Analysts say there are two main reasons for the deal: leverage and extra cash. AT&T will now have leverage when it comes to negotiating deals with content creators because the company will now hold the power to distribute content to 20 million DirecTV subscribers nationwide + their wireless customers + UVerse subscribers. AT&T will also have more flexibility with how much cash it can use. Currently, 70 percent of it's cash flow goes towards dividend payments. By adding DirecTV, it now has access to $4 billion of extra cash it can use for whatever it wants.
How will this deal affect DirecTV's sports offerings? Based on the press release sent out announcing this deal, the future looks bright for sports on DirecTV.
Adding Sports Channels
The satellite operator recently spoke out against adding sports channels to it's lineup. It is currently tangled up in carriage disagreements with the Dodgers, CSN Houston, SEC Network and Pac-12 Network.
But according to AT&T's announcement, the company classifies DirecTV's live sports programming as "premier content." Could this statement signal that DirecTV under new ownership will be more cordial with sports content producers?
In the old days before carriage fees jumped to exorbitant prices, DirecTV's advantage over other carriers was it's vast array of sports programming. AT&T seems interested in bringing back that old strategy to differentiate itself from other telcos like Comcast.
Online Sports Rights and NFL Sunday Ticket
AT&T also spotlighted it's new $500 million joint venture with The Chernin Group which will aim to buy and develop companies in online video. Could AT&T begin to pursue online sports rights more aggressively to supplement any future online video companies it acquires?
The answer to this question may come during NFL Sunday Ticket negotiations. DirecTV is said to be close to a deal with the NFL but mysteriously nothing has been announced. AT&T touted the package, which expires after next year's Super Bowl, in it's press release which could hint that a deal is imminent between both sides (it wouldn't make sense to showcase the deal otherwise).
It'll be interesting to see whether the NFL agrees to let AT&T include NFL Sunday Ticket on it's mobile devices (Verizon is the NFL's current mobile devices partner) and/or on an over the top online video option which they sell separately from the other services this combined company will offer.
The Audience Network
The Dan Patrick Show and DirecTV's annual Beach Bowl during Super Bowl weekend have served as two quintessential sports broadcasts which the California-based MVPD is well-known for amongst sports fans. It is unknown how these two broadcasts will be affected by this deal but AT&T's commitment to sports seems to indicate that these shows and the network won't be touched.
DirecTV will remain independent of AT&T which presumably means that they will continue to operate as usual and increase their original content on The Audience Network. Rumors have recently surfaced that Rich Eisen could sign with the network and launch his own Dan Patrick-like empire. The network also has it's own drama which has just been renewed for a second season.
The most interesting development which could arise from this merger in my world: Will AT&T Stadium become The Dan Patrick Show's Dallas mancave? Hopefully, The DP Show's I-Team can conduct an immediate investigation on this matter.
UPDATE: How important is sports to this new deal? If AT&T fails to renew DirecTV's deal with NFL Sunday Ticket package then the whole merger is off, according to Bloomberg.
How important is NFL Sunday Ticket to AT&T's deal with DirecTV? Check out this line from 8K filing... pic.twitter.com/NSdJWOS5aV
— Jon Erlichman (@JonErlichman) May 19, 2014