AT&T TO INVEST HEAVILY IN DIRECTV, WILL MARKET SYSTEMS
Published January 23, 1996
AT&T announced they will invest $137.5M in "fast-growing" DirecTV, "giving a powerful endorsement to the venture," according to the WALL STREET JOURNAL. DirecTV is owned by GM's Hughes Electronics Corp. AT&T will market DirecTV DBS systems to 90 million telephone customers which will allow AT&T to charge for the service on the "same bill customers receive for long distance." AT&T's investment is for a 2.5% share of DirecTV, and they have the option to buy as much as 30%. For AT&T, the decision "reflects its interest in getting into direct-to-home satellite delivery of entertainment services and, eventually, interactive and computer services that could become available over systems such as DirecTV" (Jeff Cole WALL STREET JOURNAL, 1/23). In Baltimore, Michael Dresser calls AT&T's move "a formidable challenge to the cable television industry," with DirecTV gaining "a level of market credibility that millions of dollars of advertising could not buy" (Baltimore SUN, 1/23). The N.Y. TIMES writes yesterday's announcement "galvanized" the DBS industry. Analyst John Aronsohn said AT&T's "entry is going to make this industry fly a lot faster than it would have otherwise" (Mark Landler, N.Y. TIMES, 1/23).