DIRECTV Up For Sale?

Rumors of DIRECTV being up for sale have been around for years.  Those rumors are now more than that, as DIRECTV itself has publicly stated they may be interested in a buyout.

Liberty Media Chairman John Malone restarted DIRECTV merger speculation yesterday in comments made to Bloomberg.  The comments had to do with the relationship DIRECTV has with Telco players Verizon and AT&T.   Both telecom companies currently resell DIRECTV service to their customer base.

“Our relationship will continue to broaden and intensify, It may lead to some more ownership-oriented relationship, or it may not.”  said Malone to Bloomberg in an interview late last week.  DIRECTV is also exploring ways to offer wireless high speed internet, which could be helped by an alliance with one of the big telco players.

Malone then seemed to back off the “up for sale” comments in a later interview with CNBC.

 ”I can be the first one to say DirecTV is not for sale.  If somebody wants to buy DirectTV, they can call up Mike White or me and we’ll talk to them,” said Malone on Friday.  White is the newly appointed CEO at DIRECTV, and will officially be taking the helm on January 1st, 2010.

So what sort of game is John Malone up to here?  Is DIRECTV up for sale or not?

It looks like Malone is up to his old game of flipping companies and trying to squeeze as much money out of them as possible.  His comments certainly reflect his willingness to sell the nations largest satellite TV company, as long as the price is right.  But will either AT&T or Verizon step up to the plate with the billions of dollars that will be needed to make John Malone happy?

Both telcos are already investing billions in their own video services, though neither one has the national reach that DIRECTV could offer.  AT&T U-verse is reportedly coming at a pricetag of nearly $20 billion dollars, and Verizon FiOS is an even pricier venture, with a reported pricetage of $25 billion dollars total.  A buyout by either one would quickly put the telcos high on the charts when looking at total subscribers.  DIRECTV currently boasts more than 18 million subscribers, while Verizon FiOS is in the area of 3 million and U-verse is closer to 2 million video subscribers. Does either company have the cash, or the appetite to swallow DIRECTV? 

Another obstacle could be the Obama administration.   Would they approve a merger between one of the big telecoms and DIRECTV?  A Dish Network-DIRECTV merger has been rumored for years, and was even tried at one point, but was promptly rejected by regulators at that time.  Malone doesn’t seem to think Verizon or AT&T will have issues with regulators, calling a potential merger “doable” though some concessions may have to be made to get the deal done.

Overall, the messages from Malone have to already be giving new DIRECTV CEO Mike White a headache.  Hired to come in and grow the DIRECTV brand, his #1 shareholder is already making noise about selling the farm.