At & T Merger At Ditv Case

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AT&T closed the deal and bought DirecTV for about $49 billion in July this year. This merger will make AT&T the country’s largest pay TV provider, with more than 26 million subscribers. Why did AT&T agree to pay this whopping price to acquire DirecTV? The answer to this question lies in the problem AT&T was facing with the rising competition from other wireless companies and losing money to cable companies providing phone services. With the fast growing streaming and wireless technologies, more and more cable and satellite service providers want to control content and delivery. Hence, this merger would bring more options to AT&T to provide to their customers, which would bring them more revenue. Almost every household today has Internet…show more content…
Could AT&T have invested lesser money and developed their own TV service like DirecTV, or even better? Why was buying DirecTV a better idea than adding services to it’s existing bundles or merging with a cable company? AT&T already had high quality TV and Internet service in the U-Verse whose market was growing at a decent rate. AT&T could have invested its resources to develop its U-Verse rather than acquiring DirecTV. Then why did AT&T decide to buy DirecTV? Since allocation of resources is the most important aspect of making a decision, this was a very important big decision for AT&T, which could cost them billions of…show more content…
The only additional valuable asset that DirecTV provides is TV. So, AT&T could have bought another company like Dish Network instead, which could have added to AT&T’s wireless services as well. With all these available alternatives, AT&T had to recognize the best alternative and make a rational decision. There were a few downfalls to buying DirecTV, but AT&T still decided to buy DirecTV for the following reasons that they thought would be more profitable to the company against all other options. Because buying DirecTV was a solution to fighting competition. With the increasing competitive content providing and wireless service providers today, AT&T would have a difficult time attracting customers that are already using other provider’s services. By buying DirecTV, AT&T gets all DirecTV’s customers and gets more money from the same customers by adding more services to the bundles. This would also mean that U-Verse would not have competition from DirecTV

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