IBD's TAKE: AT&T stock has dropped nearly 7% since reports of the Time Warner deal surfaced and subsequently announced. Time Warner stock is trading at near 87, roughly 20 below AT&T's cash and stock offer of 107.50 per share. Analysts say TWX shareholders may be unsure of regulatory approval. Analysts do not expect another bidder such as Walt Disney or Apple to swoop in for TWX. Media stocks have cooled off since Friday. Learn more about CBS and other media stocks at IBD Stock Checkup.
Stephenson, while announcing AT&T's proposed $85.4 billion acquisition of Time Warner (TWX) on Monday, disclosed that DirecTV Now would be launched in November. Time Warner owns a 10% stake in Hulu.
AT&T acquired satellite TV broadcaster DirecTV Group in 2015.
"We estimate monthly programming costs for DirecTV Now in the low $30 range, similar to the price AT&T will charge, meaning the company will not make much on this service," UBS analyst John Hodulik said in a research report. "However, it will avoid costs for satellites, set-top boxes and installations/trouble-shooting, while also reaching customers who have left the pay TV market or never joined.