Dallas-based AT&T and DirecTV are in exploratory talks about a potential sale of the satellite broadcaster to the telecommunications giant.
The discussions are preliminary, and a deal isn’t certain, said a person with knowledge of the talks who requested anonymity because of the sensitive nature of the matter.
Both companies have formed due-diligence teams to review a potential sale, the person said. Legal units at both are also scrutinizing the hurdles they would face from lawmakers and regulators. The talks were first reported by The Wall Street Journal.
A combination of DirecTV and AT&T would create a pay-TV giant with almost 26 million U.S. customers. DirecTV has more than 20 million subscribers, and AT&T’s U-Verse has close to 6 million. DirecTV also has 17 million subscribers in Latin America.
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The El Segundo, Calif., satellite broadcaster has a market capitalization of about $40 billion, while AT&T has $185 billion.
AT&T made the first move after Comcast Corp. struck a deal to acquire Time Warner Cable.
DirecTV has long been rumored as a potential merger candidate, most often with rival Dish Network. The companies tried to merge more than a decade ago, but regulators would not approve the combination.
AT&T has been mentioned as a potential suitor in the past. The two companies have a relationship in which AT&T broadband is bundled with DirecTV in many markets.
A DirecTV spokesman declined to comment. An AT&T spokesman couldn’t be reached for comment.
Any proposed acquisition would probably be reviewed by the Justice Department and be subject to approval by the Federal Communications Commission, the Journal said.