AT&T closes in on DirecTV

The US$48.5bn merger of US telecoms giant AT&T and DirecTV is nearing completion after the deal, which is set to create the country’s largest pay TV company, received the go-ahead from regulators.

Tom Wheeler, chairman of US regulator the Federal Communications Commission, recommended that the deal be approved, while the US Justice Department said the merger would not be a significant risk to competition.

The deal was first revealed in May last year, when AT&T proposed paying DirecTV shareholders US$95 per share as well as taking on the satellite operator’s debt.

AT&T, the country’s second-largest wireless carrier, has already branched out into the pay TV business with the launch of IPTV service U-Verse. But DirecTV would give the company around 20 million DTH subscribers in the US and 17 million in Latin America.

The boards of directors at both firms approved the merger but regulators had been considering the risk of reduced competition, raised by smaller cable operators and some consumer groups.

The arrangement with the FCC will now see AT&T extend high-speed internet connection to more than 12 million customers and share traffic agreements with the regulator.

Concerns had also been raised by companies including Netflix that AT&T had the power to slow down traffic running through its cables, affecting the US streamer’s service.

Assistant attorney general Bill Baer said the “commitments that the proposed FCC order includes, if adopted, will provide significant benefits to millions of subscribers.”

AT&T CEO Randall Stephenson said at the time the deal was struck that it would allow the company to fulfil a long-held ambition of being able to “take premium content and deliver premium content over multiple points for the customer, whether it be through a smartphone, a tablet, television or laptop.”

A similar deal between US cable and programming giant Comcast and Time Warner Cable came off the rails earlier this year due to worries about the combined firms’ strength in the broadband sector.