NEW YORK (AP) -- Shares of satellite broadcaster DirecTV climbed Friday after the company confirmed that it has dropped out of the bidding for Vivendi GVT, a Brazilian phone and Internet company.
THE SPARK: Press reports late Thursday said DirecTV had pulled out of the auction process, and the company confirmed that Friday. French conglomerate Vivendi SA had hoped to sell the unit for at least $9 billion, according to press reports.
THE ANALYSIS: Like other satellite companies, El Segundo, Calif.-based DirecTV is hamstrung by its inability to offer fast, cheap broadband service over cable or phone lines. Its interest in GVT was seen as a way of combining its satellite-TV service with the Internet.
But analyst John Hodulik at UBS pointed out in January that buying GVT would raise DirecTV's debt level, which could force it to slow its share buybacks. He called that a "potential problem for the stock regardless of the strategic rationale for a GVT deal."
SHARE ACTION: DirecTV shares rose $3.21, or 6.1 percent, to $55.81 in midday trading. The day's high of $56.48 was an all-time high for the stock.