AT&T’s Bid for DirecTV Advances With Conditional Approval Order by FCC Chief – New York Times

AT&T's proposed $ 48.5 billion takeover of the satellite company DirecTV is on the path to receiving a regulatory green light after Tom Wheeler, the chairman of the Federal Communications Commission, circulated a final order on Tuesday to approve the deal with conditions.

Also on Tuesday, the Justice Department announced that it would not challenge the acquisition.

The deal would create the country's largest television distributor with about 26 million subscribers, surpassing Comcast, the current leader.

The F.C.C. reviewed whether the deal, announced in May 2014, would serve the public interest; the Justice Department review was to determine whether it would harm competition.

In a statement on Tuesday, Mr. Wheeler said that the proposed order outlined a series of conditions that would benefit consumers by increasing competition in the broadband market. Under one condition, AT&T would be required to build its current high-speed fiber Internet connection to about 10 times its current size, extending the service to 12.5 million customer locations.

To prevent discrimination in the online video market, AT&T would not be allowed to exclude affiliated video services and content from data caps on its fixed broadband connections, Mr. Wheeler said. And to create more transparency, it also would be required to submit so-called interconnection agreements to the F.C.C. Such agreements provide for a company like Netflix to pay a fee to a distributor, like Comcast or AT&T, for better service when it creates a lot of traffic for a network.

The F.C.C. also would require an independent officer to ensure that the company complied with these and other conditions.

The final order and the conditions are subject to the approval of the F.C.C.'s other commissioners.

The deal is part of a wave of consolidation across the media industry in the last year. AT&T executives have promoted the deal as an opportunity to create a company that could offer customers the ability to watch television on the go across a wide variety of screens. Fletcher Cook, an AT&T spokesman, said in a statement that the company was pleased the Department of Justice had completed its review and looked "forward to gaining the approval of the Federal Communications Commission so we can quickly begin providing consumers with the benefits of this combination."

Antitrust specialists and industry executives have said that they did not expect regulators to raise major concerns about the transaction, unlike Comcast's proposed $ 45 billion takeover of Time Warner Cable. That deal collapsed in April after intense regulatory scrutiny.

They pointed to two important differences between the mergers: One, the larger AT&T would not control a majority of the country's high-speed broadband customers, as Comcast would have. Two, neither AT&T nor DirecTV owns a major entertainment group, as Comcast does with NBCUniversal.

"After an extensive investigation, we 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," said William J. Baer, assistant attorney general in the Justice Department's Antitrust Division. "The commitments that the proposed F.C.C. order includes, if adopted, will provide significant benefits to millions of subscribers."

AT&T's deal was not without opponents. Netflix urged regulators to reject the transaction as it was proposed, arguing that the combined company would be able to harm online video distributors like Netflix while protecting its core TV business. Other critics included the American Cable Association, a trade group, and the Writers Guild of America West.