(Repeats DEALTALK released on Nov. 18)
* DirecTV names outsider to become CEO
* Liberty holders vote Thursday on splitting off DirecTV
* AT&T, Verizon could revisit earlier deal talks
* John Malone seeks tax-free exit from DirecTV
* DirecTV purchase could trigger bid for Dish
By Yinka Adegoke and Sinead Carew
NEW YORK, Nov 18 The naming of a new CEO at
DirecTV Group Inc DTV.O could signal it's time for a takeover
bid for the satellite TV company.
Some observers think the appointment of PepsiCo Inc veteran
Michael White, who has no experience in pay TV, is a sign
DirecTV parent Liberty Media Corp LINTA.O just wants a
"baby-sitter" before a sale in the next couple of years.
Representatives from Verizon Communications Inc (VZ.N) and
AT&T Inc (T.N) have already each approached Liberty, controlled
by John Malone, in the last year to express interest, according
to people with knowledge of the talks. The discussions fizzled
out on regulatory concerns and no talks are now taking place,
they said on condition of anonymity.
Liberty, AT&T, Verizon and DirecTV all declined to
"Either telco would see DirecTV as a viable acquisition
candidate," said Standard & Poor's equity analyst Tuna Amobi,
adding that all pay-TV players are seeking scale. "My sense
right now is that John Malone will be open to selling at the
Liberty Media shareholders are set to vote on Thursday to
approve a plan to split DirecTV from Liberty Entertainment
LMDIA.O -- a move that Wall Street believes could pave the
way for a telephone company to put in a bid for DirecTV,
leading to a similar bid for smaller rival Dish Network Corp
Both AT&T and Verizon are already marketing partners with
DirecTV, offering a bundle of phone, Internet and TV services.
But one advantage of owning a satellite TV company would be
cost savings and more leverage in program negotiations with
cable TV networks. Programming is by far the largest operating
expense of running a pay-TV business.
DirecTV has some 18 million customers, while DISH has
around 13.5 million. Verizon has spent billions of dollars
building its FiOS video service, but only has 2.7 million
customers, while AT&T's investment in Uverse has so far
attracted 1.8 million customers.
Any deal under discussion would likely see DirecTV spin off
its Latin America business as both U.S. phone companies are
focused on domestic markets, analysts said.
But regulatory issues will dictate if a bid for either
DirecTV or Dish Network is formally put on the table in the
near term, observers said.
Talks of big mergers in media and telecommunications have
generally been put on ice as companies wait to see how
antitrust officials in Washington treat Comcast Corp's
(CMCSA.O) bid for controlling stake in NBC Universal.
NBC Universal's parents General Electric Co (GE.N) and
Vivendi SA (VIV.PA) are still negotiating the terms of the NBC
Universal deal, but agreement is expected soon.
"The Comcast deal could easily make a bid for DirecTV or
Dish less likely," said Craig Moffett, a cable and telecoms
analyst at Bernstein Research.
"The regulatory climate in Washington is going to be even
more anti-media consolidation once the Comcast-NBC deal is on
One question is whether regulators would allow a phone
company to offer satellite TV services in markets they already
have their own video offering.
"The big block might be whether the regulators let it
through. It's a big deal," Chris Watts, an analyst at Atlantic
Equities, said of a DirecTV takeover. "It may be a pretty
bitter pill for regulators to swallow at this stage."
For Liberty, the key to a transaction with Malone is
minimizing his tax bill, analysts say.
The split shareholders are set to approve on Thursday will
see DirecTV effectively buy Liberty Entertainment to become
independent, so Liberty Media does not get taxed on a future
sale of the satellite company if it is a stock-for-stock deal.
Liberty became a controlling holder of DirecTV last year
when it swapped a minority stake in Rupert Murdoch's News Corp
(NWSA.O) for its stake in the satellite TV operator.
Liberty Media Chief Executive Greg Maffei has said
divesting DirecTV gives it more strategic options.
Any deal will have to wait at least a few months as White
does not take the helm at DirecTV until Jan. 1. He will succeed
Chase Carey, who returned to News Corp earlier this year.
(Reporting by Yinka Adegoke and Sinead Carew; additional
reporting by Jui Chakravorty; editing by Tiffany Wu and Andre