AT&T purchase of DirecTV becomes official; John Stankey tapped to run new Entertainment & Internet business
AT&T finally received official approval from the Federal Communications Commission on its $48.5 billion acquisition of DirecTV, ending more than a year of consideration by the government regulator.
In giving its official approval, the FCC stuck AT&T with a handful of conditions designed to “address potential harms presented by the combination of AT&T, one of the nation’s largest telephone and Internet service providers, and DirecTV, the nation’s largest satellite video provider.
Those conditions include expansion of high-speed, fiber optic broadband Internet access to 12.5 million customer locations, including E-Rate eligible schools and libraries, not originally part of AT&T’s deployment plans; prohibiting the combined entity from using discriminatory practices to disadvantage online video distribution services and submit its Internet interconnection agreements for to the FCC for review; and to offer broadband services to low-income consumers at discounted rates.
Full details on the conditions are set to be released “shortly.” The deal had already garnered support from the Department of Justice, which said its investigation found the proposed deal “does not pose a significant risk to competition.”
In touting the approval, AT&T cited the expanded breadth of offerings the company said it can offer in the market.
“This transaction allows us to significantly expand our high-speed Internet service to reach millions more households, which is a perfect complement to our coast-to-coast TV and mobile coverage,” said AT&T Chairman and CEO Randall Stephenson. “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”
AT&T announced that John Stankey will head the company’s Entertainment & Internet Services business, which will include DirecTV and AT&T Home Solutions operations. Stankey previously served as AT&T’s chief strategy officer. Current DirecTV President, Chairman and CEO Mike White is set to retire.
FCC Chairman Tom Wheeler earlier this week circulated an approval recommendation to his fellow commissioners, which included a number of the conditions present in the final approval. Wheeler’s approval came on the heels of AT&T offering up further conditions for the deal.
As part of the initial proposal in May 2014, AT&T committed to expanding broadband coverage to 15 million rural homes; to continue to offer a standalone broadband service providing at least 6 megabit per second speed “where feasible” in current markets at a fixed priced for three years; to continue offering a standalone DirecTV service for at least three years; and continue its commitment to net neutrality efforts.
More importantly for the wireless industry, AT&T said it remains committed to spending at least $9 billion in the government’s planned 600 MHz incentive auction scheduled for next year if there is sufficient spectrum made available for a nationwide 20 megahertz footprint. AT&T recently shelled out more than $18 billion tied to winning bids in the FCC’s Auction 97 proceedings.
The deal was initially expected to close by the middle of this year, but AT&T late last month was forced to file an extension with the Securities and Exchange Commission “to facilitate obtaining final regulatory approval required to close the merger.”
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