AT&T Corp and Hughes Electronics Corp subsidiary DirecTV Inc say they have terminated the marketing agreement which has seen AT&T distributing DirectTV’s direct-broadcast television service and Digital Satellite System equipment for nearly two years. The original agreement, signed in March 1996, included AT&T’s purchase of a 2.5% stake in DirecTV for $137.5m, as well as an option to buy up to 30% of the company depending on the number of subscribers the telecom giant signed up (CI No 2,880). As part of the termination deal, AT&T is selling the 2.5% stake back for $161.8m, while the remaining equity options and exclusivity agreements are canceled. AT&T says it’s getting out of the deal because it’s found that the vast majority of consumers prefer to buy DSS equipment directly through consumer electronics retailers. As compensation for its promotion of the DirecTV brand, the amicable divorce settlement also entitles AT&T to offer customers certain free DirecTV programming during 1998.
