Wheeler Recommending AT&T Purchase of DirecTV

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By Scott Moritz and Todd Shields

July 21 — AT&T Inc.’s proposed purchase of DirecTV advanced as the chairman of the Federal Communications Commission recommended approval while demanding the combined company do more to spread broadband, the agency said.

FCC Chairman Tom Wheeler said he asked fellow commissioners Tuesday to approve the $48.5 billion deal proposed last year, signaling a decisive vote in coming days. The Justice Department said Tuesday it won’t challenge the deal because the transaction doesn’t pose a risk to competition.

With the deal, AT&T will add high-speed Internet service, or broadband, for 12.5 million homes and businesses, Wheeler said in a statement. The additions will more than triple the number of metropolitan areas AT&T has announced plans to serve, Wheeler said.

To prevent discrimination against online video competition, AT&T must count its own video against data-consumption limits just as it counts rivals’ video, Wheeler said. He said the company will be required to submit reports outlining how it handles data from online companies, including those that supply video competing with its U-verse television offerings.

The conditions “will directly benefit consumers by bringing more competition to the broadband marketplace,” Wheeler said.

Regulators at the Justice Department concluded “that the combination of AT&T’s land-based Internet and video business with DirecTV’s satellite-based video business does not pose a significant risk to competition,” Assistant Attorney General Bill Baer said in the statement.

Needs Approval

 

Wheeler’s recommendation needs approval from the five-member commission on which he leads a Democratic majority.

The FCC could vote for approval late this week or early next week, and AT&T could quickly close the deal, Jonathan Chaplin, an analyst with New Street Research LLC, said in a note Tuesday. Chaplin called the action “a modest positive catalyst for AT&T.”

Web video leader Netflix Inc. and Dish Network Corp. told regulators the merger would give AT&T increased incentive to thwart online rivals in order to protect its investment in programming at DirecTV, the largest U.S. satellite TV provider.

The purchase would add 33 million TV subscribers, including 12.5 million in Latin America, to largest U.S. telephone company AT&T. The Dallas-based company would have 26 million U.S. video customers. Cable leader Comcast Corp. has 22 million video subscribers.

AT&T Chairman Randall Stephenson has singled out the new video customers in Latin America as a source for profit growth. AT&T wants to sell a bundle of satellite-TV and mobile service south of the U.S. border, and has acquired Mexico’s third-largest carrier Grupo Iusacell and Nextel Mexico.

AT&T in a statement said it was pleased the Justice Department had completed its review, and it looks forward to FCC approval.

Robert Mercer, a DirecTV spokesman, declined to comment.

To contact the reporters on this story: Scott Moritz in New York at smoritz6@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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