AT&T Inc. closed its $49 billion acquisition of DirecTV
after more than a year of regulatory review, a combination that
creates the largest U.S. pay-television company.
For AT&T, the deal is the keystone in its effort to
diversify away from the U.S. wireless business, where growth has
slowed as market saturation and competition take their toll.
DirecTV, which AT&T has said it is considering renaming, will
give the carrier more scale in television and provide leverage to
offer new video services over-the-top and on mobile devices.
"We're now a fundamentally different company," AT&T Chief
Executive Randall Stephenson in a news release. The company said it
would provide updated financial guidance in coming weeks.
The company said Chief Strategy Officer John Stankey will be
chief executive of a new division called AT&T Entertainment
& Internet Services, which includes DirecTV and the division
that also includes AT&T's broadband and video business. DirecTV
Chief Executive Mike White plans to retire.
The deal went through a rigorous review after it was announced
in May 2014, a period which included strong regulatory opposition
to consolidation efforts. Comcast Corp.'s $45 billion deal for Time
Warner Cable Inc. was killed and regulators warned against Sprint
Corp.'s attempt to merge with T-Mobile US Inc.
The Federal Communications Commission approved the deal Friday
but attached several conditions including requiring AT&T to
expand its fiber-optic broadband service and offer stand-alone
broadband service at set prices to low-income individuals who meet
certain criteria. The carrier also will be required to apply any
broadband-data caps it imposes on customers to its own over-the-top
video service and content to eliminate any chance that it can take
advantage of rivals.
"The conditions also ensure that the benefits of the merger will
be realized," the FCC said in a statement.
Public advocacy organization such as Public Knowledge and Free
Press criticized the conditions as too weak, warning the deal would
harm competition in the over-the-top video market.
During the review, critics of the deal, including Netflix and
Dish Network Corp., made similar claims that the combined company
would have the ability and incentive to protect its traditional
television business and squeeze online video rivals.
Regulators have signaled they are more worried about providing
choice in Internet access and new, online video options than they
are about concentration in the declining pay TV business.
Write to Thomas Gryta at thomas.gryta@wsj.com
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