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Cable industry giants seeking mergers and acquisitions

Virginia businesses may be interested in some of the cost issues that cable companies are facing with regard to sports content. These issues may be connected with two high-profile mergers between industry heavyweights already in the works.

On June 22, the U.S. men's national soccer team faced off against Portugal in a World Cup match watched by a greater number of Americans than any other soccer game in history. Estimates show that 25 million tuned in to see the match. However, even as so many were watching their televisions, overall pay television viewership has declined for the first time ever, year-over-year. From 2012 to 2013, around 250,000 fewer people paid for television. Some place the blame on the expensive monthly bills that come with these services. Around 40 percent of that cost, reports say, is attributed to paying for sports content. Live sporting events are one of the reasons that many consumers are hesitant to go without cable television.

These higher costs and lower subscriber numbers may be the impetus for two potential mergers in the cable television industry. AT&T is seeking to purchase satellite provider DirecTV. However, a condition of the purchase is that DirecTV manages to continue its exclusive agreement to broadcast football games on Sunday nights. Time Warner Cable and Comcast Corp. are looking to merge. This is due to the loss of customers that Time Warner is facing because of those high cable bills, according to reports.

In situations like these, an attorney may be able to help with any potential business transactions, including business acquisitions and mergers. The attorney may be able to assist with the analysis of the merger and how it may help the business expand into new markets, as well as draft the necessary agreements.

Source: Bloomberg, "World Cup Mania Shows How Sports Is Driving Biggest Mergers", Alex Sherman, July 02, 2014

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