Telecom giant AT&T is in talks with DirecTV for a possible acquisition, according to The Wall Street Journal. The deal would likely be worth around $40 billion, DirecTV's current market capitalization.
AT&T currently has 5.7 million pay TV subscribers, while DirecTV has 20 million subscribers. The merger would create a pay television giant close in size to where Comcast will be if it completes its pending acquisition of TWC.
Both AT&T and DirecTV declined to comment.
A deal with DirecTV, which is the second biggest pay TV operator in the US, would provide a greater national footprint in TV for AT&T. The company already partners with the satellite firm to offer TV service in areas where its U-Verse TV service is unavailable.
AT&T has been looking for a way to get into the television business on a national scale for years now. The company has held talks with both Dish Network and DirecTV in recent years, the report notes.
An acquisition would not only allow the telecom giant to to offer bundles of wireless and TV services, it would also give the company new ways to deliver video to its mobile and broadband customers.
With the Comcast-TWC merger facing tough regulatory scrutiny, a second pay-TV merger doesn't look easy. But, as per the report, the deal would have a solid chance at approval because the combined company would be in a position to compete with Comcast, the leading cable and broadband provider.
The deal could also push Dish Network to enter into a merger with a wired or wireless broadband provider.