DISH, DirecTV Considered Merging Before AT&T Closed the Deal

By Josh Long Comments
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**Editor's Note: Please click here for a recap of the biggest communications mergers in Q2 2014.**

The nation’s two big satellite TV providers mulled over a possible merger before AT&T announced its acquisition of DirecTV for $95 per share, a July 1 regulatory filing indicates.

In February, after discovering Comcast planned to acquire Time Warner Cable, DirecTV’s management and representatives from a consulting firm discussed a possible merger with a competitor, according to a Securities and Exchange Commission filing. DirecTV requested additional information on the competitor’s spectrum holdings and strategic alternatives, the filing said.

The other company, the securities filing indicates, was none other than DISH Network, referred to in the filing as "Company A."

A month later, on March 27, AT&T and DirecTV entered into confidentiality agreements after AT&T CEO Randall Stephenson suggested to his counterpart at DirecTV (Michael White) that the companies consider a deal.

Shortly thereafter, the chairman of Company A (presumably DISH Network) reached out to White, requesting a meeting to discuss the ramifications of the Comcast/Time Warner Cable merger and a potential combination. A meeting between the two companies was held on March 28.

“The DirecTV representatives asked various questions and engaged in a discussion with the representatives of Company A but no proposal was made by either party," the SEC filing disclosed. “The meeting concluded with the parties agreeing that regulatory teams should be engaged by each of Company A and DirecTV to jointly assess both the Comcast/Time Warner Cable transaction and a possible combination of DirecTV and Company A."

On April 16, DirecTV and its competitor entered into a mutual confidentiality agreement. But AT&T was hot on the heels on DirecTV, days later (April 22) presenting the satellite TV provider a non-binding proposal letter to acquire the company for $85 per share.

DirecTV’s regulatory counsel later considered the likelihood of obtaining regulatory approvals on a deal with both companies.

But on May 4, a few days after The Wall Street Journal broke the story that AT&T had contacted DirecTV about a potential deal, Stephenson told White AT&T would increase its proposal to $93 to $95 per share.

About a week later, Company A informed DirecTV that it was ending discussions regarding a potential agreement, reiterating the chairman of Company A (presumably DISH Network co-founder Charlie Ergen) “had indicated that a combination with DirecTV was a ‘nonstarter’ at the then relative price levels for Company A and DirecTV."

On May 18, AT&T announced its agreement to acquire DirecTV for $95 per share, valuing the equity portion of the deal at $48.5 billion.

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