On the surface, AT&T's potential $50 billion deal to acquire DirecTV is being driven by a need to bulk up to better compete with the looming Comcast-Time Warner Cable merger. After all, AT&T's management has repeatedly labeled that deal, which would give Comcast control of roughly 30 million subscribers, as "industry-redefining." Adding DirecTV's roughly 20 million subscribers, which rank it as the largest satellite TV operator in the country and the second-largest pay-TV operator overall behind only Comcast, to AT&T's fledgling U-verse service, which has just under 6 million subscribers, will help in negotiating better carriage deals with programmers and instantly vault AT&T into a national competitor.

But look closer and you'll see that AT&T's interest in DirecTV isn't about video at all. In fact, the rationale for the deal is less strategic than financial. What AT&T really wants access to is not DirecTV's 20 million video subscribers, but rather the $2.6 billion in free cash flow the satellite operator generated last year. (Or $8 billion before interest, tax, and other expenses.)

Don't take my word for it — take AT&T's. According to a Barclays report from early April based on meetings with executives from AT&T's investor relations team, "while the company believes there are some strategic advantages to owning a direct video satellite business, longer term management believes that content consumption will increasingly follow an over-the-top structure. This suggests that linear video may not be as enticing an endeavor longer term."

Put another way, AT&T's management believes — accurately — that subscribers to traditional pay-TV services offered by its U-verse service or DirecTV (or Comcast) will decline over time as video consumption migrates to streaming delivery over the Internet. Since DirecTV doesn't offer broadband, it's no wonder that the satellite operator would want to sell while it can. And surely part of the reason AT&T would want to buy DirecTV is because a combined company could offer a bundled package of video, broadband, and telephone services to subscribers. As linear video consumption declines, it can move the satellite operator's subscribers to other platforms.

But that's only a small part of the reason why this deal, which has been rumored for more than a decade, now suddenly has more gravity. As The Carmel Group's Jimmy Schaeffler points out, the logistics of such a migration aren't as simple as flipping a switch. The two companies currently deliver video via different methods — AT&T uses fiber optics and wireless, while DirecTV uses satellites.

"Even though you are bringing the two companies together, you are still paying for two different delivery systems, so the synergies are low," Schaeffler said.

Synergies, of course, is a dirty word for the money companies save through layoffs and other cost-cutting measures. Comcast expects to save about $1.5 billion annually from its merger with Time Warner Cable, for instance, but analysts project a combined AT&T-DirecTV to save only about $1 billion.