AT&T completes $49 billion takeover of DirecTV
The Federal Communications Commission has approved AT&T’s $49 billion purchase of satellite television service DirecTV, a blockbuster deal that is expected to dramatically change the television landscape.
On Friday, FCC commissioners granted AT&T’s request to transfer control of broadcast licenses previously held by DirecTV. That bureaucratic step was the final hurdle for AT&T to clear in its 14-month quest to acquire DirecTV.
AT&T said it closed the merger transaction on Friday afternoon.
The phone company becomes the nation’s largest pay-TV operator with 26 million customers.
“Combining DirecTV with AT&T is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service,” Randall Stephenson, chief executive of AT&T, said in a statement.
The Dallas-based telecommunications giant will have advantages that other pay-TV operators lack, including access to a vast network of mobile device users at a time when more people are watching videos on their cellphones.
“We’ll now be able to meet consumers’ future entertainment preferences, whether they want traditional TV service with premier programming, their favorite content on a mobile device, or video streamed over the Internet to any screen,” Stephenson said.
With the completion of the deal, DirecTV Chief Executive Mike White stepped down, as expected.
AT&T announced that John Stankey would step into the role of chief executive of the newly formed AT&T Entertainment & Internet Services, with responsibilities over DirecTV and AT&T Home Solutions operations.
The FCC’s blessing brought to a close a nearly yearlong government review process.
“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,” the FCC said in a statement. “Based on this review, the commission has determined that granting the application, subject to certain conditions, is in the public interest.”
As part of the merger, the FCC said that AT&T would be required to expand its deployment of high-speed, fiber-optic broadband Internet access service to 12.5 million customer locations. AT&T will be charged with expanding high-speed Internet service to public schools and libraries.
A recent FCC study found that one-third of the nation’s schools lacked adequate Internet service. Bolstering those percentages has been a priority for the FCC.
“In addition, AT&T-DirecTV is prohibited from using discriminatory practices to disadvantage online video distribution services,” the FCC said in a statement. “Finally, AT&T-DirecTV will offer broadband services to low-income consumers at discounted rates.”
The FCC approval comes just three months after the government agency indicated that it would try to block rival Comcast Corp.’s proposed takeover of Time Warner Cable.
Since then, the smaller Charter Communications clinched a deal to swallow Time Warner Cable, which is the largest pay-TV provider in the Los Angeles region.
DirecTV, based outside Los Angeles, is the other behemoth in Southern California. The combined AT&T-DirecTV becomes the second-largest provider in the Los Angeles region with 1.5 million customers.
The merger is expected to transform AT&T into a television juggernaut that is less reliant on its wireless phone business, which has been subject to price wars among the leading providers.
It also gives AT&T greater reach into Latin America, where DirecTV has a significant presence with ownership interests in satellite TV companies that serve Argentina, Venezuela, Mexico, Brazil and other countries.
AT&T has said that it expects $2.5 billion in annual savings within three years of the merger’s completion.
This story was originally published July 24, 2015 at 6:20 PM with the headline "AT&T completes $49 billion takeover of DirecTV."