FCC approves AT&T’s acquisition of DirecTV

25 Jul 2015 | Author: | No comments yet »

AT&T buys DirecTV, now biggest traditional TV provider in US.

WASHINGTON: The No. 2 U.S. wireless carrier AT&T Inc and the biggest satellite-TV provider DirecTV became the country’s largest pay-TV company on Friday, completing their US$48.5 billion merger after receiving final regulatory approval. NEW YORK (AP) — Even as TV watchers increasingly go online, AT&T has become the country’s biggest traditional TV provider with its $48.5 billion purchase of DirecTV.NEW YORK – AT&T, which on Friday received final U.S. regulatory approval to buy DirecTV, will offer ad-supported TV streaming and mobile video products while building out its advertising technology, John Stankey, the AT&T executive named as chief of the company’s Internet and Entertainment division, told Reuters.

The Justice Department had already cleared the deal, which will create the largest provider of cable or satellite TV in the U.S., with 26.4 million cable and satellite TV subscribers.“The Commission’s decision is based on a careful, thorough review of the record, which includes extensive economic analysis and documentary data from the applicants, as well as comments from interested parties. Based on this review, the Commission has determined that granting the application, subject to certain conditions, is in the public interest.” With this deal, AT&T becomes the largest pay TV company in the world, with nearly 26 million active subscribers.

The company said it will serve more than 26 million U.S. customers and more than 19 million in Latin America, making it the world’s biggest pay-TV company. He will also oversee the wireless distribution of mostly youth-oriented original content created by Otter Media, a joint venture of the telecom carrier and the investment group headed by media entrepreneur Peter Chernin. “It’s a two-pronged approach – it’s great premium content and scale that DirecTV brings married with the innovative cutting edge, new models that the Chernin organization is focused on and bringing those two together so we can meet customers’ needs over time,” Stankey said. The acquisition has raised a few eyebrows, especially in the wake of the Comcast-Time Warner Cable deal that was called off earlier this year, but the FCC went through with approving the purchase while stipulating a few specific conditions, as well. After more than a year of review, the Federal Communications Commission finalised its vote to approve the deal with conditions, imposed for four years and enforced by an internal and an external compliance officers. AT&T’s purchase of DirecTV was approved even as Comcast’s bid for Time Warner Cable, which would have made the country’s biggest cable company even more massive, was blocked.

They are related to expanding broadband access and preserving competition, and can be summed up like this: The merger go-ahead and conditions were passed by Chairman Tom Wheeler and the agency’s two other Democratic Commissioners. The AT&T deal did not trigger the same fears from consumer advocates because the company wouldn’t contain an entertainment division like Comcast’s NBCUniversal and wouldn’t gain Internet customers, considered the future of the industry, by buying DirecTV. That list — expansion, restriction and explanation — may assuage concerns from those who generally oppose the combination of broadband or cable providers. As the U.S. wireless market reaches saturation, AT&T hopes to tap into DirecTV’s business and has been expanding its footprint in Mexico after buying the third and fourth largest wireless carriers in that country recently.

The FCC repeated Friday that it had set certain requirements for the merger, which it had disclosed on Tuesday when the head of the agency announced his support for the deal. The conditions set down on Friday are consistent with Wheeler’s larger priorities of expanding broadband, and making it affordable to all Americans. Whether it can effectively compete in the online video market as players such as Netflix and Dish Network Corp and new entrants like Verizon Communications rush to service viewers who increasingly watch video on mobile devices remains to be seen. Among these are that AT&T has to expand a fiber network that can handle fast Internet speeds to 12.5 million possible customers, which it says compensates for the loss of a video option in markets where AT&T’s U-verse cable service had competed with DirecTV’s satellite TV service.

AT&T will let DirecTV users stream linear TV content that they watch in their living rooms to their mobile devices even before they set up their satellite TV connection, in addition to offering new mobile video content services targeted at younger customers, according to Stankey. Another way the agency wants to try to promote video competition is by forbidding AT&T to make a potential online video service of its own not eat up data under the cap imposed by the company on its home Internet customers. If AT&T did that, it could make its own service more appealing compared with Netflix, for example, because streaming Netflix would count toward the data cap and potentially could trigger additional fees if a customer went over the cap. While DirecTV has exclusive content deals such as the popular NFL Sunday Ticket and some wireless agreements in place, AT&T will negotiate to bring a U-Verse-like mobile viewing experience to DirecTV services, Stankey said. “That amount of content will increase virtually every quarter and that’s going to be a constant drumbeat march that we’re going to be on,” he said.

I think that is incrementally the case in some limited set of markets,” said John Bergmayer, a senior staff attorney with public-interest group Public Knowledge. In June, Verizon acquired AOL Inc, to access its ad technology and make a $4.4 billion bet that a push into mobile video and targeted advertising can help it find new growth avenues. The issues are addressed by the FCC’s conditions with requirements for AT&T to count its own affiliated video services towards any data caps on fixed broadband connections and to share with the FCC all traffic exchange agreements it strikes with content and web transit companies. AT&T will move aggressively on the advertising side by creating ad tools within the company and partnering or acquiring advertising technology firms, Stankey said.

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