Why AT&T wants DirecTV

[Commentary] Bundling is at the heart of AT&T's desire to acquire DirecTV's satellite service.

By folding the 20 million-strong pay-TV service into its broad telecom portfolio -- wireless, phone and fiber-optic broadband and TV -- AT&T hopes to actually create better bundled packages that, in turn, will lead to increased revenue from customers.

Talks between AT&T and DirecTV were reported in April, and stepped-up discussions and AT&T's willingness to pay a premium, about $50 billion, to consummate the deal came to light. "This deal is about getting more money from the same customers," says Roger Entner, analyst at Recon Analytics. "We are running out of people who want to buy wireless service."

AT&T wants to build a better bundle of services, wrapping up mobile and data connectivity, TV programming and other services like home security. But the company can only do that in 22 states where it offers its U-verse fiber-optic service, which bundles broadband, phone and TV.

Currently, AT&T has 11 million U-verse customers, but only 5.7 million of them get TV. With DirecTV -- the second-largest pay-TV provider in the US, behind only Comcast -- AT&T instantly becomes a national TV player. New bundling could include AT&T wireless voice and data services with satellite TV, and eventually wireless TV.