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).
