $240 to $330 you can buy a special package that gets you all the NFL football games, including your hometown favorite no matter where you live. That’s why DirecTV paid an estimated $4 billion to the NFL for the latest Sunday Ticket contract; that deal expires at the end of the upcoming NFL season. If the Sunday Ticket arrangement were not to be extended, AT&T would reportedly have a legal out, according to terms of the takeover.
Part of the value of DirecTV is what it isn’t. DirecTV does not offer fixed-line or mobile Internet service, and its rights to airwave frequencies for satellite TV are not the kind that AT&T can use to improve its mobile phone network. If AT&T can convert DirecTV’s customers into high-speed Internet subscribers, they could have 25% of all pay TV subscribers and then two companies would control 55% to 60% of all Internet subscriptions in the US.
The board of AstraZeneca has rejected the improved, and apparently final $119 billion takeover offer from US drugmaker Pfizer. Pfizer, which is the world’s second-biggest drugmaker by revenue, has been courting No. 8 AstraZeneca since January. Yesterday, Pfizer raised the offer 15% to $119 billion; that would be the richest acquisition ever among drugmakers and the third-biggest in any industry. AstraZeneca didn’t take long to reject the new offer, its board arguing Pfizer is making “an opportunistic attempt to acquire a transformed AstraZeneca, without reflecting the value of its exciting pipeline” of experimental drugs.
