The AT&T/DirecTV Merger Will Likely Be Approved: Report

Josh WolfordBusiness

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It doesn't appear that federal regulators are going to stand in the way of AT&T's bid to acquire DirecTV.

According to sources quoted in the Wall Street Journal both the Justice Department and the Federal Communications Commission are almost done with their respective reviews, and they are both unlikely to block the deal.

AT&T agreed to acquire DirecTV for nearly $49 million last May.

From the WSJ:

Regulators could still decide to impose conditions on the deal, which would create the largest U.S. pay TV company, but don’t appear to have serious concerns, the people said. Final approval could still be weeks away.

The Justice Department hasn’t raised issues with the deal and doesn’t plan to block it, the people said. FCC staff are inclined to recommend the commission approve the deal with conditions, but none are expected to be unacceptable to AT&T, people familiar with the process have said.

Streaming video may play a part in said conditions. Netflix recently raised objections to the merger in its current form, saying that the deal "would result in a combined entity with increased incentive and ability to harm online video distributors and other edge-based Internet content that Applicants view as a threat to their broadband and video programming businesses."

“AT&T already has a demonstrated ability to harm OVDs by leveraging its control over interconnection to degrade its own customers’ access to Netflix’s service. AT&T also has shown an interest in using data caps and usage-based pricing methods, which it can apply discriminatorily to advantage its own services. If AT&T is able to slow the development of the
OVD industry, either by foreclosing access to broadband customers or imposing discriminatory data caps, AT&T would be able to preserve its market advantage by slowing or even reversing the shift toward competitive online video offering and away from bundled video/broadband offerings," said Netflix in a recent letter to the FCC.

It's possible that AT&T would have to agree to some stipulations protecting online video companies.

“This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes. At the same time, it creates immediate and long-term value for our shareholders,” said AT&T Chairman and CEO Randall Stephenson upon announcing the merger.

The AT&T/DirecTV deal, while significant, won't create the broadband-controlling beheomth that the Comcast/Time Warner Cable deal would've birthed. The FCC played a role in killing that deal, and Netflix and Net Neutrality was a major concern.

Image via Keith Allison, Flickr Creative Commons

Josh Wolford

Josh Wolford is a writer for WebProNews. He likes beer, Japanese food, and movies that make him feel weird afterward. Mostly beer.

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