Fitch could cut AT&T, DirecTV

Fitch Ratings said it placed the A issuer default ratings and outstanding debt of AT&T Inc. and its subsidiaries on Rating Watch Negative.

The company's F1 short-term issuer default rating and commercial paper rating was also placed on Rating Watch Negative.

In addition, Fitch placed the BBB- issuer default ratings and outstanding debt ratings assigned to DirecTV Holdings, LLC on Rating Watch Positive. DirecTV is a wholly owned indirect subsidiary.

Roughly $20.8 billion of debt outstanding at DirecTV as of March 31 is affected by the action.

The agency said it believes AT&T's acquisition of DirecTV will improve its financial flexibility owing to DirecTV's strong free cash flows and the significant equity component in the transaction financing. The transaction also strengthens the company's position in the evolving video landscape, offering the potential to capitalize on trends for mobile video and over-the-top video delivery, Fitch said.

The acquisition also diversifies AT&T's revenue stream.

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