NEW YORK and LOS ANGELES -- AT&T (T) is in active talks to buy satellite TV provider DirecTV (DTV) and may complete a deal in the next few weeks that could be worth close to $50 billion, two people familiar with the matter said.
The second-largest wireless operator is discussing an offer in the low- to mid-$90s a share for DirecTV, one of the people said, compared with the company's closing price of $87.16 Monday.
A bid near $95 a share would value DirecTV at more than $48 billion based on its shares outstanding, and would represent a premium of more than 20 percent to its stock price before news of AT&T's interest first emerged on May 1.
The deal price has yet to be finalized and terms could still change, the people said, adding that discussions are continuing. They asked not to be named because the matter isn't public.
Other details also have yet to be worked out, such as a break-up fee as well as a potential role for DirecTV Chief Executive Officer Mike White, the second person said.
The talks are the latest sign of a rising tide of potential megadeals in the telecoms, cable and satellite TV space, which is being roiled by Comcast's (CMCSA) proposed $45 billion takeover of Time Warner Cable (TWC) as well as market forces such as the rise of Web-based TV and surging mobile Internet usage.
AT&T and DirecTV declined to comment. Bloomberg News earlier reported that AT&T was offering to pay around $100 a share for DirecTV, whose management team will continue to run the company as a unit of AT&T. The Wall Street Journal said a deal could happen in two weeks.
DirecTV shares rose 6 percent to $92.50 in extended trading Monday.
%VIRTUAL-article-sponsoredlinks%DirecTV is working with advisers including Goldman Sachs Group (GS) to evaluate a possible combination following a recent takeover approach from AT&T, Reuters reported last week.
A combination of AT&T and DirecTV would create a pay television giant close in size to where Comcast will be if it completes its pending acquisition of Time Warner Cable. For that reason, the proposed merger is likely to face a prolonged battle to convince regulators to allow further consolidation in pay-TV.
"This is not the first time that AT&T and DirecTV have danced around the fire and thought if they could give it a go," said ReconAnalytics analyst Roger Entner.
"They both looked at each other for at least 10 years. Both kind of came to the conclusion that it was in the right environment. It makes a lot of sense to get together, but there was never the right regulatory environment for it."
A Comcast-Time Warner Cable merger would call for a counterweight like a combined AT&T-DirecTV, Entner said. He added that the merger would make sense for DirecTV given the decline of satellite TV.
"They both see the Grim Reaper at the horizon. DirecTV hasn't gone out and bought spectrum. Dish has, so DirecTV needs to find a partner, and AT&T is that partner," he said.
Some investors have also speculated about a potential tie-up of DirectTV and smaller rival Dish Network (DISH).
But Dish Chairman Charlie Egan last week said his company, which attempted to buy DirecTV more than a decade ago, wouldn't make a fresh approach at current prices even though he said such a tie-up would create many benefits.
-Additional reporting by Marina Lopes.
10 Easy Ways to Pay Off Debt
AT&T In Talks to Buy DirecTV for Nearly $50 Billion
"Your daily habits and routines are the reason you got into this mess," writes Trent Hamm, founder of TheSimpleDollar.com. "Spend some time thinking about how you spend money each day, each week and each month." Do you really need your daily latte? Can you bring your lunch to work instead of buying it four times a week? Ask yourself: What can I change without sacrificing my lifestyle too much?
Remove all credit cards from your wallet and leave them at home when you go shopping, advises WiseBread contributor Sabah Karimi. “Even if you earn cash back or other rewards with credit card purchases, stop spending with your credit cards until you have your finances under control,” she writes.
If you do a lot of online shopping at one retailer, you may have stored your credit card information on the site to make the checkout process easier. But that also makes it easier to charge items you don't need. So clear that information. "If you’re paying for a recurring service, use a debit card issued from a major credit card service linked to your checking account," Hamm writes.
Reward yourself when you reach debt payoff goals. "The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated," Bakke writes. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. "If you aim to reduce your credit card debt from $10,000 to $5,000 in two months," Bakke writes, "give yourself more than a pat on the back."
“Establish a budget,” writes Money Crashers contributor David Bakke. “If you don't scale back your spending, you'll dig yourself into a deeper hole." You can use personal finance tools like Mint.com, or make your own Excel spreadsheet that includes your monthly income and expenses. Then scrutinize those budget categories to see where you can cut costs.
Sort your credit card interest rates from highest to lowest, then tackle the card with the highest rate first. "By paying off the balance with the highest interest first, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards," writes Mint.com spokeswoman Hitha Prabhakar.
To make a dent in your debt, you need to pay more than the minimum balance on your credit card statements each month. "Paying the minimum -– usually 2 to 3 percent of the outstanding balance -– only prolongs a debt payoff strategy," Prabhakar writes. "Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments." Or if your minimum payment is $100, try doubling it and paying off $200 or more.
If you have a high-interest card with a balance that you’re confident you can pay off in a few months, Hamm recommends moving the debt to a card that offers a zero-interest balance transfer. "You’ll need to pay off the debt before the balance transfer expires, or else you’re often hit with a much higher interest rate," he warns. "If you do it carefully, you can save hundreds on interest this way."
Have any birthday gifts or old wedding presents collecting dust in your closet? Look for items you can sell on eBay or Craigslist. "Do some research to make sure you list these items at a fair and reasonable price," Karimi writes. “Take quality photos, and write an attention-grabbing headline and description to sell the item as quickly as possible." Any profits from sales should go toward your debt.
If you receive a job bonus around the holidays or during the year, allocate that money toward your debt payoff plan. "Avoid the temptation to spend that bonus on a vacation or other luxury purchase," Karimi writes. It’s more important to fix your financial situation than own the latest designer bag.