Federal regulators are poised to approve AT&T Inc.'s $49
billion acquisition of DirecTV, ending a review process that lasted
more than 12 months and clearing the way for the biggest media deal
of the past year.
Federal Communications Commission Chairman Tom Wheeler said an
order has been circulated to the agency's other four commissioners
recommending approval of the deal. The agency has attached numerous
conditions, including requirements that AT&T expand its
fiber-optic broadband service.
The company will also 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. No requirements were included related to net
neutrality.
The Justice Department also signed off on the transaction.
The acquisition, which was announced in May 2014, will make
AT&T the nation's largest pay-television provider at a time
when companies are navigating huge shifts in television as video
consumption moves online.
AT&T is betting that acquiring DirecTV with its 20 million
satellite customers and $33 billion in revenue will give it access
to programming relationships that could put it in a better position
to expand into online TV as more Americans "cut the cord."
Earlier this year, rival Verizon Communications Inc. bought AOL
Inc. for $4.4 billion as a way to access AOL's digital-advertising
technology for a mobile-first video service it is launching later
this summer.
The DirecTV deal will be AT&T's biggest acquisition under
Chief Executive Randall Stephenson and the carrier's largest since
its 2006 purchase of BellSouth for $85 billion. It lifts the shadow
from its failed attempt to buy T-Mobile US Inc. in 2011, which was
blocked by the Justice Department, a misstep that cost the company
more than $4 billion in break-up fees and other penalties.
This time around, AT&T had an easier go of it with
regulators, who killed Comcast Corp.'s $45 billion deal for Time
Warner Cable earlier this year. The AT&T deal didn't raise the
same regulatory problems as Comcast's combination, which would have
created a giant service provider controlling access to more than
half of what the FCC considers high-speed broadband Internet
service.
The deal with DirecTV will pair AT&T's regional U-verse
pay-TV business with DirecTV's satellite operation, which is
nationwide but lacks a robust broadband offering.
The combination has raised concerns among rival companies and
industry groups, including Netflix Inc., Dish Network and Cogent
Communications, which told the FCC that the combination would give
AT&T the ability and incentive to squeeze online-video rivals.
Netflix has said it doesn't oppose the combination as long as there
are conditions imposed to protect online video companies.
The FCC added no requirements to the terms covering so-called
interconnection agreements, which cover how other networks connect
to AT&T's. The company will have to file its interconnection
agreements with the commission for review.
AT&T is also required to offer standalone broadband service
at set prices to low-income individuals who meet certain criteria,
people briefed on the matter said.
AT&T has said the deal will give it more scale in
television, which could help its U-verse video service become
profitable. Owning DirecTV may also advance AT&T's ambitions in
online video. The company has said it plans to offer an
over-the-top video product and has formed an online video venture
with media mogul Peter Chernin.
Write to Thomas Gryta at thomas.gryta@wsj.com
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