A deal would likely be worth at least $40 billion, DirecTV's current market capitalization, the newspaper said.
A combination of AT&T and DirecTV would create a pay television giant close in size to where Comcast Corp (CMCSA.O) will be if it completes its pending acquisition of Time Warner Cable Inc (TWC.N), the Journal said.
Representatives for AT&T were not immediately available for comment outside of regular U.S. business hours.
DirecTV spokesman Robert Mercer said the company does not comment on speculation.
Comcast Corp this week agreed to a three-way deal with Charter Communications Inc (CHTR.O) as part of Comcast's efforts to win regulatory approvals for its proposed $45 billion purchase of Time Warner Cable.