Sources report that SBC may bid for Hughes Electronics, owner of direct satellite broadcaster DirectTV. Analyst Adam Quinton says SBC has the motivation and resources to execute such a deal, but asks: Would it make sense?
Quinton says a past mixed history of telco/media deals, different operational challenges, and the entrenched nature of a cable threat suggests SBC would need to make a compelling case to gain investor support. He says he would take SBC's interest in the deal as an indication that the company is concerned about the growing threat from cable to its residential telephony base. In the past, merging a telecom company with a media/content business raised questions. SBC needs to make the case why this one would be more successful.