The head of the Federal Communications Commission has recommended approving AT&T’s $48.5 billion purchase of DirecTV. The deal would create the country’s largest provider of cable or satellite TV.
The other four commissioners still have to vote on the proposal. The Department of Justice has approved the deal.
FCC Chairman Tom Wheeler said Tuesday that he approved the deal with certain conditions.
The company would have 26.4 million TV subscribers in the U.S., topping Comcast as well as a possible new giant, Charter, which wants to buy Time Warner Cable. It would also include AT&T’s nationwide network of tens of millions of wireless customers, its Internet and landline phone services and DirecTV’s millions of customers in Latin America, where AT&T wants to grow.
Consolidation has swept the industry as people increasingly turn to the Internet for video and content costs rise for cable and satellite TV companies. A bigger AT&T would have more leverage in negotiations with big media companies over the price paid for popular channels. It would also combine a nationwide satellite TV service with a nationwide wireless network, giving it the ability to sell new kinds of video packages as people increasingly watch on their mobile devices.
But regulators have not given the green light to all deals in the TV and Internet space. Comcast earlier this year walked away from a $45 billion attempt to buy cable rival Time Warner Cable after regulatory pushback.
The AT&T-DirecTV combination did not generate the same level of concern as the Comcast deal from consumer advocates and regulators.
That’s because regulators were concerned that a bigger Comcast would have had too big a chunk of the country’s high-speed Internet customers, which are seen as the future of the industry. That would give it the ability to undermine online video rivals.
The bigger AT&T wouldn’t have a significant entertainment arm like Comcast’s NBCUniversal, and buying DirecTV does not add to AT&T’s U.S. wired Internet subscriber count of just over 16 million. It still trails Comcast’s roughly 22 million Internet customers, and would lag a larger Charter as well.
AT&T’s TV business pipes in cable to 6 million households, while DirecTV supplies more than 20 million households in the U.S. and 19.5 million customers in Latin America.