Feds Will Let AT&T Buy DirecTV

AT&T had to agree not to favor its own video services and to deliver fiber Internet to more people.

The AT&T Communications Inc. corporate headquarters building is seen March 6, 2006 in San Antonio, Texas.
National Journal
Brendan Sasso
Add to Briefcase
Brendan Sasso
July 21, 2015, 2:53 p.m.

AT&T is poised to win gov­ern­ment ap­prov­al for its $49 bil­lion pur­chase of Dir­ecTV.

Fed­er­al Com­mu­nic­a­tions Com­mis­sion Chair­man Tom Wheel­er said Tues­day he plans to ap­prove the mer­ger with cer­tain con­di­tions. The Justice De­part­ment also an­nounced that it will not chal­lenge the deal.

The mega-mer­ger will make AT&T the largest TV pro­vider in the coun­try, beat­ing out Com­cast, which aban­doned its own mer­ger with Time Warner Cable earli­er this year in the face of op­pos­i­tion from the FCC and Justice De­part­ment.

“After an ex­tens­ive in­vest­ig­a­tion, we con­cluded that the com­bin­a­tion of AT&T’s land-based In­ter­net and video busi­ness with Dir­ecTV’s satel­lite-based video busi­ness does not pose a sig­ni­fic­ant risk to com­pet­i­tion,” Bill Baer, the head of the Justice De­part­ment’s An­ti­trust Di­vi­sion, said in a state­ment.

Two more of the five FCC com­mis­sion­ers must still sign off on the deal, but that’s not ex­pec­ted to hold up the form­al ap­prov­al for long.

To get Wheel­er’s sup­port, AT&T had to agree to make high-speed fiber In­ter­net avail­able to 12.5 mil­lion ad­di­tion­al cus­tom­ers. In an at­tempt to “build on” the agency’s net-neut­ral­ity rules, Wheel­er also got AT&T to prom­ise not to ex­empt its own video ser­vices from the data caps on its home In­ter­net con­nec­tions. The com­pany also prom­ised to sub­mit any In­ter­net traffic agree­ments to the FCC for re­view, along with re­ports on its net­work per­form­ance.

The FCC plans to ap­point an in­de­pend­ent of­ficer to en­sure that AT&T abides by the con­di­tions.

“These strong meas­ures will pro­tect con­sumers, ex­pand high-speed broad­band avail­ab­il­ity, and in­crease com­pet­i­tion,” Wheel­er said in a state­ment.

Al­though the FCC chief didn’t identi­fy oth­er con­di­tions, AT&T is also ex­pec­ted to prom­ise to provide low-cost In­ter­net to poor con­sumers, among oth­er meas­ures.

Win­ning ap­prov­al for the deal is a bit of re­demp­tion for AT&T law­yers and lob­by­ists, who had their 2011 bid for T-Mo­bile blocked over com­pet­i­tion con­cerns.

The deal with Dir­ecTV gen­er­ated less of a back­lash from con­sumer ad­voc­ates be­cause AT&T will not be elim­in­at­ing a dir­ect com­pet­it­or. The com­pany aims to use Dir­ecTV’s of­fer­ings to add satel­lite TV to its bundles of phone and In­ter­net ser­vice.

“We are pleased the De­part­ment of Justice has com­pleted its re­view of our ac­quis­i­tion of Dir­ecTV,” AT&T said in a state­ment Tues­day. “We look for­ward to gain­ing the ap­prov­al of the Fed­er­al Com­mu­nic­a­tions Com­mis­sion so we can quickly be­gin provid­ing con­sumers with the be­ne­fits of this com­bin­a­tion.”

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