Blog Post

Verizon Might Be Considering DirecTV Bid

Verizon (NYSE: VZ) just might be ready to make a move on DirecTV (NYSE: DTV), the WSJ speculates, as the telco turns its concentration to video as its “core product.” Although Verizon made huge strides on rolling out its FiOS video and Internet service over the past three years — it’s gone from 200,000 FiOS subs in 2006 to 2.5 million as of last June; 600,000 alone were added in h109 — it remains the eighth largest among cable and satellite TV operators. Naturally, catching up to Comcast’s 23 million subs would be instant if Verizon could add DirecTV’s roughly 18 million customers. At the rate Verizon is going, without the acquisition of another system, it could take three years just to make it to fifth place among MSOs, WSJ estimates. Adding a large amount of subs is not just about bragging rights; without the kind of scale that it’s bigger rivals have, Verizon FiOS will continue to have difficult time on getting more favorable pricing from programmers.

A combo with DirecTV would offer both companies clear benefits. DirecTV, which is currently going through a restructuring with its primary shareholder, Liberty Media (NSDQ: LINTA), would be a more attractive acquisition target than its chief competitor, Dish Network, since it has been much more healthy financially. The tie-up with Verizon would allow DirecTV to offer extensive phone services, which Verizon has, as an additional incentive to customers. But Verizon does not have a clear path to such a deal. AT&T (NYSE: T) is considered likely to pursue DirecTV aggressively, should the opportunity arise.

3 Responses to “Verizon Might Be Considering DirecTV Bid”

  1. Dont be surpised if either ATT or VZN buys Direct tv they will use it to supplement their fiber optic service and would eventually phase the DTV brand name out. Since Liberty Media took control of DTV sales are down and so are the # of new customers and customer servcie comlaints have gone through the roof. It apoears they never really had any commitment to keep DTV as a going operation, such a quick profit by selling it

  2. Mike, there is not enough about TWC that would be attractive to Verizon. First, there is ample overlap in their footprints. Second, Time Warner is part of the consortium that owns 27% of the Clearwire joint venture with Sprint. Third, DirecTV has a loyal following in part because of the NFL Sunday Ticket package it currently has a contract for, which expires in 2014. One of the reasons the NFL allowed this contract to exist as an exclusive was to protect FOX, CBS, etc and its local affiliates from the lost advertising revenue should this package be available too widely. Verizon's 2-3 million would not significantly affect this.

  3. the best deal for verizon is to grab time warner cable and verizon will have a better standing with all them customers in all those major markets,plus its best verizon to get twc than directv since its a cable company and directv the best situation for verizon is to buy twc and combine it with the fiostv and internet.