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AT&T Gets DirecTV, Vaults to Top Pay TV Spot

Company Now Boasts 26M Combined U.S. Satellite, U-Verse TV Subs 7/27/2015 8:00 AM Eastern
TakeAway

Telco AT &T has clinched its acquisition of satellite-TV firm DirecTV, making it the largest U.S. pay TV provider.

Moments after receiving the Federal Communications Commission’s condition-filled blessing, telco AT&T on Friday closed its acquisition of satellite-TV firm DirecTV, creating a pay TV provider with north of 26 million customers in the U.S. and 19 million subscribers in Latin America.

 

The closure came with a big executive announcement: John Stankey will be CEO of AT&T Entertainment & Internet Services, where he’ll head up the combined DirecTV and AT&T Home Solutions operations and report to AT&T chairman and CEO Randall Stephenson. DirecTV president, chairman and CEO Mike White announced plans to retire.

 

The FCC blessing came three days after chairman Tom Wheeler confirmed that the order had been circulated for approval. The FCC said the full order detailing the decision and the conditions for the merger will be issued shortly.

 

Wheeler and commissioners Mignon Clyburn and Jessica Rosenworcel voted in favor of the deal; commissioner Michael O’Rielly concurred in part, and commissioner Ajit Pai dissented in part; the agency said it goes down as 5-0 approval.

 

Merger conditions, which will generally remain in effect for four years, are:

• The combined company will be required to expand its deployment of high-speed, fiber optic broadband Internet access service to 12.5 million customer locations as well as Gigabit service to E-rate eligible schools and libraries;

• AT&T-DirecTV is prohibited from using discriminatory practices to disadvantage online video distribution services and will submit its Internet interconnection agreements for commission review. The FCC noted that AT&T is currently the only “major ISP” that uses data caps for fixed broadband (Comcast is testing such policies in select markets), and that the merger “increases the incentive of AT&T-DirecTV to use strategies that limit consumers’ access to online video distribution services in order to favor its own video services.” On the interconnection issue, the FCC said monitoring is needed to determine whether the combined company is denying or impeding access to its networks in anticompetitive ways.

• The combined company will offer broadband services to low-income consumers at discounted rates.

• The company must also retain an internal company compliance officer and an independent, external compliance officer that will monitor and report on the imposed conditions of the merger.

 

AT&T also talked up the multiscreen and mobile video implications of the deal, noting that it will launch new integrated TV, mobile and high-speed Internet offers “in the coming weeks.”

 

AT&T is also pushing ahead on OTT via Otter Media, its joint venture with The Chernin Group. Expanding on its conditions and commitments tied to the merger, AT&T said it will not favor its own online video programming services, but said it will continue to offer discounted integrated bundles of its video and broadband packages.

 

“Combining DirecTV with AT&T is all about giving customers more choices for great video entertainment integrated with mobile and high-speed Internet service,” Stephenson said in a statement. “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.”

 

AT&T also posted an FAQ about the deal, telling DirecTV and AT&T U-verse customers that their existing TV services, including current channel lineups, won’t change. But the NFL Sunday Ticket out-of-market package is still only available to DirecTV subscribers, due to contractual limitations.

 

The New Top 5

 

These are (or will be) the top U.S. pay TV providers, in customer numbers, if another pending set of mergers is approved:

AT&T-DirecTV: 26 million

Comcast: 22.3 million

Charter plus Time Warner Cable plus Bright House Networks: 17.3 million*

Dish Network: 13.8 million

Verizon FiOS TV: 5.76 million

* Pending merger approvals.

SOURCE: Multichannel News research

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