Moffett Floats AT&T Run at DirecTV

Could AT&T be prepping a run at pay-TV distributor DirecTV? In a note out Monday, May 3, Bernstein Research telco analyst Craig Moffett floats the likelihood of that outcome, describing it as AT&T’s “only option.”

In an investor note titled “The Process of Elimination,” Moffett says the telco industry is in a hole when it comes to finding growth avenues, and that with few other options, AT&T — which hasn’t completed a big deal since BellSouth in 1996 — is highly likely to make a run at DirecTV. DirecTV’s stock was up 43 cents, to $36.67, in mid-afternoon trading. The satellite provider, which just tied with rival Dish to create an interactive advertising platform, reports earnings on May 6.

The Bernstein analyst notes that over the past four years the phone companies, which include Verizon and Qwest, have shed some 85,000 employees and are losing broadband customers to cable companies such as Comcast and Time Warner Cable. Moffet suggests that executives in the know think a deal will be made in the next 12 months. AT&T operates TV service U-Verse.

Moffett writes, “[AT&T] CEO Randall Stephenson has certainly made no secret of his interest,” and suggests that such a deal would have a good chance of passing muster with regulators, though he doesn’t see a strategic reason for such a deal.

Asked in an interview published in Satellite Business News Fax, Monday, May 3, whether DirecTV and AT&T are in talks, DirecTV CEO Michael White says, “No. Unequivocally, no.”

It’s hard to believe that such a widespread expectation could be so off base, so one wonders what AT&T might be waiting for. On the other hand, when it’s earnings season, such speculation is the lifeblood of the market.